Member Info for Mike1959

all, something that is often ignored is that the THS shareholders do NOT own 26%of Tharisa Minerals which is basically the mine where most of the profit is made.
as Visitor pointed out yesterday the THS promise to pay out minimum 15% of Net Profit After Tax as dividends is based on the full profit before the 26% BEE interest is deducted and again as Visitor points out this is a MINIMUM and the pay-out in the last 5 years has been over 17%.
In H1 NPAT was $75.663m so the 4.0 cent interim dividend was $10.8m or about 14.27%. But after taking the non-controlling interest of $18.224m out of the the NPAT the remaining NPAT attributable to the owners of the company is $57.439m so the total $10.8m dividend represents a 18.8% pay-out.
Even assuming a Q4 PGM basket price of only $2900/oz (we seem to be around $3250/oz 2 weeks into the Quarter)I calculate the total NPAT for the full year will be $150m or $114m attributable to us owners so I calculate the final dividend will be about 5.5c or 9.5c for the full year including the interim, equivalent to around 17% of the full NPAT or around 22.7% of the NPAT attributable to shareholders.
At the current poor share price of 120p, 9.5c dividend is equivalent to a yield of about 5.7% which is excellent by most parameters.
I see there has been discussion on possible special dividends or share buy backs balanced against the investment needed elsewhere. Salene Chrome is relatively small. Unlike some I do not believe that Karo is a vanity project but the capex will be absolutely massive and should pay back but this will take 5-10 years+. My take is it would help if the CEO/controlling family introduce a special dividend at the end of the year taking the pay-out of NPAT attributable to shareholders up to say one third, this would reward current shareholders NOW and send out a strong message while retaining two-thirds for the Karo capex in Zimbabwe. At the same time I would like other possible big projects to be formally put on ice until the Karo capex is over half completed and the project starts to generate some return. I do not think that a relatively small but growing company like THS should be taking too many risks by fighting capex battles on several fronts.

F4U, 4 days ago the price on www.ferroalloynet.com for S African chrome ore containing 40-42% chrome was USD 160-165/tonne bulk CIF Chinese port. I generally find this to be a good guide.I believe the Tharisa metallurgical grade matches this specification.
The trend appears to be gently creeping up.
Chrome ore is blended with iron and coke to produce ferro chrome alloy and the price of ferro chrome also appears to be gently creeping up.

Bangrak, thanks for your figures.
After going through the Q3 figures and revising my Q4 PGM price down to reflect the recent drop ,my latest calculated sales is similar at $653m but my NPAT is a bit higher higher at $147m.
For Q4 I am assuming PGM'S 45,000 troy oz @ basket $2,900/oz (just a little lower than where we are at the moment) and chrome concentrates 439,300 tonnes @$161/tonne metallurgical grade.
By all means critique my numbers! As you say, this is really good value.

Feynzz, I pretty much match your figures. My projection for current year revenue is $699m (H1 $314,Q3 176m, Q4 $209m, obviously Q3/4 is very much dependent on volumes and prices) and nearer 18% (rather than your 19%) dropping out as NPAT, as profit rises relative to turnover so the royalties increase faster than profit.
My Q3 gross profit/revenue works out at 41% exactly as reported by THS.

HI Ian, the Q3 figures next week will be production figures rather than financials.
By my calculations you are optimistic on your Q3 NPAT of $53-55m, but it depends on the assumptions used.
My Q3 NPAT is around $41-43m which is still an improvement on H1 prorated. I am assuming invoiced despatches of 39,500 ox PGM's and 375,000 chrome. With the PGM price movement over Q3 the PGM Fair Value adjustment is likely to be around zero or even a small loss (the first for a few years). Also I expect the Q3 Royalties to be a massive $15m (they are very much a function of EBIT/turnover.
We will never know as the Q3 financials will not be published but like you I am looking forward to some encouraging production figures and positive news on the chrome fines investment next week.

I have expressed concern in recent months about the stripping ratio but I am less concerned now. As Ragnar points out the life of mine stripping ratio is currently 9.6 and as the figure was 12.1 in 2020 and H1/2021 11.5 this means the figure should improve for the remaining 13-14 years as an open pit mine so we will be moving less waste relative to the reefs.
The mineral resource and mineral reserve statement in the 2020 accounts is very thorough and carried out by an independent body and confirms much of previous reports. The report does point our that the MG chromium layers do tilt between 9 to 15 degrees and that there are usual geographical faults so that some variance in the stripping ratio is to be expected. As already mentioned the mine carried out some reorganisation in 2019-2020 that temporarily negatively effected the stripping ratio but this has now been completed.
Again Ragnar has mentioned that the company almost seems quite proud of the stripping ratio but I this is just justification for bringing the mining in house and that the tremendous capex in Caterpillar earth moving equipment is paying off.
The video also fails to understand the link between PGM's produced and revenue due to the delay in processing and valuing the contained metals, effectively the PGM basket today is valuing the PGM concentrates produced about 3-4 months ago rather than the PGM concentrates produced this month.
I thought that the video might have made something of the PGM recovery rate falling to 78.1% in H1/2021 but this is just due to the heavy rain in HI and gave a PGM revenue adjustment of -$7.2 million suggesting there was over 4% of moisture in the PGM concentrates sent to the 2 PGM smelters in this 6 month period.
Regarding the possible chrome tax (I do not think it will happen) while it is the buyer who will pay , if this happens then the chrome producers will have to reduce their prices to compete with chrome on the international market so the S African chrome producers lose out and the main customer base, China, is encouraged to look elsewhere . Another factor is that mining royalties in S Africa are very much based on earnings before interest and tax and turnover so if the chrome tax is introduced then chrome miners pay less royalties and less corporation tax so it is an overall loss for the Government.
One final point, THS has promised that the capex on the Vulcan plant will be completed before the year end in September and so will start to produce chrome fines but I believe these fines will have a lower value to lump chrome due to a bigger melting loss for the end customer. So it would be good for transparency if THS could advise the discounted price they will get for this finer/smaller particle chrome, is it less $10/tonne or say $20/tonne and just how fine is fine, are we talking about typical particle diameters of say 0.5 mm or even less? Similarly is THS working to alleviate this problem by say converting this fine chrome into bri

TT, thanks for your re-hashed figures.
What I found as somewhat sobering is the Profit Attributable to THS. This reminds us that as shareholders in Tharisa PLC we only own 74% of Tharisa Minerals which is largely the mine producing the PGM/chrome. All of the production revenues and costs in the THS accounts include ALL of Tharisa Minerals but THS will only get 74% of the benefit of increasing production and increasing PGM prices. In 2020 the Net Profit After Tax attributable to THS was $43.296 m (with $11.655m going to the BEE shareholders) suggesting NPAT for the 100% THS owned Agency and Manufacturing divisions was about $10m and about $33m from the 74% share in Tharisa Minerals.
I see in your re-hashed figures your PAT is $85m and you have used the same 78.79% in the 2020 accounts to calculate your Profit Attributable to THS of $67m but because most of the H1/2021 improvement is due to higher PGM prices applicable to Tharisa Minerals where THS only owns 74% then I calculate your Profit Attributable to THS as $64.4 m.

Ragnar, thanks for your balanced cost information, it is good to know the concensus is that I have overdone the costs!
I am still worried about the high stripping rate.
TT, My thoughts were that the PGM prices in note 22 are the prices on the last working day of September 2020 and are used to value the PGM's that have been despatched and provisionally invoiced before the year end but the prices have not yet actually been agreed. I calculate these prices in note 22 give a basket price of about $2240/oz at the end of financial year 2020. If I am right, the equivalent prices in note 22 for H1/2021 will be the PGM prices on the last working day of March 2021. Well done for your financial detective work!

Ragnar, it is good that a few of us are generally ending up in the same ballpark!
we know that Eskom has increased the electricity price by 15%. The local costs in ZAR such as wages might be 5% or less but with the stronger ZAR, the percentage increase will be greater with the accounts in US$.

TT/LL, thanks for your figures it is always good to benchmark! I have total revenue $340m less COS 188= gross profit $152m, less other income/for exchange/admin 24= results from operating activities $128m, less all the finance costs/liabilities (I am assuming we have generated more than enough free cash to pay the 2020 3.5c/share divi =$9.4m and the part Vulcan investment $16m =£124m PBT less 28% tax=PAT $89M.
From the PGM figures already provided by THS we know that the provisional values are roughly $180m before Fair Value (Q1 39,300 oz @ provisional basket $2399, Q2 35,800 @$3290 less 15%). From generating the PGM concentrates to producing the refined metal takes 2 to 2.5 months for Pl/Pd but 3 to 3.5 months for Rh/Ru/Ir. For the FV I am simplistically assuming the prices for all of the PGM's are settled 3 months after despatch and the original provisional invoice. So my FV adjustment is Q4/2020 say 36,000 oz@ (2399 actual-2200 provisional)= $7.16m,Q1/2021 39,300 @ (3290-2399)=$35.0 m,Q2 35,800 oz @ say 3700 provisional value at end of March -3290 provisional value on despatch)=14.7m = FV $57m. If the PGM contents/prices are agreed after say 3.5 or 4 months the FV value will be higher on a rising market.
By all means please critique my figures and assumptions! Unfortunately ulike you both I did not get into SLP to compare but I have backtracked over the THS accounts for the last 3 years and FV calculation does very broadly match.
By all means check my assumed basket prices.

LL/TT,
For H1 we are coming from slightly difference angles but i have profit after tax at $89 m. I calculate total revenue $340 m (PGM $237 m which includes fair value of $57m which I think is very conservative- glad to explain if you wish, chrome $90m, agency $12m, manufacturing $1m). I think some of the costs will have jumped up due to higher flotation consumables/continuing high stripping rate/stronger ZAR/considerably higher international sea freight. With dividend at 17.5% of PAT that gives a dividend of 5.7 c/share for H1 only.
I think the market wants to see some hard serious free cash and consistent PGM prices before this is rerated close to where we all think it should be.

Total Trader,
my calculation was that Fidelity would be fully sold by this week/next week, so 1-1.5% left sounds right to me.
The only question is that if Rance Holdings sold about half a million shares earlier this month and announced on 13th April that they were down from 15.052% to 14.864% ,was that a one off or are they still selling? Does anyone know if the next major threshold declaration is 10%?

Sotolo/TotalTrader,
Effectively yes.
1) THS deliver conc to smelter and the invoice with revenue "A" is raised but this is only a PROVISIONAL invoice value based of THS's estimated/sampled PGM content and current PGM prices which is the "fair value" shown in the accounts and other costs (so the circa 15% costs are allowed for here, I think the discount is now less than this).
2)The smelter undertakes the assays and their results might be higher/lower than THS's estimate or sample, THS will no doubt have already sampled and know the PGM content, in some contracts the buyer/seller will exchange assays are providing the difference is small the buyers assay will rule but if the difference is great then either party can ask for a retained sample to go to an independent sampler to act as referee. Once the assays are agreed the buyer/seller will agree a day to price fix the contained PGM;s and it is only at this stage that the actual final price of the PGM's is LOCKED IN.
once the weights/assays/metal prices /impurity penalties/treatment charges are agree then THS can raise a final invoice "B" (and cancel the original invoice).
so "A" the provisional value,can be greater than "B", the actual final value and the Fair value Adjustment in the accounts, is the difference between "A" and "B". With rising metal prices then "B" will be greater than "A" (other things being equal) so I agree with Sotolo that we can expect some stonking gains.
Just another rider to this, is that we are assuming that THS does not do any "hedging" in the form selling on futures markets (derivative). There is no futures markets for rhodium but there are futures markets (such as COMEX/LME) for platinum and palladium and gold. All the evidence up to now is that THS does NOT do any "hedging" (and this does incur additional trading costs) so we are assuming it has not changed. Obviously hedging would give some insulation when PGM prices eventually staert to go down.
Another point is as the concs take 2-4 months to finalise which is a massive stretch on cash flow (the smelter may pay part in advance on agreement of assays) from the accounts is looks like THS is factoring part of this with Nedbank at LIBOR + 356 points (or prompter payment for effectively a discount of about 3.64%/year) although they will need a bigger limit with the bank at current prices!
My final point- a lot has been said about the net smelter gain of about 15% which I think is now already lower. While it is in THS's interest to upgrade the concs as much as possible I do not see them being able to do the full phase of ore to all of the individual precious metal s in the form of ingot or grain or sponge. Rather for me if they can reduce that 15% discount to nearer 5-10% then that is the best they can do without a truly massive investment and ongoing cost. No doubt the 1mw furnace is now upgrading the concs (possibly only containing 3000 ppm PGM's) to a matte with 30-60% metallic content.

Hi all,
This is my first post so please be gentle.
From working in precious metals a long time ago the PGM concentrates will be delivered to the 2 smelters based on valuation against a master contract. The smelters will assay first and will not price fix against official PGM prices until the assays have been agree which could be 2 to 3 months after despatch from THS. So even if THS delivered to Impala in say this month,April they will get the PGM prices when the material is price fixed in say June/ July, so on a rising rhodium market they get the benefit of the higher price a few months later. I am guessing this is work $30 m in H1/2021, the same as all of 2020.
The smelter will deduct an amount off the assay for each precious metal, say 1%, and will make a deduction off the precious metal ,say 1%. Then there will be penalties for certain impurities which are hard to remove and an overall fixed treatment charge.Remember on rising PGM prices the total discount will rise but the percentage of total deduction will fall as the treatment charge is a fixed amount.
I see much has been said about a possible 15% PGM mark up f THS