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THS has a 13yr open pit mine + 40yrs of underground mine, JORC standard auditable. With 165k PGM Oz and 2MT chrome p.a., that's 8.7m Oz of PGMs and 106Mt of chrome to be produced. To support such operation, tangible assets of near $300million.

However that is known and producing, unlike JLP copper. It's more valid to compare JLP's copper procurement to THS' huge 96 Moz 4E Zimbabwe Karo resource (platinum, palladium, rhodium and gold) grading at 3.2g/t declared by Zimpats in 2017, Tharisa is completing prefeasibility study, which is expected to be released in mid-2021. It may surprise even most of us LTHs here who thought it was "too big". From investor calls get impression THS will do it bit like bit and build it up incrementally like SA Chrome and PGMs. At these PGM prices they will have no issue funding 1st phases it organically + raising competitive financing... unlike some bucket shops.

JLP has an indeterminate amount of copper tailings not their own asset, terms not clear, some JV 60% to JLP not 100% as you are insinuating, some third party (who knows terms + margin), none JORC standard i'm aware of, not clear Capex and I would never trust JLP timelines or costs projections (capex or opex). History has shown both to be widely inaccurate. Through finishing Sable Refinery, Project Elephant and Project Roan, expect more "blue chip" placings/ conversion of CLNs.

Hi Ragnar - it's in the last RNS in the Detailed Report Section - Market update and metal production. After the "Investor relations contacts" which makes it look like the RNS is finished, but detailed section afterwards.

There was the little factor of a war going on in Azerbaijan and a number of employees, particularly technical/ engineering backgrounds, conscripted into the army. Coupled of course with ongoing COVID19. With end of the war, this should of course reverse and we should see production improve.

More importantly though:
- JORC updates in Nov already provided increase of mine life from 3yrs to 8yrs and further exploration to come

- Azerbaijan defeating Armenia has meant the return of the illegal occupied territories and Nagorno-Karabakh. AAZ hold huge amount of contract areas there: "Very significantly, in partnership with the Government of Azerbaijan, we will start evaluating additional development of our licenses in the restored Vejnaly, Soutely and Gyzilbulakh contract areas as soon as practically possible" .

- They have $38.8m Net Cash, no debt. They have huge amounts of money for aggressive expansion + dividends.

- Large exposure to copper (2,600 tns in 2020), which is now pushing to all time records of $8,000/tn. Copper out performing gold will push up the "Gold Equivalent Ounces" (GEO) and cashflow.

- Lesser new positive, but I'd always largely written off Ordubad Contract Area where significant positive drilling has occurred. It is in Nakhchivan which was cut off from rest of Az and you needed to go through Iran or fly to get there. Going through Iran brought logistical and cost implications, particularly any hi-tech equipment of sensitive nature. Now there will be a land corridor which will open up this area far more to AAZ. Likely though this may take a backseat to the re-opening of other areas.

How are RMM planning to achieve the 2% Cu grade when their resource on average is 1.7% and they've previously been mining circa 1.5%.

I understand from 2022 how they plan to get 2.4 - 2.5% by addition of an ore sorter, just can't connect the dots on how they get to 2% in 2021.

The Oct 2020 presentation states "mine grades to improve from historical 1.5%Cu to 2% based on updated drilling results, new resource model and new mine plan". Has the new resource model and mine plan been released to public? I can only assume pre ore sorter, the mine plan will focus on sections like Ming North Zone which appears to have grades consistently above 2%, but can't find exact details.

Notwithstanding keeping eye on COVID19 and safety of personnel as TBTT highlights and the company itself puts front and centre, this is a great update. They have also taken on board one of my requests at the investor telecon to include unaudited cash and debt metrics per quarter, which is great and I really do think it will make a difference to existing and potential investors.

You can't look at cash alone, you have to look at cash and debt and how the Net Debt position has changed. It is amazing that Net Cash/ Debt has improved by a whopping $25.9m in 1 quarter alone and we're now in Net Cash of 4.8m, from previous quarter Net Debt $21.1m. That was at 6E PGMs of $2,399oz and Chrome $136tn. We're now at 6E PGMs $3,000 and Chrome $145-150tn. You're looking at extra free cashflow of $20-25m at these prices and therefore could have quarters of $45 - 50m+ free cashflow (subject to how Vulcan Capex is phased).

They're also not holding back any Capex at these prices with SIB Capex circa $45-50m and ploughing ahead with Vulcan at $50m Capex.

A breather very healthy to allow new investors an entry point and now i've revisited my own corrected EBITDA/ free cashflow calcs, perhaps reason I didn't spot my initial error yesterday is it brings up still such a significant undervaluation I can't quite believe it!

Rhodium is now at $18,500! Palladium has pushed up 4% to $2,460, Platinum to $1,100 and Iridium $3,000. We're looking at a THS 6E PGM basket of $2,950 per Oz - another record. On basis THS have a circa 13% refiner fee to Impala (my calc only from data from the Accounts, not official), sale price due to THS is $2,560 Oz. ZAR has also weakened back to 15.

My EBITDA calc of $260m yesterday is now at $280m. If you want to get to a very crude "free cashflow" from EBITDA, SIB Capex of $45-50m per annum has to be deducted and for FY2021 only, the $50m for Vulcan Fine Chrome Project also has to be deducted. May also have interest on loans of circa $5-6m and Tax, however THS have so many tax credits it should be fraction of SA 28% corp tax threshold.

So we're looking at free cashflow of at least $150-170m and that's in a high Capex year with Vulcan Project. With THS market cap of £350m, that's only 2.8x free cashflow, put in perspective of 12yr open pit mine life, 40yr+ underground mine life, 10% dividend yields based on such FCF, increase of chrome to 2MT for FY 2022 and 200k PGMs p.a. On top of Zimbabwe Karo huge PGM resource, open pit and can be developed incrementally making it far more viable.

With my wrong calculation that lopped off 26% of EBITDA to $180-200m yesterday, I had a 12 month target of 180 - 200p for THS. With it corrected and based on EBITDA of $260-280m, I really don't think it's out of question to have 12-18 month target of 300p+ if it stayed at that EBITDA. However I do think at some point PGMs will take a breather and move back - although i'm not really worried by this as we just remain so undervalued. This EBITDA even for 2 quarters is transformational for THS, organically funds Capex expansion, yet still will allow THS to have strong Net Cash position by FYE 2021.

I assume JTD over-arching point is that the TSG board is now clogged up with posts that have nothing to do with TSG or Gold.

It's not helpful at all to existing or potential new investors. Take it elsewhere.

Yep you're right I regressed back to my old incorrect calculation in my cost model, sorry about that! It's of course 26% BEE taken at net profit level after tax, so for this purpose I should not be applying 74% at gross stage! On 8-Dec I correctly applied the 100% which is why I got Chrome EBITDA of $40m and PGMs of $220m for $260m EBITDA overall. Based on 1.5MT chrome and 160K oz 6E PGMs.

Funnily enough even with the recent increases in PGMs, my EBITDA hasn't changed, still at $260m. Chrome EBITDA has decreased by $10m due to ZAR strengthening (increasing AISC) and PGM EBITDA moved up by $10m - the significant PGM increase again partly offset by ZAR increasing AISC in USD terms.

Have to admit didn't see Iridium is now at $3,000! Normally only check JM these days which is still showing $2,600. Considering Iridium can't be "traded" (or at least extremely difficult to) and really is for end-users only, this move must have a strong fundamental basis. Long may it continue!

Hi Rax - thanks for posting the article. I have a Telegraph subscription and actually wrote a detailed comment back to this Article stating it was flawed analysis. Questor didn't take kindly to my analysis and removed my comment without any explanation. It's actually made me consider whether I will bother renewing my subscription.

My issue with the article is it mentions "fundamental analysis", then when discussing THS makes no reference to Rhodium or Palladium?!! They then give it a "hold" on the back of some pretty shoddy research and "fundamental analysis", downplaying THS' huge upside.

Hi Ragnar - I have estimate of $180-200m EBITDA, but I think it may be because of our different interpretation of THS' share of the PGMs and Chrome. The Annual Accounts seem to confirm that THS do indeed receive 74% of both PGMs and Chrome: "The principal activity of the Group is the exploitation of metals and minerals, principally PGMs and chrome, and associated sales and logistics operations. The Group holds a 74% shareholding in Tharisa Minerals Proprietary Limited (‘Tharisa Minerals’). Tharisa Minerals owns and operates the Tharisa Mine, an open pit PGM and chrome mine located in the Bushveld Complex of South Africa". Unless I missed something else in the Accounts of course clarifying situation further. I think you mentioned previously THS may receive 100% for the PGMs?

At $180-200m EBITDA this is still significantly undervalued, even taking into account THS pushing through to £1.30 -1.40 region so quick. It's like when SLP pushed through fast to 60p region from 30p... still didn't stop it pushing to 90p. If i'm wrong and EBITDA is indeed in $280m region, then it's even more significantly undervalued than I thought!

Rhodium has now pushed through to $17,700, amazing. Due to THS "yellow fleet" and open pit operations we know they're better placed than others to weather any future COVID related lockdowns or the like.

Very belated merry christmas and happy new year one and all.

Rhodium appears to have hit $17,000 as of today, brand new record, with Iridium up to $2,600 and palladium up by 4% today to $2,440. Even platinum is playing ball at $1,065. THS 6E PGM basket is now circa $2,770 per Oz. At these levels EBITDA would be in the $180million region.

Based on the Accounts Revenues THS retains far more of the PGM basket than SLP and JLP. For THS it's around 13% discount/ fee to refiner (admittedly per metal not sure what the split is) and for SLP it's around 20-23% (could be because they report on 4E PGMs etc.) JLP not so sure but in the past when I had major issue with their Quarterly reporting, their earnings figures highlighted a significant discount way in excess of SLP.

In long-term THS from the investor presentation and Q&A also appear to have plans for refining themselves to retain more value...

Good call by many on here that expected Iridium to rise - now at $2,550. Great to see other metals doing so well, as it de-risks relying solely on Rhodium motoring along at $16,650.

Wonder if Ruthenium will ever join the party?!

Yep a really good Q&A session, good questions and transparent answers - they covered all mine. I didn't write notes unfortunately (think it will be released on the investormeet company platform anyway), but the one thing that stood out without any need of notes was the ambition of 200K Oz for FY 2022 as you refer to Ragnar!

(2 of 2): Chrome FYE Sept 2020
Chrome Revenue: $161,267,000
Chrome Cost of Sales: $120,880,000
Chrome Production: 1,340,000Mt
Chrome Price Reported: $140tn
Chrome Price Achieved (Revenue/ Production): $120tn
Chrome AISC (Cost of Sales/ Production): $90tn

Assuming no change in Chrome Ore (increase in chrome ore production will counter any negative impact in Forex ZAR strength for purpose of this back of pack exercise) $30tn margin x 1.5million tns = $45million.

So even though I attack it in different way, my EBITDA of $265million (perhaps more like $245million assuming 10% reduction in PGM basket from these heady heights) probably isn’t too dissimilar from those here. EBITDA of course is not “free cashflow” so would need to take into account CAPEX ($100.8million for FYE 2021 incl Vulcan Fine Chrome Project), Interest on Loans (perhaps $5-7million) and Taxation.

So even with Capex there should be a huge build up in their cash position. One item I’m not too clear on is Tax – from Accounts I see their “tax charge” is significantly reduced due to all their “unredeemed capex”:

“The tax charge amounted to US$20.8 million (2019: US$2.8 million), an effective charge of 27.4% (2019: 24.9% charge). Cash tax paid amounted to US$3.4 million […] At 30 September 2020, the Group’s unredeemed capital balance available for offset against future mining taxable income in South Africa amounted to US$106.2 million”

(1 of 2): Ragnar – thanks for your detailed forecast – your $230m EBITDA is similar to my $245million. Whilst THS don't do a full-blown P&L breakdown by segment, on pg.88 Operating Segments of the Annual Report there’s a wealth of data by segment.

Whenever the Accounts come through I always try and recalculate the PGM and Chrome AISCs just for future forecasting purposes. The THS accounts are very informative that they provide this breakdown by PGM and Chrome, as well as their Arxo Metals Trading Arm which makes circa $3.5m gross profit but for this exercise I ignore that segment. I also recalculate the 12-month average 6E PGM Basket "Market Price" from Johnson Matthey (http://www.platinum.matthey.com/prices/price-tables) so I can then calculate the "discount" THS receives for their 6E PGM concentrate from Impala. JM is easier to use than BASF for this exercise as its user-friendly to see all previous monthly averages.

For October 2019 - Sept 2020 THS FY 2020, JM 6E THS PGM Basket Price pumps out a figure of $1,787 per Oz using THS % PGM breakdown of 55.1% Pt, 16.1% Pd, 9.5% Rh, 4.3% IR, 14% Ru & 0.2% Au (various other sites track gold). This compares to THS reported basket of $1,704 in the Accounts, but if you dig into the numbers you can actually see from PGM revenue number the actual PGM basket price THS receives:

6E PGMs FYE Sept 2020:
PGM Revenue: $218,619,000
Cost of Sales: $132,434,000
Production: 142,100 6E Oz
AISC (Cost of Sales/ Production): $932 (Forex ZAR-USD 16.2)
PGM Basket Received (Revenue/ Production): $1,538 Oz
PGM discount (JM basket $1,787 - $1,538/ $1,787) = 13% discount to PGM market price. I never use THS reported basket $1,704 for this exercise, as when I try and forecast future THS prices, I'm taking the "market" basket price from sites like JM. From doing this exercise on a number of THS Interims and Accounts, 13% is also pretty uniform, notwithstanding any fluctuations/ discrepancies due to delay between “production” and “trade receivables” (Impala paying THS).

Applying this to present day $2,649 Oz 6E PGM basket, sale price achieved by THS is $2,300. ZAR Forex has strengthened to 15.2 increasing AISC in $ terms, but this will be offset by higher production, so margin of $1,368 * 160,000 = $219million

From Investor Chronicle:

• Miner’s operating profit for 2020 rises more than three-fold on last year
• Full-year dividend of 3.5c, compared to 0.75c in 2019

Platinum group metal (PGM) miner Tharisa’s (THS) operating profit more than tripled to $88m (£66m) for the 12 months to 30 September as sales went up and costs went down. Platinum Group of Metals (PGM), including palladium and rhodium, traded at record prices this year because of demand in the automotive industry. Tharisa’s profit growth was driven by its basket price – effectively an average selling price for its PGM products – which jumped 58 per cent on last year to $1,704 per ounce (oz).

On top of the palladium price strength, rhodium’s heady price rise took it to just over half of Tharisa’s PGM revenue from 29 per cent last year. Averaging around $8,300/oz in the company’s financial year, the metal is now over $16,000/oz, driven by new vehicle emissions standards in China.

The company’s other product, chrome, had been a drag on first-half earnings, but this was more than covered by PGM strength. Chief executive Phoevos Pouroulis said he expected stainless steel demand to push up chrome prices in the coming year. Investors will be hoping this is right – Tharisa has restarted work on the Vulcan plant, which will increase chrome concentrate production by a quarter from 2022.

The company has brought back its payout after not handing out an half-year dividend to investors because of Covid-19 uncertainty. This payout level – barring any magical new source of palladium and rhodium appearing – will likely not be short-lived. Buy.

Last IC view: Buy, 59p, 22 May 2020

On Monday in the audio presentation for the Annual Report it was mentioned THS 6E Basket was now $2,500. However with Plat going back to $1,000, Pall $2,400 and Rh $16,100 since, it's circa $2,600 now. That's in comparison to $1,704 for FYE Sept 2020 and EBITDA of $113.4m.

For FYE Sept 2021 with production guidance around 12.5% more than 2020 (e.g. PGMS of 142k in 2020 compared to 160k guidance in 2021) and circa 50% increase in 6E PGM basket with Chrome unchanged, clear to see why some have huge EBITDA forecasts north of $150m. Should be no problem funding Vulcan Fine Chrome Project of $50m Capex organically.

THS presentation that complements the Annual Report and Audio posted is here:
https://www.tharisa.com/pdf/investors/financial-results/2020/annual/2020-annual-results-presentation.pdf

Yep happy here too and Ragnar appeared spot on with his more optimistic dividend yield of circa 3%.

At first I was bit disappointed that the Net Debt only reduced by $4million to $21.3million from 6 months ago in Interims, however as Ragnar mentions THS' Trade Balance has ballooned in THS' favour. Trade Receivables and the like due to THS from Refiner Impala is now at $116.3million, whereas Trade Payables and the like THS owed to Contractors etc. is $61.1million. So Net Trade + Contract Assets Balance due to THS of $55.2million. It's probably for reasons mentioned by TBTT and should normalize over time.

If you normalise Net Cash/Debt for this metric, THS is sitting pretty at $34million.

Like you folks say it's all about "power" and SA (Eskom) simply can't at present guarantee affordable competitive power, so I doubt THS would look to purchase + refurbish existing ferrochrome smelter. Possibly they would sign up to a tolling type arrangement if it made sense, but many entities may now be scrambling to do that.

I wouldn't be surprised if Fine Chrome Vulcan Project (Capex $50m) got suspended again because of the risk of the chrome export tax, along with other chrome producers cutting back more than they already have, thus export tax achieving exact opposite of what it purports (destruction in jobs and value). This cut/ threat to growth and thus employment opportunities may be what's needed for the SA Government to see sense - madness to apply an export tax in a chrome market which is depressed already and doesn't have infrastructure to follow through on "benefication". Kazakhstan would gobble up chrome market share. Perhaps naive but for me at present the chrome ore side of things in terms of THS valuation is "noise".

Even if Vulcan Project is again delayed and if due to chrome export tax, THS make no free cash on chrome but break-even (I forecast EBITDA on 1.5m tonnes of chrome is circa $20m at current chrome price of $135-140tn, so they do have headroom), THS can produce 155 - 165k 6E PGMs this FYE Sept 2021. Rh today is $15,900, THS 6E PGM basket price is now a whopping $2,554. Based on previous Accounts, I worked out roughly there is normally a 13% discount on Sale price to THS. So a $2,554 Oz basket amounts to $2,213 Oz to THS.

ZAR has strengthened a lot over last few months, now at 15.4 to USD. Based on this Forex, approximate AISC for PGMs is in $1,000 region (they do sometimes tweak the cost split/allocation between PGMs + Chrome so be interesting to see next set of Accounts end of this month and I'll re-crunch the Chrome + PGMs AISCs), so at present 6E PGM basket they're making $1,200 per Oz, applied to 155-165k Oz, is $139 - 148million EBITDA (once you apply THS 74% share).

So even if you assume chrome breaks even if the chrome export tax is indeed fully enacted, THS is valued at £213m when we could be looking at EBITDA of $139-148m. It's pretty crazy situation. Hell if the PGM basket loses 40% of value from here, EBITDA of $100m would still make market cap of £213m look pretty ridiculous, when THS should now be Net Debt/Cash neutral and has 13yrs of open cast mining following by 40yrs underground mining.

In long-term, the chrome export tax would decimate many SA chrome producers. THS with their hugely profitable PGMs business, would be one of the few that remain by the end of it for those without smelters. Eventually this could cause a significant increase in chrome price and actually help THS significantly. I really hope this is not the case though even if good for THS in long-term, as it's an extremely ill-conceived policy that will only hurt jobs, not create jobs.