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Hi Moneyman, as you say the cash production cost was $1096/6E oz based on certain by-product prices which are lower today so that $1096/z will be higher today plus there will be the capex ex costs to pay off, on the Tharisa website today they have the Karo PGM basket as $1266.59/tonne.
Also that $1096/oz cash cost was based on production of around 190,000 ozs/year which is based on a 6E ROM of 3.0 grams/tonne, but the last Karo Mineral Resource and Mineral Reserve Statement has a 6E of only 2.31g/tonne which is 23% less, based on this figure the costs would increase exponentially about 23%. that $1096/oz also assumes a recovery of 78-82% which is achievable but could easily be 75-80%.Karo will have a massive stripping ratio of 21.6 m3 ,more than double the Tharisa number ,and Karo could go down to a maximum 130 metres (which is considerably deeper than Tharisa). If severe weather has a massive effect on the Tharisa numbers then think what it might do at Karo which is must deeper and has largely a contractor workforce compared to the own well trained labour force at Tharisa.
Affan , I can understand that the EV at Tharisa could be $450m but remember if things went fully wrong at Karo for various reasons then the $39million investment at FOIM in July next year could easily be $400-500m 12 months later and if the mine was closed/mothballed then Tharisa would be responsible for around around two thirds of this Leto Settlement the rest, the Zim government has a 15% free carry which means that Tharisa/Leto has 100% of the risks but only 85% of the potential profit) which could reduce that $450m EV to under $200m. This financial year Tharisa might have a PAT attributable to shareholders of say $98m but could easily right-off 2 or 3 times this amount if things go totally wrong at Karo. It is worth remembering that the Karo site was once controlled by Zimplats but under pressure from the Zim government they gave it up.
The Zimplats Ngezi mine next to Karo was originally Hartley Group which started aa an underground mine in 1997 having cost $289m to develop only to close 2 years later due to operational problems. Zimplats reopened the operation in 2001 as an open pit mine but in 2001 the open pit was closed and the mine went underground.
With lots of "ifs" and "maybes" including the PGM price recovering this does not happen and Karo is a complete success.
But is just goes to show that we are playing a massive high stakes game of poker! I do not want to be negative but we have to be aware of the risks. Look what happened at Salene Chrome, the investment is made and we are months away from a profitable operation when the Zim government moves the goal posts and the operation has to be mothballed.
The risks at SLP are severely less , the tailings are already there, the contents are known and their production costs even up to 10 years forward are pretty known so the only big unknown is the chrome and PGM price and SLP has a track history of this
Hi Affan, I am 99%+ with you but to be devils advocate, there are still questions on the Tharisa production numbers for this year, profitability next year based on the low PGM price environment and particularly massive concerns on the big Karo investment, if the Karo production numbers will even be achieved and at current PGM numbers how loss making Karo will be. Although Tharisa is financing a chunk of the development itself, the external borrowings will hurt in this high interest period. Karo is extremely reliant on PGM prices recovering where they where 6-12 months ago. or more. So there are big risks with Karo and some of these factors are outside of Tharisas control.
SLP is considerably more de-risked and has a track history of being a low cost producer, tacking on these incremental projects and making money even with low PGM prices.
But ,as I say, I am 99% with you!
Thanks all, my dividend has also now appeared in my HL account.
BHSI up 1.29% today to 548, that is now 17.35% down YTD. in contrast the BDI hit a 5 week low on Friday but is up today and is now down 4.41% YTD. Still very much focused on news out of China.
H1/2023 (Jan-June) accounts for Sibanye Stillwater out yesterday. Says the S African PGM operations had a AISC 4E of USD 1083/oz and for the FY expect USD 1156 -1211/oz (based on USD ZAR 18.00). On P.15 there is a Southern Africa PGM industry cost curve (cash cost including capex) produced by Nedbank. The most expensive mines are Northams Zondereinde mine, Implats Styldrift mine and Anglo American Mototolo mine. Tharisa is just in the cheaper half (although this looks like they have ignored the co-product , chrome and since then PGM prices have fallen and the chrome price increased).
All, good that we all chip in.
I agree with the concerns over China, the property market which accounts for about 25% of the economy is in a real mess at the moment threatening businesses, local government and possibly spreading to the banking sector while the central government seems unwilling or unable to do too much about it.
The average Handysize spot time charter rate is currently around $9,500/day which is above breakeven for TMIP if not quite Grindrod., we need this good run to continue .
I agree that the NAV at 30th June was £1.23 when the share price was 75p so that was a 39% discount. But in April -June the NAV fell 8.85% and I think the market is expecting a similar or even bigger percentage fall in the current quarter.
The BHSI has increased for the last 15 days and is today 514 and for July to date averaging 422, if we assume say 550 for the remainder of this quarter this would give a quarter average of around 465, but the April-June BHSI average was 683 so the current quarter is likely to be about 20% lower than the previous quarter. So I expect the net operating performance to be a loss of around $5 million or1.2 cents/share then "normal" vessel depreciation is around 1% every quarter (it actually fell 5.7% in the previous quarter)which would lose around $8-9 million or say 2.5 cents/share so overall I am expecting July-September NAV to be down about 4 cents or about 3p on the previous quarter.
So the share price drop so far this quarter has been 7p while I only expect the NAV to be down around 3p. I could easily be wrong in my calculation but I think that the economic news out of China continues to spook this sector so I expect the share price to be at a 40%+ discount to NAV when the current quarter NAV is published on 25th October.
As always it is good to exchange ideas with each other!
Yes, I am expecting the chrome price to be $300+ tomorrow. Despite the lacklustre Chinese economy and cutbacks in basic steel production, stainless steel production continues to be busy. In July China imported 1.338 million tonnes of chrome concentrates from S Africa, up np 43.6% YOY..
Chrome will account for about 70% of turnover at Tharisa this financial year and probably more next year. Tharisa Q4 Production Report will be out on 11th October. Don't forget that a big chunk of the improved cash position this year has been due to reducing ROM stock which must be running very low at the moment given the hiccups in mining so the cash position at 30/09 will be lower due to this and that we are now in the big capex spend period for Karo. I particularly want to see if the Mineral Reserve and Mineral Resources Statement for Karo will improve.
I agree on current PGM prices, we seem to be in a period of consolidation, if platinum can remain above $900/oz and palladium above $1200/oz ,then it is starting to build a solid base for higher prices when the macroeconomic picture improves.
Chrome price is increasing again this week.
Sam, 459 was the close on Thursday, I assume you are looking at ukinvesting.com which tends to be a day behind. The close on Friday was 469, have a look at StockQ.org ,they report the actual number just after the close that day at 3pm.
The S African chrome concentrate price CIF main Chinese ports is up to $296-300/ tonne today.
Sam, spot on. The BHSI was 446 at the end of the last Quarter (June) so if the 2%+ daily increases of the last 4 days continue then we will be back there by the end of the week.
China seems to be a two edged sword at the moment, their economy is lethargic which increases the possibility of further fiscal stimulus, medium term interest rate was reduced yesterday by 0.15%.