Member Info for Mike1959

....yes, interesting article but the BEV numbers look way too optimistic to me, he is assuming 50% BEV growth this year (and then growing by 1.6% year thereafter) but the figure will be nearer 25-30% this year. Still it does set the trend for the future.

DYOR.

Sotolo, this site is dedicated to THS so I think the "minutiae of THS output and costs" is really important but let us move onto some macroeconomic factors as you suggest.

I agree with you the the Chinese economic rebound after removing Covid restrictions has been extremely disappointing with 3 consecutive months of reducing economic activity in April-June and that this is holding back world growth. But as I mentioned a few days ago, Chinese chrome imports in Jan-May 2023 are 17.94% up on the same period last year suggesting that stainless steel production is going well and that South African chrome is critical.

You are correct that the question of how fast BEV's will replace ICE's is an existential question for the whole PGM industry. Your information that China is dominant in BEV's account for about 60% of global production and that China has over half of the BEV's on the road worldwide. Global BEV production has grown from 3.2m in 2020 to around 6m in 2021 to nearly 11m in 2022 and expected to be around 14m this year. As you point out , BEV's account for 24% of new car sales in China compared to 12% worldwide in 2022 and around 16% worldwide this year but this strong figure is high in China, Europe and USA but less than 2% in India, Japan, Indonesia and Brazil.

But the big picture for PGM's is where will these figures be in say 2030, the suggestion ranges from 20% to 90%. Due to the problems of prices, infrastructure and supply of lithium I expect the figure to be under 40%.

Despite the increase in global BEV sales from 12% last year to 16% this year , global ICE sales this year are still expected to be about 72m which is the same as last year but with higher PGM loadings so that PGM usage will increase this year despite more BEV's. I must admit that the May research from Johnson Matthey suggesting that platinum demand in 2023 would be 20% higher than last year seemed incredibly optimistic to me. The speed of the future switch from ICE to BEV is critical to the future of all PGM producers , if you think that switch will be faster than the conventional wisdom then investing in THS is possibly not for you.

then on the reverse side there is the potential from the growing hydrogen economy.

Always willing to have sensible , rational discussion and debate!

Sotolo, the share price is so low now because it is reflecting the current PGM basket which reflects the big drop this week.

I calculate todays PGM basket price as $1402 for Karo and $1312 for Karo, these should match the prices that Ilja puts on the twitter site on Monday. Using $1402 for the PGM basket and the current chrome price of $285 I make the 2024 PAT as exactly $100 million which allows for the inflationary increase in costs and financing for Karo that you mention. That is a PE of around 3.1 although admittedly it was around 2 less than 2 weeks ago.

For 2024 if the chrome price averages $285 and the PGM basket averages just $510/oz than the business would still breakeven. With chrome where it is now , even if the current PGM basket was to drop a further 100% then the business would still make a profit. So you are wrong below when you say "pgm break even is very close if not here". Admittedly 2025 onwards would be tougher with the running costs of Karo.

Moneyman is spot on, eventually the supply of PGM's will start to drop and push prices upwards again, Tharisa can live with the current price levels and still make money.

As I have mentioned before, eventually I hope that the updated Karo mineral statement will confirm the original Zimplats results which would increase the PGM yield by about 10% and hopefully the Karo development does not use all of the 15% contingency (probably about $50m) allowed in the latest project capital cost.

Sotolo, I try to be tolerant particularly on discussion of forward prices which will always be subjective as none of us know the precise answer. In my humble opinion I do find you overly negative but accept your opinion but what I do not like is that you are not willing to accept facts and throw out incorrect information without justification.

You say "...we are already in the realm of losses on PGM basket around $1400 on Tharisa and $1300 on Karo". But Tharisa is still profitable at PGM $1300 and chrome $285 although I agree that Karo is around or possibly just below the current AISC level.

You say "the worse thing is chrome is falling too" Let us has some perspective. The chrome price today is $285-290, the same as last week and a few weeks ago the price was $305. The current price is still fantastic. the last chrome port stocks in China were 2.03m tonnes , down 210k from the week before. You mention a "China slowdown" but Chinese imports of chrome in Jan-May this year are +17.94% on the same period last year.

If you want to discuss the chrome ore/concentrate price then discuss that product not Chromium 99 which more reflects the high energy cost of converting chrome ore/concentrate rather than the chrome price itself.

I agree we are in the big debt period for Karo but as others have said this in hypothetical until Karo starts selling. In the meantime the management will have difficult decisions to make, we are too far into the project to stop but as you suggest it could be slowed down or paused or adjusted.

Yes, the last 2 year trend has been for PGM prices to significantly fall, but only after a significant increase before that, the same cycle will happen again although there will be a time lag before the lower PGM prices force the higher priced producers to reduce production.

....sadly the chrome price is down slightly to $285-290 this week although spot sea freight rates are around $5/tonne lower this week or down about 30^ since the end of last December.

With the PGM fall today it makes the Tharisa basket around $1475 and the Karo PGM basket around $1335 which is around my Aisc level ( as others have said, all hypothetical until we are producing and selling.

Sotolo, no not $1303, I do mean PGM aisc $303, it just shows how profitable a chrome price of $294 is to Tharisa. It is worth saying I am assuming the Agency and Manufacturing performance will not drop if PGM theoretically fell to just $303/oz and don't forget the royalties would be lower.

Sotolo, no not

Sam, I saw that yesterday, the recorded sells were dramatically higher than the recorded buys yet the share price was up 2.46%?

The Baltic Dry Index has gone down for the last 2 days but is still up quite a bit from 3 weeks ago.

More relevant to us, the Baltic Handysize Index has been falling in recent weeks and in now 454 (got down to 431 on 15th Feb) but has hardly changed in the 3 days ago so I hope this is the turn to higher levels. Current spot Time Charter rate is around $8100/day. TMIP needs about $9,000/day to break even but fortunately the majority of business has already been locked in at higher numbers.

From what I can see for the second half of this year most predictions expect a moderate recovery in the Baltic Dry Index.

Sotolo,

For 2023 ,with the PGM basket at say $1600 my chrome AISC is roughly $190/tonne and based on chrome at $294 my PGM AISC is roughly £303/oz.

As the alcohol warning goes ".... please use responsibly".

....even with a PGM price of USD 1450/oz Karo is still profitable, just not as profitable as the Tharisa mine (don't forget that base metals also contribute around 18% of Karo's revenue which dampens down the loss on PGM's. If the PGM basket was to drop another USD 100 by start up it might be a different picture but I agree with Moneyman below. Also THS could look to reduce the costs such as by reducing the 4 pit sequential development to say just 2 or 3 until PGM prices improve prices.

Some serious perspective is needed on the current numbers. THS is just 9 days away from the end of the first 9 months of the 2023 FY., Based on prices already locked in for the first 9 months and PGM basket of $1600 and chrome at $294 for the rest of the FY I expect PAT of around $115m which is a PE of 2.8. Again using PGM of $1600 and chrome of $294 for FY 2024 I get PAT of over $115m+ and a PE again of just 2.8 which allows for the Karo spend and effectively no revenue from Karo.

in 2023 PGM will generate only 33% of revenue and in 2024 only 31%.

Fingers crossed for Q3 production numbers on 12th July and I would like to see some positive news on the Karo official reserves.

Sam, the bigger Baltic Dry Index is down 33% YTD but the good news is that it has traded up in the last 3 days. The smaller BHSI has its own slightly different rhythm and is currently 526 but it still heading down and is now down 22% YTD but still substantially higher than the 2023 low of 431 reached on 15th Feb, I think this might also turn upwards in the next few days. China is trying to stimulate its own economy by cutting interest rates by 0.5% when much of the world is still heading the other way.

Fortunately from the April announcement TMIP has covered 24% of the fleet days for the current financial year to 31st March 2024 at a net TC rate of $16,250/day and so in well insulated from the current TC spot rate of around $10,000/day and a breakeven of around $9,000/day and sh should remain profitable this Quarter subject to no surpries in vessel values.. Unfortunately Grindrod Shipping will probably remain loss making at current levels. If vessel depreciation follows its long term pattern then I think the TMIP share price has recently fallen more than the NAV and if shipping recovers makes a good entry point. But as I mentioned last week , it might get worse before it gets better.

Enjoy spending the kids inheritance in Portugal!

Moneyman, you are totally correct that the PGM price is all hypothetical until Karo opens. But Ragnor raises some good points comparing the PGM price now compared to the original financial basis for Karo.

In October last year the published project economics showed the cash cost as USD 1096/PGM oz excluding royalties.

In the H1/23 the Tharisa mine had a stripping ratio of 11.5 , is typically digging down 50-80 metres and had an on mine cash cost of $48.2/tonne while I think Karo will have a stripping rate of 21.6 and digging down up to 100 metres giving a higher on mine cash cost of $74/tonne.

Ragnor, don't forget that although the Karo PGN basket has considerably fallen, the contained base metal prices have held up relatively well and at todays prices would represent about 17% of total revenue so cushioning the PGM loss. Also while Tharisa loses about 20% of the PGM value in refining/smelting terms as the Karo PGM basket has a lower content of rhodium/ruthenium/iridium while are all higher melting point metals than platinum/gold/palladium I hope that Karo will lose slightly less in refining/smelting terms. I calculate the all in sustained cost as $1377/PGM oz or possibly slightly lower. Based on the current Karo basket price ii make the current IRR 6-7%, DYOR. The Company promised to advise on possible additional expansion in the current half year but at this level any talk of further expansion will be mothballed until PGM prices recover. I still want the Company to confirm that the 3.0 grams 6E/reef of mine tonne is still achievable.

The current half year will see the biggest 6 monthly capex investment in the whole Karo project and Karo is unlikely to be profitable until full production is reached in 2026 so any good news will be gratefully received!

Sam, don't confuse Grindrod Shipping with headquarters in Singapore although their offices include an office in Durban (this is the company 83% owned by TMI) with Grindrod Ltd which is headquartered in S Africa.

Grindrod Shipping was originally part of Grindrod Ltd but Grindrod Shipping was soldoff as an independent company in 2017.

So Grindrod Shipping in not particularly exposed to S Africa, you might even argue that the Durban office benefits from a weaker ZAR as their ship rates will be based in USD and their local costs will be in ZAR.So the effect of power shedding in S Africa should not be a serious issue for Grindrod Shipping.

Another holiday, that is 3 this year!

Hi Sam, sorry but I do not know the answer to that as I never auto reinvest.

Tough day for shipping shares yesterday in US, Grindrod -7.7%, ZIM Integrated Shipping -5.9%, Eagle Bulk Shipping -4.78%. The Baltic Dry Index down 13% yesterday and down 38% in May, the first monthly decline since January. Even the daily fall in the BHSI seems to be increasing , down 1.72% yesterday. With 40-65 m new Covid cases expected in China during June , demand there appears weak.

Sam, I am with HL too and my dividend is in today.

Hi Sam, it is still being pulled down like most other shares by the big economic picture and possibly even higher interest rates so possibly more pain to come before it gets better.

BHSI is still creeping down and China have another wave of Covid.

So for me , sit on the funds for a few more days/weeks and then reinvest!

....likewise, using the same figures as feynzz I get a H2 NPAT of $64 m so we are both in the same ballpark and the result is higher than H1.

Sotolo, you should not use the 99% alumothermic/electrolytic chrome price as a guide for the 40-42% chrome concentrate price, it is like using the price of a Ferrari to work out the price of a VW Polo. Yes, they both contain chrome but they are priced for totally different markets. Chrome concentrate or ore is a mixture of chrome oxide/iron oxide/magnesium oxide and other contaminants and is generally sold for conversion into ferrochrome alloy much of which ends in stainless steel, as we know currently sells around $305/tonne CIF China. In contrast a small proportion of that ferrochrome is substantially purified to 99%+ chrome selling at over $9,000/tonne for specific market applications so the conversion costs considerably outweigh the costs of the actual chrome content.

In the presentation THS says trial open pit mining at Karo starts in June 2023 with first ore in mill July 2024 and as mentioned below PGM production in 2025 will be about 112,900 oz (the 4 pits will be developed sequentially) or about 59% of the planned full production of around 190,000-194,000 ozs which will probably be reached in 2026. I is worth saying that the average Karo depth will be deeper than the average Tharisa mine and the stripping ratio will be considerably higher.

As ragnor mentions below, with the Karo PGM basket now around $1600/oz the IRR is now below 10% by my very basic calculations and the "all in cost" around $1377/oz. So Karo will not be profitable until 2026 and then it will be profitable but less so than the Tharisa mine based on the current basket price. Don't forget only 59.5% of the Karo profit is attributable to THS shareholders.

As I mentioned back in March the Karo phase 1 was based on PGM 6E of 3.0 grams/tonne but the last mineral reserve statement showed only 2.31 grams/tonne. In 2017 when the Karo concession was owned by Zimplats they reported 3.44 g/tonne. Tharisa is currently working on the next mineral reserve statement which they have promised to advise the numbers by the end of June. For me this has to show an improved Karo number of 3.0g/tonne or more, any less will reduce the IRR and the life of mine. This is critical to de-risk the project. Conversely if the figure is nearer the Zimplats estimate then this will increase the IRR.

JD/toptiger, like many others, I think you are correct but he pulls the site down for the rest of us. I am all for different views and willing to consider what others might say and sometimes change my views but he he/she is not willing to listen to reason and facts and just blurts out statements without any backing and then hides behind we are being undemocratic or not allowing his/her views

.......you mention "PGM price is now near 20% down" and that "chromium is only slightly up on the average in these figures" but chrome averaged $247/t in H1/23 and around $300/t today, I make that a 21% + increase. it is you that does not like the figures.

You then say "if current prices are maintained profits will be lower second half" which is WRONG. Please tell me what H2 production numbers you are working with.