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The acquisition is an interesting one. Priced at a fraction of sales they have doubled in size for only £800k (net of working capital and cash) and also taken on a 'hardware engine' (whatever that might be). Would love to see some kind of presentation and engagement with investors but they may just be getting on with it.

The MCap is is £9m, somewhere around £1.5m cash in the bank and there are some pesky loan notes of £3.7m due 2024, so for an enterprise value of say £11m you get £14m in sales and EBITDA/cash flow break even, but fairly low to zero organic growth recently (maybe harsh given Covid impact)

Mark Ward has forked out £1.1m in the placing for 15% of the company and the chairman £120k. The CEO didn't participate but he already has 20% so plenty of motivation there. This leaves around £800k across other investors. I wonder how many of them are in it for the 20%... just a couple of % churn with such low liquidity, horrible spread and very infrequent news will mean this could stagnate for months.

Happy holding here though to see how this plays out. Just a little bit of sales growth will go a long way

Half year results from UK peer Keystone today. Interesting comparison to DWF. DWF is
5x the sales
7x EBITDA
50% better margins
Similar sales growth >10%
4x the dividend yield....

and only 1.5x the enterprise value. DWF is still below its pre covid share price while Keystone is 30% higher. Might see a trading update from DWF for Q12022 any day now... Opportunity....

Hey Andy, I think you've probably nailed the sensed the confusion which sometimes clouds this company. Take a look at slide 14 of the latest company presentation and it will show you that the company has 25% exposure to the forward curve movement in 2022 and 70% from 2023 onwards. However the gas market is in heavy backwardation reflecting the fear around short term supply over winter rather than a more structural change. So the result is that the forward curve, while it has moved up, hasn't moved up anywhere near the magnitude of the spot price. And by spring in 2022 it is substantially lower than spot.

Dec don't tell us when they hedge, only that they are opportunistically building their hedge book. Although the 2023 forward curve has risen its still a huge discount the current spot price and makes you wonder if its worth hedging at that level. Its really a balancing act between protecting cash flow but still having some exposure to positive market fundamentals.

https://d1io3yog0oux5.cloudfront.net/_49567b186e5d7375626308f614522076/dgoc/db/557/4494/pdf/DEC+Investor+Presentation+August+2021.pdf

Going ballistic... not much upside to DEC this year given hedges but the forward strip has improved substantially. Still not much reaction from DEC SP yet

Incredible company and performance this one. I had been admiring this since the beginning and couldn't believe my luck when the price tanked to 500p last year. Seems like one to hold forever given its position and success in what is a very competitive landscape. That cash balance is becoming ridiculous

Compare THS to a variety of other African miners across a range of minerals and sizes and its PE <5 is far from unique. No analyst would consider using PE to value a mining company, especially in isolation from its peers. The below reflects recent consensus. All of these peers are also trading at EV/EBITDA of less than 3. A DCF and comparison to book value would be the most useful.

When you consider Tharisa's massive reliance on rhodium and chrome (probably the most chronically oversupplied bulks), the overhang and the huge amount of capital investment the company has been talking about (relative to its South African peers which in general are transitioning to a focus on shareholder returns) then the small discount Tharisa trades at is understandable. Management have emphasised this discount (as part of the investment case) in almost every presentation without trying to explain why this discount exists (with the exception of the perpetual offloading of shares by mysterious sellers).

Impala 4x
Sibanye 3.4x
Royal Bafokeng 3.3x
Atalaya 3.8x
Tharisa 3.2x
Pan African 5x
Atalaya 3.8x
Kenmare 5.4x

Hey JMJones

Here are the factors which have lead me to sell 2/3 of my holding since half year results. The two themes are governance Iike you mention) and shareholder returns

- the huge overhang is making this feel like the personal fiefdom of the family. Does Tharisa have truly independent directors? Why do they keep shuffling unknown assets from the family into Tharisa (Salene/Karo). What do we really know about Salene in Zim?
- why have we seen such a constant period of selling with no notification? Where is it all coming from? I've been in this situation before where major holders with some kind of inside track to management seem to be abandoning the company leaving the small guys holding the baby. Has anyone seen an updated register?
- the company has indicated it will be prioritizing investing in growth projects (like Greece nickel or a new smelter) instead of shareholder returns. We literally know nothing about these projects.
- The world doesn't need a Karo. They are wasting money on exploration. It doesn't belong in Tharisa, it should be stand alone.
- The endless shareholder presentations regurgitating the same material over and over are starting to make the company feel a little desperate and rampy. They seem pretty busy patting themselves on the back about the record half year while the company is LANGUISHING BELOW THE IPO PRICE FROM OVER 6 YEARS AGO. Shareholder returns are big part of performance but they seem to have missed that
- The final kick in the teeth is the 14% half year dividend payout (below their stated goal, which is now full year goal by the way). If you look at majors like Rio and BHP since 2014 they have been prioritising shareholder returns (buybacks and huge dividends). If they had such a tremendous half why such a low dividend. They should have paid 25% if it was so good. Why didn't they?

Unrest has nothing to do with it. Impala/Sibanye +5% today so far

Feels a little bit of a leap of faith... hasn't been a trade over £1000 for 2 weeks, current spread is 1.25/1.42 and like last year could be no news until a trading update in December. I wonder if anything interesting will happen between now and then? Some acquisition or contract news would be most welcome

Ex dividend tomorrow, payment date 30 June

https://www.spglobal.com/platts/en/market-insights/latest-news/metals/061121-south-african-miners-hit-again-by-eskoms-power-cuts

Prices all over the place are wobbling. Rhodium back down to 21,000. The selling has intensified to almost desperate levels, yesterday was a barrage. There appears to be a seller/s which are becoming increasingly disorderly. Buying has dried up, not just here but most small caps, as the market loses confidence in the outlook and prepares for some painful range trading for the remainder of the year by switching to cash. And perhaps, like me, there are those that cant get over that measly 14% dividend payout. A company has one chance to back up its words with action and they fell short.

Hey Mike, I recall them saying that the recovery had fallen due to a higher level of oxidised material, perhaps the heavy rain meant ore was exposed for longer than normal. On the chrome tax, I don't think it will impact the price they receive. They supply China with over 80% of their chrome ore needs and China has roughly 4 months supply. There simply isn't enough alternative supply to get close to what they need from alternative sources in that time period. Turkey is the next largest but they only export less than 10%. of SAs volumes. Then you have Kazakhstan which I believe produces its own ferrochrome from its ore. And to get ore from NW Kaz to Chinese smelters is a very very long way overland.

I believe that the most likely outcome would be for China to bite it, at least for several years, but take some retaliatory action, probably by applying tariffs on some other commodities, iron ore or coal I suppose

A couple of highlights which I thought were most interesting:

"At Nasstar, Nigel took the business from being loss making on turnover of £2.5m to making an EBITDA profit of £6.4m on turnover of £26.1m"
It looks like Nasstar was used as a vehicle to acquire a number of small managed service businesses. I see that it was recently acquired for around £70m. It looks like they may be on the hunt for some acquisitions to try and replicate this strategy

"We are pleased to report material overhead savings versus the first half of the previous financial year. Through these reductions, these costs are now more closely aligned with the size of the business. Management continues to take steps to make the business as efficient as possible from a cost perspective."
They have really ripped out some admin expenses, 600K lower than the previous half. They seem serious about keeping costs under control. These are words that I like to read

Pretty much break even on a cash flow basis. Great base to continue to build some scale and make some acquisitions

I also agree its a good review and really highlights some birds eye concerns with the company. The stripping ratio discussion is pretty good.

Life of mine ratio is 9.6. It's confusing why stripping has recently almost always consistently been above this number. I'm still waiting for the day when stripping is below the life of mine. They always seem quite proud that stripping is above LOM. The pit redesign is supposed to be complete as far as I'm aware , so they shouldn't still be removing previously mined material. What is all this overburden that they are removing and how does it fit in with the mine plan? They call it a tailwind so we should assume that it will fall in the future and so will AISC, but when?

It similar with the discussion around the outside interest. If they had gone to the back of the annual report they would have found out that this relates to BEE…But despite not having done the most thorough research they do probably represent the reaction of the average (lazy) investor who doesn't get to page 96 of the annual report.

I think their point is that it's a messy structure and we cant calculate the impact with a high degree of confidence. Ultimately anything that makes a company more difficult to value will impact that valuation

They sound pretty uninformed and perhaps even silly but I can sympathise. I recall having this same issue with both THS and SLP in the beginning. It took me several months to work out what a tolling charge was and why realised prices were so much lower than market prices. But back then the communication with investors was nothing like it is now so the reason wasn't clear from the publicly available information. Now if you had listened to the 6 hours of presentations and many more of interviews you will probably have picked it up. It is a little opaque when you compare to TCRSs for copper refining. It seems the industry benchmark is to display net revenue, rather than gross revenue with tolling part of cash costs like copper. It can be calculated very easily so commercial confidence couldn't be the reason

Thanks for sharing that. He has really been churning out the interviews and calls after the results. I would have thought paying out a decent dividend would have been much more effective at sending the message. Not paying out even the full 15% after such a cracking half reminds me of those misers over at SLP

Hey fenynzz, the payout ratio is based on NPAT. not profit attributable to the owners (a different metric)

For comparison purposes:
2020 full year
NPAT = 54.95m
Dividend = 3.5c/share*269m shares = 9.42m

Payout = 9.42m/54.95 = 17.1%

17.1% is the number disclosed by Tharisa

Hey Visitor. Seems like the author of that article has done their homework. The policy is a minimum of 15% NPAT

NPAT = $75.63m
Dividend = 4c/share * 269m shares = $10.76m

Payout = 10.76/75.63 = 14.2%