Member Info for Mike1959

Visitor/Sotolo/oufc, I agree with your comments. Based on a H2 average chrome price of say $270/ tonne and PGM basket price of say $2700/oz I calculate Profit Before Tax in H2 will be split 30% PGM/69% chrome/1% agency +trading+manufacturing. (this assumes the basis of shared cost allocation continues to be split 80% PGM:20% chrome but THS will eventually adjust this in line with revenue).
The H1 results today where generally better than I expected. H1 PBT was $124.3 million but included the one-off $48.6 million gain from the Karo deal but IF chrome/PGM prices ae maintained then my prediction for H2 PBT is $162 million or $286 million for the full year. That gives profit after tax of about $226 million which at the current share price is equivalent to a P/E of less than 2.5.
So I totally agree that the current chrome price is not being reflected in the share price. The other big factor is, has the Karo project been valued correctly and on the basis of about 40% external financing/60% out of THS over the next 2 years this is going to hit the cashflow in a big way. Time will tell!

oufc, likewise we are all looking forward to the figures but you will have to wait until Thursday rather than tomorrow.

Hi Sotolo , they are both important to me but we have to realise the basic EPS includes the extraordinary contribution from the Karo investment and buying out the BEE'S which is a special one off so based on the same production figures/prices in H2 the basic EPS in H2 would be lower. The basic EPS will be used to calculate PE as this is the total EPS.
Although it is a step in the right direction for the share price we still need to see what happens to the Headline EPS- how is Vulcan going, are costs still going crazy, where are PGM' s heading, will we get the external investment in Karo and will Karo keep to the incredibly tight schedule and tight budget etc. I expect EPS for the full year to be $0.45-0.60 which even at a low PE of say 4.5 should be £1.60-£2.16/share.

Troaja, interesting preliminary numbers from Tharisa.
Based on 296.05 million shares their Headline EPS of $0.14-0.15 for the first 6 months is equivalent to $44.4 -47.4 million which is considerably less than my prediction of $67 million suggesting costs have increased more than we thought and that sales could be lower than production.
But the good news is that the basic EPS of $0.32-0.33 is equivalent to $94.7 -97.7 million (just over $50 million higher) , is more than I expected and proves that buying out the BEE holdings and the initial Karo valuation is accreditive for shareholders.

Hi Sotolo,..... for what it is worth, next week I am expecting the H1 profit before tax to be USD 67 million and VERY roughly split 75% PGM's/24% chrome/1% manufacturing+ trading.

Hi Sotolo, with the H1/2022 financial accounts being made public on Thursday next week, 26th May then Iija or anyone else from THS has to be very careful in what they say.

RetiredBanker-i agree exactly with your Q2 revenue of $175m and I calculate $328m for H1.
My revenue for the full year is $764m compared to your over $700m (I am assuming a PGM basket of $2900 and a chrome price of $220 for H1 and that we will just fall short of our chrome production target of 1.75-1.85 m tonnes).
My profit before tax is $218m or profit after tax $170m (compared to your "should easily beat $140m)..
From the Karo presentation it was mentioned that the peak funding would be $310m and this could be split 40% internal and 60% external borrowings .So if THS is directly financing say $310m x 40% say over the next 3 years then that is about $41 m/year of our profit after tax gone, hopefully invested for greater long term gains.

RetiredBanker-i agree exactly with your Q2 revenue of $175m and I calculate $328m for H1.
My revenue for the full year is $764m compared to your over $700m (I am assuming a PGM basket of $2900 and a chrome price of $220 for H1 and that we will just fall short of our chrome production target of 1.75-1.85 m tonnes).
My profit before tax is $218m or profit after tax $170m (compared to your "should easily beat $140m)..
From the Karo presentation it was mentioned that the peak funding would be $310m and this could be split 40% internal and 60% external borrowings .So if THS is directly financing say $310m x 40% say over the next 3 years then that is about $41 m/year of our profit after tax gone, hopefully invested for greater long term gains.

Hi Ragnar/Swatton, valiant work!
I agree with Ragnar that you have not allowed for the PGM processing cost which is generally thought to be about 15% but with the complex high rhodium content PGM basket for Tharisa I believe the figure is nearer 21%.
So my calculation of Q1 revenue is PGM'S $192.8m (Q1 47,000 oz sales @$2394 X79%, Q2 45,000 OZ sales @ $2860 X 79%, fair value adjustment based on $3015 at the end of Q2 +$2.3m) , Chrome 134.4m ( Q1 402,000 @$161-20,Q2 439,000 @ $197-20), Agency $21m, Manufacturing $1.1m, Salene $1.0m.That makes total revenue $350m.
I have total costs at $259m (which is in between your figures).
My profit before tax for H1 is $91m.which is less thn Swatton's figure of $132.6m.
As you both say DYOR! We should know by the end of May!

As Ilja has explained my previous valuation was based only on the net profit but the net assets are split considerably differently.
Looking at the official announcement on LSE/JSE the net assets of Tharisa Minerals was only $33.7m but the profit for FY 2021 was in comparison a massive $149.0 m( im contrast Tharisa plc had net assets of $451.274m , equivalent to 98% of the combined assets of Tharisa plc plus the 26% BEE shareholding in Tharisa Minerals). As the BEE's owned 26% of these Tharisa Minerals assets then that is equivalent to $8.76 m but they have given this up for a $25.6m share of Tharisa PLC but then this will be offset as the new dividend they get as THS shareholders will be lower than the annual share of profits they would have made before as 26% owners of Tharisa Minerals.
This complexity just goes to show that the new arrangement will make the THS accounts much more transparent in future for everyone.
I am not sure how the 6 monthly Oct 21 to March accounts will be presented, will they show from Oct 21 to now as usual and then now to end of March just as the bigger THS plc?

Thank you toptiger and Ilja for your detailed explanation.
even with a 4% increase on the news I do not think the share price fully reflects this information so I have managed to make a small top-up.

All, I totally agree it is excellent news and has happened much quicker than I expected. IanB I agree with your 4.8% dilution.
I cannot get my head round the numbers. In FY 2021 the BEE shareholders got $31.072 million of the net profit and $11.655 million the year before and would have got over $20 million for the current year so why are they giving this regular profit up for $25.6 million equivalent is shares? Although this only appears to be a proposed deal rather than an agreed deal.
I agree with all that it makes the Company structure much more transparent.

I think it is worth going back to basics and explaining that Tharisa Minerals which is basically the mine, is 74% owned by shareholders on JSE and LSE and the remaining 24% by sleeping partners, BEE. As the business has developed the add on companies (Arxo Metals, Arxo Logistics, MetQ, Salene Chrome and the 26.8% holding in Karo Mining Holdings) are all owned by the shareholders on JSE/LSE (and none by the BEE).
Aa many of us have been saying for the last few years, the annual accounts are rather opaque and include the assets/liabilities of Tharisa Minerals (part owned by BEE and us Tharisa shareholders ) plus the businesses soley owned by us shareholders. The results for each individual company are not shown.
This all lacks some transparency particularly as the business gets more complex which adds layers of costs and uncertainty which will take increasing monitoring. For example at what transfer price does Tharisa Minerals sell to Arxo Metals which owns the Challenger plant which is integrated into the Genesis plant owned by Tharisa Minerals? Or if Arxo Metals takes the PGM concentrates from Tharisa Minerals how is the transfer price set, and then it gets complicated as which company pays the royalties particularly when unrefined PRM concentrates are charged at one rate and refined PGM's at another rate.
So the Tharisa shareholders would own everything and it would all be much more transparent particularly with new add ons such as Karo, and other benefications such as solar energy.

I think it is worth going back to basics and explaining that Tharisa Minerals which is basically the mine, is 74% owned by shareholders on JSE and LSE and the remaining 24% by sleeping partners, BEE. As the business has developed the add on companies (Arxo Metals, Arxo Logistics, MetQ, Salene Chrome and the 26.8% holding in Karo Mining Holdings) are all owned by the shareholders on JSE/LSE (and none by the BEE).
Aa many of us have been saying for the last few years, the annual accounts are rather opaque and include the assets/liabilities of Tharisa Minerals (part owned by BEE and us Tharisa shareholders ) plus the businesses soley owned by us shareholders. The results for each individual company are not shown.
This all lacks some transparency particularly as the business gets more complex which adds layers of costs and uncertainty which will take increasing monitoring. For example at what transfer price does Tharisa Minerals sell to Arxo Metals which owns the Challenger plant which is integrated into the Genesis plant owned by Tharisa Minerals? Or if Arxo Metals takes the PGM concentrates from Tharisa Minerals how is the transfer price set, and then it gets complicated as which company pays the royalties particularly when unrefined PRM concentrates are charged at one rate and refined PGM's at another rate.
So the Tharisa shareholders would own everything and it would all be much more transparent particularly with new add ons such as Karo, and other benefications such as solar energy.

Hi Swatton ,in the FY 2021 accounts profit after tax was $131.541 million of this $31.072 million or 23.62% was attributable to non-controlling interest ( BEE) and in FY 2020 it was 21.2% which explains my figure of around 22%. With lower PGM prices this year compared to last then I believe THS will represent a bigger percentage of the total plus THS has added the investments in Salene and Karo.
I totally accept that looking just at profit and not allowing for assets/life of mine and other major factors is extremely simplistic so it is a very rough rule of thumb.

Moneyman 64, as you suggest, BEE currently owns 26% of Tharisa Minerals (NOT THS) so if this was "exchanged" for shares in THS then they would own less than 26%, very very toughly I calculate 22%.
This might seen like a dilution of our ownership in THS but if done correctly it should be relatively neutral.

Moneyman 64, as you suggest, BEE currently owns 26% of Tharisa Minerals (NOT THS) so if this was "exchanged" for shares in THS then they would own less than 26%, very very toughly I calculate 22%.
This might seen like a dilution of our ownership in THS but if done correctly it should be relatively neutral.

The way I read it is THS buys out the 26% BEE shareholders in the Tharisa mine (remember this is only the mine, the BEE shareholders do not own any part of Arxo Metals/Arxo Logistics/MetQ/Salene/Karo) but pays for this in the form of THS shares so that the BEE then own THS shares rather than part of Tharisa Minerals?
As has been expressed below, I agree that this would simplify and make thinks more transparent in the long run particularly with the growth plans and that this has to be announced on the JSE as it could have a material effect on the shareholders.
As to the question of, is it going to be good for the share price, it just depends on the price paid for the 26% and the number of share given in return, I would expect the values to be roughly equal.

Hi Viable,yes, Eskom increased their electricity prices on average by 15.6% in April 2021 and asking for a 20.5% in April this year and then 15.07% in April next year.
In FY 2021 Tharisa Minerals spent USD 15.129 million on utilities, if this is 90% electricity they were paying equivalent of USD 0.068/KWh all in for electricity but given the Eskom increases, increasing production and possible increases to carbon tax this makes good commercial sense to replace by solar.
But Tharisa spends even more on diesel, USD 25.614 million in FY 2021 and based on the current higher price and increased production this is likely to be USD 33 million in this FY.
Sotolo, Ditto , I agree the higher rhodium price is excellent news!

After digging a bit deeper (pardon the pun) and finding out that Gold Fields 40MWp solar farm planned in 2017 will only start operating later this year and that Sibanye Stillwaters own solar farm planned in 2021 will only start producing in late 2023, I now think it could be 2024 or even 2025 before the Total Eren/Chariot plant is operational.
IF my rough calculations are accurate then the Total Ern/Chariot solar plant will actually generate only 30% of the electricity used by Tharisa Minerals based on 2021 actual consumption and with the increasing production this will fall below 30% by the time it is operational around 2024-2025 so that Tharisa will need further measures to achieve its 2030 carbon target.
It does mean that Tharisa will be buying 99%+ of the electricity generated by the Total Eren/Chariot solar plant.