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Another interesting Rh article here too:

Analysts deliberate whether auto manufacturers can tolerate high rhodium prices
https://www.spglobal.com/platts/en/market-insights/latest-news/metals/031221-feature-analysts-deliberate-whether-auto-manufacturers-can-tolerate-high-rhodium-prices

Whilst the article discusses "substitution", ultimately the bottom line is "Rhodium only PGM that can reduce NOx emissions".

Somebody's take on the Nornickel mine closures I didn't spot last week that is pretty interesting reading:

Palladium Short Squeeze: 20% Of Global Production Is Halted:
https://seekingalpha.com/article/4412407-palladium-short-squeeze-20-percent-of-production-is-halted

Nornickel should be releasing further news 16th March onwards when they hope their initial iniatives work in stopping groundwater inflow as per their news release of 9th March: “By now, one of the mine workings has been filled with hardening backfill mixture. In the coming week, once the mixture will harden, water valves will be shut and the inflow of groundwater should stop”, said Senior Vice President, Head of Norilsk Division, Nikolay Utkin. The Company is planning to consider the recovery schedule of the two mines once the current initiatives are completed by March 16th"

Bit of an update on Norilsk Nickel:

- Annual supply of Palladium is roughly 6.2m oz from mining, 3.1m oz from recycling
- Norilsk produces 2.7m oz p.a. and is pretty much flat y-o-y
- Norilsk's Oktyabrsky and Taimyrsky mines were partly suspended on Feb. 24 due to water inflow. From the below Reuter's article, it will not be until next week (article from 09 March) that Norilsk have "an idea of when it can restart two waterlogged mines". So it will only be next week that it thinks it can stop the water inflow and then understand what remedial works are required, let alone start remedial works!
- The Reuters articles quotes an analyst who believes "Nornickel could loose 4-5% of its 2021 output if the two mines are suspended for one month" https://www.reuters.com/article/russia-norilsknickel/update-1-nornickel-to-take-another-week-to-halt-water-inflow-at-siberia-mines-idINL1N2L70ZO
- Clearly it will now be over a month, so that could knock off 135-150k oz off a tight market. Separately Norilsk's concentrator is still idle after tragic accident that killed 3 workers. They've also just been fined $2.5bn for the Arctic oil spill.
- Norilsk's Feb 2021 presentation for its 2020 Accounts is pretty interesting on a few slides - market update slides 18 - 37. On slide 32, it shows PGMs ETF holdings. From Jan-2019 to now, Palladium oz in ETFs has gone from 750k oz to circa 550k oz, now only enough to cover 2-3yrs of 200k oz defecits. Norilsk, before mine closures, was also predicting a 200k oz defecit in 2021, whereas BMO & BASF from THS slides expect a small surplus.

https://www.nornickel.com/upload/iblock/ac1/norilsk_nickel_2020_fy_presentation_feb_16.pdf

Kitco is terrible with Rhodium prices, always way off. By far the best sources are Johnson Matthey and BASF, who are the biggest producers of catalytic converters in world and therefore biggest end-user of Rhodium

https://apps.catalysts.basf.com/apps/eibprices/mp/
http://www.platinum.matthey.com/prices/price-tables

catsick - good point and something i forgot to ask on NPV, IRR metrics etc. For Karo Resources which will obviously go through usual steps of PFS, DFS etc., the NPV and IRR at certain PGM basket prices will no doubt be stated. It would also be good to get this for other projects like PGM Smelting + Refining and potential Salene Manganese + Iron Ore. Even though THS already have a 1MW PGM Smelting pilot plant in operation, I would have thought a full blown complex with end goal to process circa 200K PGMs would cost far more than $10m?

Ragnar - not sure why I said interim div depends on Mar-May 2021 prices ignore that! Obviously only depends on final days of March! I have to admit I'm completely clueless on manganese too and only recently done some research on iron due to my research of FXPO.

bhama - the refiner's margin of course includes their work, overheads, admin to refine the product itself, so a 15% margin will not equate to that profit to refiners. For SLP it's even worse (although perhaps because they predominantly report on 4E basis) and the margin to refiners is anywhere between 20-25%. SLP aren't as open and don't report this, but it's relatively easy to work out when comparing SLP basket price versus SLP Revenue (difference being the refiner's margin). The THS dividend policy has always been clear regarding as a minimum 15% of Net Profit After Tax, albeit they have history of paying bit over in the 17.5% region. For me whilst the dividend is nice, it's always been more of a growth stock and I like the growth prospects of Vulcan to 2MT Chrome, 200k PGMs, Karo Resources PGM mega project. I'm on the fence on SA PGM Smelting + Refining and Salene Manganese + Iron until we know more details, but the former appears a good strategy (dependent on capex) to claw the 15% margin back and should work at most PGM basket prices. If you have 14yrs open pit + 40yrs underground, a refinery + smelter makes sense, but depends on the "payback period" and calcs for its viability should be set at a much lower PGM basket for "stress testing" purposes. But sure this is what THS management will no doubt be doing.

Presentation is now up on THS website: https://www.tharisa.com/ovr-presentations.php

Hi Ragnar - good to hear from you. I was looking at a potential 3.5% div yield for the Interims, but of course depends on metals prices for Mar - May 2021. Your 4.83p ends up being around 3.6/3.7% div yield at current share price, so we're pretty much aligned again.

At current PGM + chrome prices and with significant free cashflow being generated, I was thinking an NPAT of 15% for dividend was too low, but after today's presentation they have some major growth opportunities to get after they can fund organically. I could envisage they fund the PGM smelting + refining organically over the next few years, Salene Manganese + Iron dependent on purchase price for 70% equity and then utilize financing options for Zimbabwe Karo Resources PGM asset.

Yep it has been quality update and presentation was actually significantly updated since last one issued on website. They also incorporated most of my questions I submitted couple days ago into the presentation, albeit perhaps coincidence and they would have covered it anyway:

1) Open Pit LoM extended by 1yr to 2034/35 (14yrs left). We're already so undervalued so what's another year or here before THS moves to 40yr+ underground mining, but this is still great news.

2) Confirmation Vulcan Fine Chrome Project on target for completion by Sept 2021, meaning for next FY starting Oct-2021, 2MT p.a.

3) Salene Manganese + Iron is a producing cash generative asset which THS has option to acquire 70%. Currently producing 600kt Manganese & 600kt Iron Ore, but 2nd phase would double production of each.

4) PGM Smelting & Refining - THS appeared very confident on expanding the 1MW PGM pilot Smelter to cover smelting and refining of 200k PGMs annual production from FY 2023 onwards (Oct-2022), meaning they will receive full value of PGMs spot prices and claw back that 15% margin they hand over to refiners.

5) Karo Resources PGM Asset (26.8% THS owned, option to acquire further majority share) - 2 rounds of exploration have confirmed Zimplats data (as reminder Zimplats data was 96 Moz 4E resource (platinum, palladium, rhodium and gold) grading at 3.2g/t ), which will be incorporated into Pre-Feasibility Study to be released later in year.

Very comprehensive Q&A so I only touch on few of the points.

Just as reminder for all those with some spare time tomorrow, at 3pm GMT THS CEO Phoevos Pouroulis will be hosting a live interactive presentation via the Investor Meet platform:

https://www.investormeetcompany.com/tharisa-plc/register-investor

The last one I feel was very constructive and InvestorMeet allows you to submit questions beforehand or during the presentation. I've already submitted mine. I think presentation will most likely not be different to the latest one on website:

https://www.tharisa.com/ovr-presentations.php

I note THS Twitter says 1pm GMT, 3pm CAT, but the original RNS stated 3pm GMT and when I login to InvestorMeet it also states 3pm UK time, so i'm assuming 3pm GMT is correct.

A lot us here posting on THS have also been in SLP or still are. SLP was one of those life changing shares for me getting in 1st at 7-8p, but to spot value "for the here and now", it would be incorrect to solely look at the past to predict the future. SLP has now stagnated from a growth perspective - post Project Echo there is now no real way they can expand past the circa 70-75k oz of 4E PGMs (Volspruit paladium asset could be a good one, but don't believe SLP have the expertise). They can make lots of free cash at that level and pay dividends (although seem to think of any possible excuse not to!), but it's not clear how they can expand further, unless Samancor who they rely on decide to open up other sites, but even then they might not use SLP for new sites - it's slightly concerning the main II AAC (IMR) of SLP has been partially selling down, which from my last research was still owned by the 3 Kazakh oligarch owners of Samancor. But who knows who owns what when it comes to them.

THS on the other hand went through a huge restructure of moving from a contractor operated to owner operated model, with brand spanking new yellow fleet. This is and will to start to pay massive dividends (pun intended), on top of some very substantial growth prospects that SLP simply do not have:

THS mine life open pit to 2033, 40yrs underground thereafter v SLP 8yrs, possibly 10yrs
THS PGM production 160K 6E PGMS versus SLP 70-75k 4E PGMs (100k 6E PGMs)
THS Chrome 1.5MT, expanding to 2MT annualized by Oct 2021 and thereafter 200k 6E PGMs in 2022
THS has further expansion plans in SA (PGM Smelting + Refining) and Zimbabwe (Karo Resources 96 Moz 4E resource (platinum, palladium, rhodium and gold) grading at 3.2g/t)

Yes SLP does have lower AISC per oz and Capex, however through THS’ larger size and quantities, they are now making far more free cashflow than SLP. Last calendar Q4 2020 report already shows this with THS making $25m free cashflow in 1Q alone, when PGM basket was $2,400 and Chrome $136tn. Imagine now what the free cashflow would be at $4,000 and Chrome $180tn. This is far in excess of anything that SLP can generate based on their size. We will soon find, unless THS expedite growth opportunities through cash, that THS will quickly catch up with SLP’s cash position of $67m.

I would tend to agree a $4,000 oz 6E PGM basket may be unsustainable, but THS was undervalued when basket was $2,400 and the THS sp has not chased the PGM basket up. So a softening of the PGM basket should not scare anyone. The cash will soon do the talking. THS will release their next Q report on 12-Apr, Interims 27-May.

Back in the pre-listing 2014 THS statement, Rance Holding was listed aa a subsidiary of NWS Holdings Limited, listed on HK stock exchange https://www.nws.com.hk/EN/About-Us

Now whether Rance was sold since then post 2014, I couldn't say.

Wilsby - you need to knock off around 15% from the THS 6E Basket Price to take into account the Refiner's processing fees etc., but in turn THS is also now at a run rate of 160k PGM Oz p.a. So be more like:

1) PGMs: $3,900oz x 85% - AISC $1,000 * 160k 6E Oz = $370.4m.
2) Chrome: $170tn x 85% - AISC $100tn * 1.5Mt = $67m
3) EBITDA of $437m (before Capex, BEE Trust %, Interest & Tax if you want to get to free cashflow).

Pretty absurd valuation and whilst I don't expect PGMs to stay at $3,900 oz, even if THS' PGM basket was $1,000+ lower this is still grossly undervalued in my opinion. 1Q of these prices the free cashflow effectively pays for Vulcan Fine Chrome Project at $50m capex, which should be complete come Oct 2021 in time for next company FY and on way to 2MT Chrome.

How many ginger people are invested in HUM?! Pretty niche group...

THS twitter site is pretty active these days - regularly post the THS 6E basket breakdown + news articles. It's definitely worth a check now and again through the week. I'm not on twitter but easy to viewer it as normal on a browser

https://twitter.com/tharisa_sa

Hi Ragnar - it is bit leftfield, particularly when they're juggling Zimbabwe Karo Resources too, which is a monster PGM project if commercially viable and they did proceed 1st with open pit. After dividends, this is where I would like to see cashflow go, if the Pre-Feasibility study shows viable project(s).

I'm neutral on this leftfield news though - Tharisa is part of a Consortium/ JV, so until we know their % in the JV, they could end up just being a silent JV partner with exposure to nickel, which could be a good thing. If you look at pg.13 of THS presentation yesterday, they believe nickel, copper and cobalt have the best fundamentals in the industrial metals space, with chrome close behind.

Are you concerned by leftfield nature of it, or that the Consortium may overpay due to the buoyant nickel market? I've been looking for quality copper and nickel plays to diversify into myself, however will only go for producers. Perhaps THS will end up ticking the nickel box too?

799 - here's the powerpoint presentation you can download and the event itself was streamed live on Youtube - link below to that. Theo was on first.

Thanks Sarah for hosting event - very good presentation from Theo and Ilja (Head of IR & Comms) confirmed she would be happy to clarify any questions not answered (there were far too many to cover after the presentation, which showed lot of interest)

https://www.proactiveinvestors.co.uk/upload/SponsorFile/File/2021_02/1613658168_20210218-This-is-Tharisa-February-2021-Proactive-One2One-Virtual-Forum.pdf

https://www.youtube.com/watch?v=dm9Y5aihAJc

2 of 2 In Summary:

1) THS production exceeds PAFs: THS 230-240K PGMs Eq. Oz versus PAF 180 – 190K oz Gold

2) LoM and resources similar for their respective operations, however PAF on inspection is far more complex, requiring constant stream of new projects w/ operational risk that brings to maintain circa 180-190k oz

3) EBITDA & Margins: THS has a far bigger margin, $1,900 oz margin on PGMs versus PAF $720 oz Gold, even if PGMs soften from these heady heights. This difference is stark when comparing EBITDA of THS at $364m versus PAF $137m.

4) The difference in Cash positions is $70.3m (£51m) in THS’ favour. On top of that, difference in “Trade Balance” is $92.2m (£67.3m) in THS favour.

THS is far more profitable than PAF with LoM just as sustainable, if not more with THS’ 40yrs underground mine after open pit to 2033. At very least it should be same market cap as PAF normalized for cash + trade balance positions: £422m + £51m + £67.3m = £540.3m, or share price of £2.01. But ultimately with a far larger EBITDA and better growth prospects, it should be larger market cap than PAF by sizeable margin.

Both companies in SA, subject to same BEE Trust positions, tax etc., so for comparison purposes haven’t “deep dived” those respective areas.

Separately SLP is now £328m, almost on parity with THS at £344m. I know many of us or our friends/ family remain invested in SLP but this is just madness. THS has x2 production, x5 LoM, better growth prospects (Vulcan increase Chrome to 2MT, push PGMs to circa 200k + Zimbabwe Karo Resources). It should be at least x2 SLP, even taking into account SLP’s large cash pile. In fact when you think THS should be at a premium to PAF as per above and should be x2 SLP, both comparisons do start to converge on £650m market cap for THS (£2.40+).

Then separately without comparing THS to other companies, when it currently trading at both PE of less than 2 and free cashflow ratio to market cap of less than 2, a doubling of sp only brings THS to x4 on both metrics, for a company with 12-13yrs open pit + 40yrs underground life + expansion projects.

When SLP release their Interims, I’ll do another THS v SLP similar to above.

1 of 2: In quiet periods of no news (although THS is speaking at Proactive Event tomorrow), I like to try my hand at "back of the packet" comparisons. So for today with Pan African Resources (PAF - SA gold miner) releasing their Interims, being in SA and similar size to THS, I thought I would compare them on the main metrics I look at:

THS
1) Market Cap: £344m
2) Production: 160k oz p.a. PGMs & 1.5Mt Chrome, which is 230 – 240k Oz “PGM Equivalent Ounces”
3) Margin:
a) PGMs: $2,900 ($3,400 basket x 85% to take account of refiner’s fees etc.) - $1,000 AISC = $1,900 oz
b) Chrome: $140 ($165tn chrome ore x 85%) - $100 AISC = $40tn
4) EBITDA: $364m, of which PGMs $304m (PGMs $1,900 x 160k oz) & Chrome $60m ($40tn x 1.5Mt)
5) LoM: Open Pit until 2033, thereafter Underground Mine 40yrs+
6) Capex: $50m p.a. of “Stay In Business” SIB Capex & for FYE Sep 2021 $50m for Vulcan Fine Chrome
7) Expansion:
a) Vulcan Fine Chrome Project ($50m), increase Chrome to 2Mt, which through economies of scale should reduce Chrome AISC as well as increasing production. So could add circa $40m EBITDA.
b) Zimbabwe Karo Resources (26% THS ownership but can be increased) 96 Moz 4E resource (platinum, palladium, rhodium and gold) grading at 3.2g/t. 32.4 km of drilling to average shallow depths of between 50 and 150m, to identify open pittable resources, awaiting Pre-feasibility study
8) Net Cash: US$5.1m (calendar Q4 2020)
9) Trade Balance (Receivables – Payables): $55.2m owed to THS (FYE Sept 2020)

PAF
1) Market Cap: £422m
2) Production: 190,000oz Gold
3) Margin: $1,820 - $1,100 AISC = $720 oz. On AISC, in last 6 months PAF AISC was $1,252. Their goal is $1,000 which I do not think they’ll achieve, but do think they will improve upon the $1,252.
4) EBITDA: $137m ($720 x 190k oz)
5) LoM: Barberton (65-70k oz, 20yrs) BTRP (20k oz, 2023 + potential 6yr extension), Elikhulu (60k oz, 2031), Evander (30k oz, 2-3yrs + potential extensions through new shafts)
6) Capex: to ensure “steady state around 180k oz”, PAF have revolving list of projects, shafts etc. and appear to spend ZAR 600m ($40m) per year on average.
7) Expansion: Egoli (circa 70k oz p.a. LoM 9-14yrs), financing of ZAR 1.2bn ($83m) to fund construction over 2.5yrs (this will plug some of gap of short mine life above, not lead to direct increase of 70k oz)
8) Net Debt: US$65.2m (on top of this, taking on further debt for Egoli expansion above).
9) Trade Balance (Receivables – Payables): -$37m owed by PAF (Interims End Dec 2020). Includes liabilities PAF don’t include in Net Debt.

THS are presenting as part of Pro-active's One2One Virtual Investor Events this Thurs 18-Feb from 18:00hrs:

https://www.proactiveinvestors.co.uk/register/event_details/318

I just registered now myself

Hi Jdevereaux - I think it can get quite technical from accountancy perspective, incl. perhaps past credits/ deductions and other factors etc. (e.g. capex paid 100% by THS Group, but not 26% BEE trust under Tharisa Minerals Proprietary Limited and therefore will offset/ reduce the profit + income of the 26% proportion accordingly, ) and inter-company transfers/ reconciliations as THS Group (Arxo or another segment) will sell on behalf of other THS companies.

For example, the 2018 Accounts Profit was $51m, of which $2.5m was "non-controlling" (4.9%). In 2019 Net Profit After Tax (NPAT) was $8.4m, "non-controlling" portion was a loss of $-2.2m. And 2020 as we know NPAT was $55m, "non-controlling" $11.7m (21%). I think the 21% figure is probably closer to "steady state" actuals in years of limited reconciliations/ deductions etc. May be one to ask them on the next Investor Call or other forum.

It's crazy isn't it, it's like we're not a 160k oz p.a. PGM producer with a record 6E Basket Price of > $3,400!!!