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Can you provide a link to this claim of "resource nationalists" and that is one of the protestors claims for change?

Because there i was thinking they were protesting against weak economy, corruption in 30 seats in election result and lack of progress against 6yr fight against jihadists.

Out of country of 20million, a couple thousand came out to protest. Hardly the stuff of regime change. No matter the protests, Keita is following through with reforms requested by ECOWAS and the main opposition leader has already stated he wants change but OK for Keita to stay on. Keita needs to agree to hold elections again for the 30 contested seats, otherwise these low level protests will continue.

Vulcan Fine Chrome Project (expansion to main SA operations): on hold due to COVID19 and awaiting financing options. $52.8m Capex, however once complete will allow increase of chrome from current 1.45 Mt to 1.55 Mt capacity, to 2Mt. This and other final optimisations will also allow PGM capacity to increase from 155 - 165k to 200K 6E PGM Oz.

https://www.miningreview.com/platinum-group-metals/tharisa-minerals-vision-2020-on-the-cusp-of-realisation/ (good article but written in Jan 2020 before Vulcan was delayed)

Karo Mining (THS have 26.8% interest) - Zimbabwe:
1. June 2019 THS paid $4.5 million for a 26.8% stake in this huge Zimbabwe Great Dyke asset – est. to be able to deliver 1.36 million ounces of PGMs p.a. by 2024 (monster project). THS have option to acquire 100% of $4.2bn project, however haven't found full details on terms of this.
2. 96 Moz 4E resource (platinum, palladium, rhodium and gold) grading at 3.2g/t declared by Zimpats in 2017, Tharisa (as part of its US$4 million capital commitment to Karo Platinum) is under way with a prefeasibility study, which is expected to be released in mid-2020. This was prior to COVID19, so hopefully we could still see it back end of calendar year 2020.
3. Area of land was released by Zimplats in 2018 in support of the governments’ efforts to enable participation by other investors in the country’s platinum mining industry.
4. Tharisa has completed Phase 1 of its exploration programme, which entailed 32.4 km of drilling to the south-west, west and east boundaries of the licence area to average depths of between 50 and 150 m, targeting areas of outcrop of the reef to identify open pittable resources.

Salene Chrome (90% THS) - Zimbabwe:
1. Initially produce 5,000 tpm, or 60 000 tpa of lumpy chrome (production started Q2 2020), with the potential to increase production to between 10 000 and 15 000 tpm (which equates to about 10% of Tharisa’s existing chrome production from South Africa).
2. Potential to build a chrome recovery plant, which would be used to improve lumpy chrome grades from 40-41% to about 48% including the fines.

https://www.miningreview.com/platinum-group-metals/tharisa-developing-a-future-in-zimbabwe-through-two-project-acquisitions/

There's always the chance the Pouroulis family sell THS to a major just like they did with Eland Platinum to Xstrata Plc in 2007 for the equivalent of $1.1 billion. Karo is a monster project and far too large for THS, but I could see them taking up the option for 100% and then selling to a major or farm-in JV (a major new to Zim to deliver on the Government's original reason to force Zimplats to relinquish the prime real estate for new entrants).

Production (FY 2021 onwards):
- PGMs: 155 - 165k PGM oz, rising to 200k Oz annualised on completion of all “Vision 2020” (admittedly with delay).
- Chrome: 1.45 Mt to 1.55 Mt, rising to 2Mt of chrome concentrates (excl. Zimbabwe Salene Chrome (90% THS) which has commenced Ops and will add eq. of another 10%).

Life of Ops: 13yrs open pit (2033/34), 40yrs underground

Net Debt position (Interims 31 March 2020): $25.8m (cash $40.3m, debt $66.1m)
Trade Balance: $65.3m Trade Receivables owed to THS, compared to $39.8m Trade Payables, so positive balance in THS favour of $25.5m.

Margin/ Cashflow before Capex & Tax (assuming current market prices unchanged):

- PGM Sale Price: 6E PGM Basket Price = $1,869 minus 13% offtake agreement fee/deductions = $1,626oz
- Chrome Sale Price: at $138tn minus 27% refiners/ offtake deductions etc = $101tn

AISC: circa $909 Oz for PGM, $76tn for Chrome (based on ZAR 17). Through economies of scale AISC would reduce with increases in production, but increase if ZAR strengthens.

EBITDA/ Free cashflow (FCF before Capex, Interest & Tax):
PGM: 155 – 200k PGM Oz x ($1,626 sale price minus $909 AISC) = $111m – $143m
Chrome: 1.45 – 2Mt x ($101tn minus $76tn AISC) = $36m - $50m
Arxo: THS logistics/ sales/ marketing company usually adds another $2m profit.
TOTAL = $149m - $195m p.a.

This is before Capex, Interest & Tax, however on the latter, THS have $98.9m of “unredeemed capex” to offset against profit meaning tax will be negligible. “Stay in Business” (SIB) Capex harder to predict until Accounts hopefully give some guidance. FY2020 THS has spent a significant $64.4m ($21.9m planned for H2) upgrading fleet and optimising across the board. Land purchase, cont. fleet replacements could still be ongoing through 2021. But for now I’ll assume on avg. $30m SIB Capex + Interest p.a.

So above would be $119m - $165m, of which THS receives 74%, so final $88m - $122m.

With the near infinite mine life (13yrs open pit + 40yrs underground), dividend stock and huge expansion potential of their assets in Zim, a ratio of 8x FCF should be more than fair, providing $704m - $923m, £541m - £710m market cap (top est. reduced by $52.8m to take into account Vulcan Capex). The lower end would mean a valuation of over £2. If they can follow through on “Vision 2020” capacity, top end being £2.66 per share.

The 6E PGM breakdown was included in the FY 2020 Interim Results Presentation released 20 May 2020, pg. 13 of 30, which is 1st time I’ve spotted it and just for everyone’s info:

Platinum 55.1% ($965)
Palladium 16.9% ($2,190)
Rhodium 9.5% ($9,000)
Gold 0.2% ($2,000)
Iridium 4.3% ($1,645)
Ruthenium 14% ($270)

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

Above produces current 6E PGM basket market price of $1,869 per oz (over 15% increase on Interims 1H 2020 basket price of $1,612). However using the Accounts 2019 and Interims 1H 2020 to compare “market prices” versus THS realised “sales prices” (THS PGM revenue/ total Oz produced), there is usually a 11-13% discount/ differential. This is understandable as THS have offtake agreements with Impala & Sibanye for the concentrate. So at current market price, price to THS is circa $1,626. Their “AISC” in Interims was circa $1,030 based on ZAR at 15. With ZAR at 17, it would be more like AISC of $909 per Oz.

THS’ production forecast is circa 135k p.a. for FYE Sept 2020, however prior to COVID19, THS guidance after all the already completed “Vision 2020” optimisations was 155 - 165k PGM oz + 1.45 Mt to 1.55 Mt of chrome concentrates. Once final Vision 2020 upgrades/ extensions completed (e.g. Vulcan Fine Chrome Project for Capex of $52.8m), guidance will be 200K 6E PGMs Oz p.a. and 2.0 MT of Chrome Concentrates on an annualized basis.

In terms of Chrome, again using same methodology and analyzing the last Interims, the reported price of chrome of $138tn for THS appears to yield a chrome sale price of $101tn, so there’s a 27% discount/ differential between reported “market” chrome ore price and THS sale price. Not an exact science as the Accounts only include production figures not sales figures, but the two over a 6 month or year period should not be dissimilar, so close enough. The “AISC” in Interims was also around $87tn based on ZAR of 15. At ZAR of 17, this reduces to $76tn.

Hi Ragnar - I came to the same broad conclusions. If THS deliver on completion of "Vision 2020" (2021!), I roughly calculate EBITDA of $195m.

Have to admit didn't work out this FYE Sept 2020 - I looked forward past COVID19 on basis THS can deliver next FY on their guidance of PGMs 155 - 165k PGM oz and Chrome 1.45 - 1.55Mt at the very least, which provides EBITDA of circa $145m.

On dividend, I wouldn't mind too much if they reduced or skipped dividend again for 2021 until they get Vulcan Fine Chrome Project ($52.8m capex) out the way. I do note on their dividend policy: "dividend policy of distributing at least 15% of net profit after tax (‘NPAT’) and capital allocation to low-risk projects". So on the latter it could mean a reduced dividend, although I know they're also looking for financing for Vulcan.

I prefer to work out a “Net Free Cashflow (FCF)” Ratio rather than PE, but for SLP if you apply same ratio of x5 to “Net FCF” you get to similar valuation above:

Production: 68,000 (assuming “steady state” in current chrome market of 17k Oz PGMs per Q)

Life of Operations: 8yrs (would normally say 10yrs, with 12yrs+ in buoyant chrome market where Samancor are expanding operations and providing SLP more chrome tailings, however with Samancor reducing operations, it means SLP needs to increase dump material p.a. with lower grade compared to tailings, reducing both life and production). So this justifies a ratio of x5 which provides significant conservative discounted ratio compared to life of Ops.

SLP 4E PGM Basket Price = $2,275 minus 23% refiner’s fee & deductions = $1,750

All-in Cost (AISC + Capex): ZAR 11,500/ 17 (ZAR:USD) = $676

Free cashflow (FCF) = 68,000 x ($1,750 - $676) = $73m minus $18m tax = $55m Net Free Cashflow.

So as FCF is similar to Net Profit above, it actually will bring up similar valuation, albeit will be £255m market cap (93p). Again only based on SDO, does not include upside listed above.

However both valuations based on current shares in issue of 272million. Some of the 15m shares in Treasury will no doubt be issued as performance bonuses/ options over the years, but wouldn’t materially change the above.

Not sure if the "market" has digested the FYE June 2020 Net Profit (FY 1H 2020 Interims + Q3 & Q4 2020) of $51.5m based on 69,026 4E PGM, until they see it in B&W in the Audited Annual Report 2020 due to be released in September. If you took the Net Profit of $51.5m and PE of x5 (reasonable when life of production is at least 8yrs) + normalise for $55.9m cash you reach value of $313.4m (£241m market cap/ 89p).

That valuation would not take into account the fact cash position doesn’t even include:
- Trade Balance in SLP Favour: $29.7m owed to SLP (I’ve taken the Interims and updated for working capital movements stated in Q3 and Q4, but Audited Accounts will of course give more accurate update). SLP is unique compared to other producers/ miners who are normally the final “Client” and have large Trade Payables – SLP has the complete opposite and as the refiner is the final “client” in the chain, SLP has a huge trade balance owed to it from the Refiner (due to 4 month trailing payment from refiner to SLP).

- Volspruit palladium rich open-pit mine JV ($43m on the books, but more if all approvals secured and ready for sale/ dev. Liberum forecasted $50m disposal). DFS and studies, Mineral Rights all in place. They just need Environmental Authorisation and Water Use Licence.

- Recovery in chrome market and Samancor increasing production – other than open-pit chrome + PGM operator THS, I think private company Samancor are best placed to capitalise on any bounce in chrome market, specifically due to their symbiotic relationship with SLP. This would again ensure continued ops of SLP past 8yrs and even could increase production if Samancor expanded into Lesedi etc. This is more long-term 2+yrs down line.

- Due to large cash position and 7% interest SA banks pay out, SLP are now making circa $2m in interest each year.

- If SLP start paying a commensurate dividend (should be at least 5%+ with such a large cash balance), it will become "yield stock" too attracting other investors.

Hi Ragnar - THS open pits actually have estimated 13yrs left (2033), with 40yrs for the underground mine - PDF page 30 of the 2019 Annual Accounts provides a great little overview, as does the last presentation - the presentation even provides a THS 64 PGM basket split which is think 1st time I've seen them do this.

I've done a bit of a "deep dive" on THS on standalone basis as well as "THS versus SLP" basis just for comparison to explain why I went heavy on THS in the high 50s/low 60s share price and why it's now a bigger position for me than SLP. Like you I have struggled to find time to post, but will try and do so tomorrow, particularly as board is so quiet might be some new food for thought.

Whilst Chrome is struggling, no one is better placed than THS with its low cost open pits to ride it out than THS, even compared to SLP. Both THS and SLP are inextricably linked to chrome as you know: SLP through receiving their PGM rich tailings from Samancor (which will reduce in current climate) and THS as they of course produce both Chrome + PGMs. In fact "lower for longer" on the chrome front actually will benefit THS in long-term far more, as it will mean huge irreversible structural cuts in chrome supply and even before COVID19 entities like Glencore, Samancor and others were cutting production. At $130/tn, THS pretty much breaks even on the chrome, but of course still makes a huge profit on their 140k p.a. 6E PGM Oz. We also have to remember pre-COVID19 the guidance for THS was 155-165K oz of PGMs, increasing to 200K PGMs p.a. post "VISION 2020". This compares to SLP's 68-70K 4E PGM Oz p.a. in a world of low chrome, where they will receive less Samancor chrome tailings and use more of their "dumps" which have lower grade and will mean depleting life of operations (perhaps 8yrs instead of 10yrs in normal climate and 12yrs+ in booming chrome market). THS' mine life is more than double (13yrs open pit + 40yrs underground), before you even factor in their Zimbabwe operations. With 2x more mine life and 2x more PGM production, but factoring in SLP's stronger cash position, THS should be at least 3x market cap of SLP. SLP is currently £141m market cap, THS is £196m.

I think SLP remains significantly undervalued, particularly if they deliver on all ours and house broker Liberum's expectations for a dividend - however THS I believe is even more undervalued. But once I have more time will add more flesh to the bones tomorrow.

You have to take in D&A before you tax which will reduce the tax considerably. Additionally at present the minority government interest is 10% not 20% (they are still to pay the additional $10m for 10%) and I dont believe even kicks in from a profit distribution point of view until all Capex is recovered.

Would agree SLP Platinum Group Metals (PGMs) producer (£122m market cap) is a great company with some $45m cash in bank, but even better is larger PGM + Chrome producer Tharisa (£189m market cap). These 2 companies are the only 2 I would be looking at outside of gold miners, but THS pips it for me (1st time I've thought that in 3yrs when SLP has been chronically undervalued in comparison to others). I'm not confident SLP's Apr-Jun 2020 quarter will be very good and could be short-term weakness there, but who knows.

JLP I wouldn’t even utter in the same breath as all the other companies we’re discussing. It’s a bucket shop of continual placings with opaque “project earnings” that have no bearing to actual cashflow as they have so many costs and capex outside of this. If you cut through all the noise, JLP's 1H 2020 results show an improved Cash/ Debt position of $5.6m only, when it has a market cap of near £100m. One to avoid compared to the rest.

With the exception of HUM, I have to disagree on the other recommendations as being better bets than TSG.

SHG has circa 80K Oz per annum - at first one may say they have double the production of TSG and should be double the market cap. SHG being £127m and TSG being £79m. HOWEVER

1) SHG New Luika's Mine Life is only currently up to 2024 and that's already with recent extensions. TSG's is 2027 at the earliest and doesn't incorporate the recent additional exploration (“bonanza grades”) and the future exploration plan is clear as per recent presentation on their website, so no doubt will extend through to 2030. Whilst I believe SHG should also be able to extend into and past 2024, the way forward is not nearly as clear. So TSG is effectively double mine life of SHG.

2) TSG pays a dividend

3) TSG's AISC truly is AISC. SHG omit key cost items. SHG have a constant "development Capex" of around $4m each quarter. It's been nigh 3yrs since they achieved commercial underground production, it's ridiculous to still be logging such huge Capex - it is clearly Opex or Sustaining Capex and therefore should be included in AISC. This alone adds $200 per Oz hidden outside of AISC. When you add the VAT which is not likely to ever be refunded in its entirety, SHG's AISC is $1,000+

4) In this gold bull market SHG still have 23,048 Oz forward sales to work through at circa $1,260! That's $13m of lost revenue at current gold prices. They will close this all out in H2 2020 supposedly, which will be over 50% of their H2 2020 production. That means if gold stays at $1,800 which all other on-hedged gold miners like TSG will be realising, SHG's average gold price will be circa $1,530 per Oz.

5) SHG have a silver stream agreement so have negligible benefit on Silver. TSG has large silver quantities and will benefit from the rising silver price.

6) TSG's additional project Rodnikova with resources: + 1Moz at 5.3 g/t Au and 7.4Moz Ag is far superior to Singida in grades, size, mine life etc. and the scoping study is imminent. Additionally both TSG's mines are 100% owned whereas SHG do not own 100% of their mines and the Acacia fall-out and Mine Tax/ Ownership changes could still hit SHG. So it would not be correct to compare TSG’s Gross gold production (which is also it’s Net) with SHG’s Gross production, whereby due to % ownership the Net to SHG is less.

7) SHG’s Kenya acquisition still hasn’t yet diluted the shares in issue – another $7.5m worth has to be added, so actually the normalised SHG market cap is already circa £135m. Whilst Kenya is promising, it’s highly speculative and a long long way off, perhaps 3yrs+ if everything went according to plan.

As much as the western mainstream media may try and paint Russia as the bogeyman, from a gold mining business perspective history has shown it’s a very safe jurisdiction. Not so much with likes of Tanzania and “The Bulldozer” at the helm. Both undervalued with gold >$1,700+, TSG moreso.

Yep very good - in Q2 they have produced 6,028 oz from Vein 25 alone, so add that to whatever has been produced from the Main Zone and hopefully we should get a bumper Q2 result! Q2 result should be reported in mid-july according to this RNS, so perhaps late next week?

As you mention panda grades are exceptional > 50g/t and they have also found further "veinlets" so could be bigger than anticipated: "exploration works have discovered the ore body at secondary veinlet of Vein 25, which was not previously known."

Shows how important Single Mine Origin (SMO) initiatives are like Hummingbird promote. Being a WGC member also adds further legitimacy

The ability to launch share buybacks is a resolution for the AGM: "Special resolution 6: Purchases of own shares by the
Company". Although it has also been Resolution previously, but they're now in a far stronger position to act on it and so they should at this gold price.

In terms of shareholder queries, I also asked a question on dividends but probably from a different angle to GB because I still think it's still to early for sustainable divs - I asked whether they would be formulating a dividend policy as part of the 1H 2020 Interims (hopefully released August) and then maiden dividend 1H 2021. I personally would like to see:

1) AGM RNS which includes some pertinent info to some shareholder queries that would be "new info", including that they're formulating dividend policy
2) Dividend Policy as part of Interims released in Aug/Sept
3) Share Buyback(s) in Q3/Q4 2020 if we're still this undervalued, to protect against cheap hostile TO and to realise correct valuation. This can be ad-hoc and 1-time or at any time, unlike divs which need to be sustainable and consistent.
4) Dividend in Q1/Q2 2021

How is it a reverse takeover? Pasofino Gold are acquiring ARX and there is no mention in the notification that any ARX directors are transferring/ taking over the Pasofino Gold BoD nor what the acquisition cost is, which is strange. Surely Pasofino Gold shareholders are required to know how much it cost for them to acquire ARX.

It's far too early for a dividend and there's many reasons why they wouldn't pay one yet. I know we've all been guessing, but with COVID19 impacts ($100 increase to AISC which will be front-loaded in the year to Q2 2020), I do not believe like others we will go from Net Debt to Net Cash just yet - this will likely occur in Q3.

We need a cash buffer for "rainy day" unforeseen events like COVID19 2nd wave, operational/ regional issues etc., of at least 2-3 months working capital. We need to build cash to fund Kouroussa - it should not be 100% debt, that would not be in interests of shareholders, as ultimately we pay through the interest on that debt. If gold stays at $1,700+ 60%-cashflow 40%-debt would be better split.

I do think though that it will be right time to announce a dividend policy in the Interims for period ending June 2020 (Aug release). I then think if gold stays at $1,700, a maiden dividend should be provided in early 2021 (announced as part of Q4 2020 or Q1 2021 results). At these gold prices funding Kouroussa partly from cashflow and a dividend should not be mutually exclusive - they can both happen.

HI Ragnar - long time no speak, hope you're well. Are you aware of any websites providing relatively updated "real time" prices on Ferro Chrome/ Chrome Ore?

Very difficult to find any so whilst you can find news articles from googling and seeing the Chrome price was around $170/tn in early June, can't find anything to see what it is now.

That's not correct - the total number of shares in issue is 87m + 22.9m in treasury - prior to July 2019 buyback the shares in issue were 110m

Refer to Section 27 Share capital and reserves of the 2019 Accounts
"At the reporting date TSG had 87,158,508 ordinary shares in issue and held 22,894,565 ordinary shares in treasury"

I of course agree with sentiment though that TSG is extremely undervalued if they hit their targets for 2020 and achieve higher grades and higher Q production as we all expect. Although I don't agree with comment on ALTN, but that's subject to separate thread and board! I'm in HUM, TSG, ALTN and SRB in that order of my investment sizes in each.

Cflather - they usually update the SLP PGM basket price every 6 months in the presentation that accompanies the Annual Report and Interims. It differs over periods as each SDO site has a different % of PGM splits:

http://www.sylvaniaplatinum.com/component/jdownloads/send/77-2020/454-updated-corporate-investor-presentation

If you jump to pg.19 of the last presentation, in top left you will see split:
Rh: 12.5%
Plat: 62.1%
Pd: 25.2%
Gold: 0.2%

However going forward Samancor who provide the chrome tailings which SLP process are reducing production at some sites, not others, SLP covering shortfall with dump material etc. so the split more than any other period could change from that in presentation.

There's also other major issues with SHG I was not happy with and ended up selling. They continue to have recurring large Capex costs not included in AISC - considering Underground Mine Commercial Production was years ago, it's bizarre this is classed as "Development Capex" and outside AISC when it should be Sustaining Capex and included in AISC. It is one of many reasons forecast cashflow never marries up with actual Net Debt movements.

Development Capex was some $20m in 2019, way over the Mine Plan - now in Q1 2020 they don't appear to even include Capex costs anymore, just the small footnote: "Development costs at the BC, Luika and Ilunga underground operations are not included in AISC."