Member Info for ragnarlothbrok

Hey Mike, Yes indeed good to know. Regarding costs, overall when comparing H121 to H120 I dont think performance should be that bad. The inflation that we are all hearing about only really started kicking in as the global recovery gained pace towards the end of the half. And in general reports are that inflation is running at 5-10% for many industrial products

Electricity is 5% of total costs and the Eskom price rise only kicked in from April 1, 2021.
Salaries and wages are less than 20% of cost of sales and the wage agreement was concluded mid way through the half. I'm guessing that the agreement was between 5 and 10%.
Diesel will put costs under pressure as the oil price rises, but for now the price for H1 was lower than the comparative half last year.
I have no idea whats happening with the global reagent market but I'm guessing that it is experiencing pressure as well
Grinding media will probably be going up as well, reflecting soaring steel and iron ore. But this should make up a small part of costs.

We are also seeing increased volumes which will lead to unit cost efficiencies to offset the inflation. The ZAR is at similar levels as well.

H2 should start to see some more serious cost impacts as inflation starts to bite and the lower ZAR is for a full period but they are ramping up production so should continue to see continued cost efficiencies. Vulcan starts in 2022 which should substantially support the cost base next year with a near 20% increase in chrome recovery

Mike and TT, my numbers for H121 are uncannily close although we get there in a slightly different way...

PGM Revenue $184m
Chrome Revenue $90m
Total Revenue $283m
EBITDA $137m
NPAT $88m
EPS 24p
Dividend 5.8c/4.1p
6E PGM Basket $2,885/oz
Chrome $123/t

Regarding costs, I look on a total unit cost basis PGM equivalent and have allowed for a 5% increase from H220. I have made some detailed assumptions around this but this increase broadly reflects the new labour agreement, fixed diesel prices and other inflationary cost pressures. It would be prudent to allow for another $10m perhaps for unexpected costs.

I have not included a fair value adjustment, and confess that I never consider this in either the SLP or THS results as my calculations always proved to be too unreliable. But if I were to guess , it would add an additional $12m to revenue and EBITDA calculated as

work in progress inventory of 3 months sales = $82m
price uplift (average April/May = 15%
82 x 15% = $12m

Hi TBTT, I'm not opposed to investment in Zimbabwe, and would greatly favour there over an investment anywhere else in south/eastern Africa (with the exception of countries like Bots). I'm not a fan of this project though, too big, too complex and thus too risky, very long payoff and the reliance on the fledgling hydrogen economy is too great to support the fundamentals. If it was a base metal then great but it would take someone with truly great vision to see this project come into fruition. Tharisa has enough on its plate in my view

Gosh I hope theres a big seller... I for one am waiting for the opportunity to accumulate more in the 1.2s or even the 1.1s.

No trades today, none! Not often you see that is, even in the micro micro space... It would take an age to liquidate even a small stake.

That sales number you have quoted seems entirely realistic. If you look at the most recent trading update, signed TCV was 97% ahead of last year so at the most optimistic you could perhaps say sales are also 97%. I think that might be a little bullish and I would be happy with 25% sales growth, which would get to in excess of £10m. Companies like this go for multiples of sales, not fractions, so as long as that sales number has a high recurring element then we should be peachy. Even 1x sales would be 50% upside from this level

Hi TBTT, Its one thing operating a small gold mine, and another thing to build a massive PGM mine, power plant and processing complex. I would suggest taking a look at the Darwendale project http://www.greatdykeinvest.com/ as an indicator of what is required to get the project off the ground. Its maximum planned production is less than Karo (although a low level of confidence from Karo) and they aren't even building a power plant, with a total investment of $2bn. Karo is a good 3-4 years behind Darwendale

Karo should be interesting. The scale of the project is ambitious, almost ridiculously so. If it was in Australia or Canada I would be less sceptical but the government of Zimbabwe is on the hook for 50% so funding from their side is a real risk. Do they have any cash? Their side might need to be funded as well and repaid out of project cash flows

The project may be missing some involvement from one of the majors with deeper pockets, the Chinese or maybe the Russians. Also the impact of adding an additional 1mozpa+ PGMs could change the whole dynamic of the market.

I'm very interested to see the update in a few months

Yeah I think they prefer to reinvest in the business rather than buyback. Tjhe reason why the dividend payout ratio is relatively low. SLP was in a different situation given their lack of growth opportunities. In the shorter/medium term THS has:

- Vulcan completion
- Salene Zimbabwe
- Salene Manganese
- A collection of optimisation projects
- Smelter/refiinery
- Larco bid (Greek nickel). They're up against a real hodge podge in the bid so they have as good a chance as anybody

Then there is Karo.... that may require something later this year

A shame ruthenium is only 1% of gross revenue. Also a shame they couldn't do a buyback.. remember all those shares SLP bought back at what seems like crazy prices now (<40p)

Chrome at around $150/t so not a record basket but very healthy. The market looks to be getting tighter with China port stocks falling again last month, they are at the lowest level since at least mid last year since I have been tracking. Shipping hard to come by, I imagine the Suez incident put a dent in Turkey chrome exports to China. Turkey and SA control most of the seaborne chrome ore trade. I'm surprised the price is where it is given iron ore's meteoric run. I don't know why stainless steel hasn't experienced the same trend as normal steel.

ZAR also looking extremely strong which is unexpected.

I notice Jubilee's MCap is now 10% higher than Tharisa

1.17/1.32 for £5K... not for trading, sticky hands only. MMs don't want to touch this and you need to be committed. I wonder what is going on through the minds of those sellers of bits and pieces over the last week. I suppose tired of waiting for contract news. Current MCap £6.3m, market sees the equity in this business as being worth almost nothing. Anything could happen!

Its easy to get frustrated by the slow SP movement but look at the SP from April 2020. That is a magnificent, low volatility, steady uptrend with only one brief 10% correction after putting on 75% in a month. Any minor dips have been bought into almost immediately. We are poised here with an incredibly low valuation supported by record basket prices and an unbelievable cash flow yield, the complete opposite of the rest of the market which is starting to look a bit frothy in places. All this despite huge churn over the last few months, where have all the shares gone? We are an impatient lot but just sit back and enjoy

Hey TBTT, the basket for Q4, 1 month in, is 19% higher than Q3. And there may also be a bump in production levels. So bodes well for a further EBITDA boost next quarter

Rusty doing what he does, adding cash flow. And opening up another area to expand into. Should see a 5-10% rise in the dividend next year. For a company which has consistently increased the dividend since it floated, the yield is awfully high

How could they possibly be considering an IPO at 750m?!

The law firm that represented Princess Diana in her divorce is considering an initial public offering. Mishcon de Reya on Wednesday said it may list on the London Stock Exchange later this year, with a valuation of as much as 750 million pounds, according https://www.ft.com/content/73023d4a-5d6b-4148-bbae-401615e6fb95 to the Financial Times.

That looks punchy. Mishcon expects revenue of around 188 million pounds for the year to April 9. Its UK peers, such as DWF , are valued on average at 2 times sales including debt, according to Refinitiv data, implying a valuation of around half the mooted amount. Its partners want to more than double revenue to 400 million pounds in five years, an ambitious move given uneven revenue growth in recent years.

True, Mishcon has good pedigree, and no debt. But listed law firms can be tricky investments: aggressive expansion can backfire, and partners may struggle to get lucrative business under the public glare. Mishcon will use the money to shift its business to non-legal areas, such as consulting, which may have higher growth, but are also less tested. Caveat emptor. (By Dasha Afanasieva)

Hi Ian, Yes I concur with your numbers. I've got 48% for H1 and 56% for full year using current prices. What's even more interesting is the FCF yield, which is well north of 30%, even with the Vulcan capex this year. Next year I think is closer to 50%. You can compare that to the likes of many FTSE 100 which are in low single digits and that indicates some truly bumper dividends in the future. A lot hinges on price but we have an exciting volume growth pipeline as well which should have a materiel impact on unit costs.

I don't think the THS multiple will ever compare to the likes of Implats, Amplats an Northam. But with such relative underperformance say compared to Implats, which is up 40% this year, I think there is close to a 50% valuation discount, and something has to give. A 50% rise would still leave us at a 25% discount.

Fidelity selling down has greatly improved volume and liquidity. Actual spread is as narrow as I've seen it over the last year as well. A sell down from the Family would help I suspect but there is no way they would sell a single bean for less than £2.

Agree with TBTT, must be 1.5% of Fidelity to go. However, are any of the other large holdings going as well? Looks like Rance sold a few recently...

THS gross PGM revenue from Palladium is 8% at current basket (or 6% for full basket including chrome), and around 11% for SLP. It would be higher for both on a post refining base given the higher refining charge for Rh and Ir but I could only guess what that number is.

On a PGM gross revenue basis, THS is biased to platinum, SLP to palladium and rhodium is pretty equal with SLP a little bit higher. However SLP is higher for all PGMs and has overall better PGM exposure once you take into account the 25% contribution of Tharisa's chrome revenue.

While the PGM sentiment may float the SP, in reality palladium does not make enough a contribution to revenue to really move the valuation dial. I think the SP movement is mostly attributable to Fidelity selling down and the ebbs and flows in the SP mostly due to their activity

799Boy, It depends on the circumstances of the seller. I would consider Fidelity to be an orderly seller. They seem to be setting a limit above 140p and not forcing the price below that level. Saying that, demand seems very strong and volume, although down this week, is well above the average for the last year and supporting their selling.

I would contrast Fidelity's liquidation to that of Majedie in SLP which was a disorderly process. Majedie suffered huge fund outflows in the wake of the Woodford scandal and was forced to dump SLP in the 30s to meet member redemptions. I know of many posters (including me) who took advantage of Majedie's misfortune to accumulate SLP in the 30s and subsequently 4-bag it.

If Fidelity were to carry on like Majedie and desperately liquidate I would remortgage my house and sell my car to buy more THS stock

Chrome prices fell by $10/t last week to $152/t and are now down $25/t from their peak. Based on current prices revenue splits for Q3 are below. The narrowing gap between iridium and palladium is interesting!

- Rh 50%
- Cr 25%
- Pt 12%
- Pd 7%
- Ir 4%
- Ru 1%

camdenlad, my view is no. The relationship with Samancor and lack of reserve statement make valuation of SLP difficult and too risky. THS more likely, although the founders have a blocking stake so it would have to be very friendly. But Theo is still young and the vibe I'm getting now is that they are looking to build something bigger and more diversified and that Tharisa may be a good vehicle to execute this so my guess is thats its not for sale right now. They got a very good price for Eland some 15 years ago which shows that they may be willing to sell but THS is still trading below its IPO price and even without the Vulcan and 40kozpa incremental production in the near term pipeline its incredibly undervalued. So I don't think the price is anywhere near what they would be willing to sell at (which I would say would have to be close to £3)

Vulcan only recovers chrome, my understanding is that its basically recovering the chrome from the PGM tailings which the other plants spirals couldn't extract because it was too fine

Hi Catsick, I have seen a figure of R50/t, which is about $4 per tonne. This would be tailings material processed. I don't know what the recovery is for Vulcan, but if its similar to the other plants my guess is for costs around $15/t chrome produced. No additional mining or associated overheads though. From what I can see the process is closely guarded so I don't know what the additional cost relates to, but I presume its a combination of mechanical and chemical. Either way pretty high margin