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You have to wonder just how much of the 2020 BP write downs of some $17.5 billion of its assets will gradually be reversed and bolster the value of the company even further. This was at a time Brent was $37 and average forecast was only $55 barrel.

Article in Daily Telegragh Money with above headline, with analyst stating "Polymetal International, forecast to yield 9.8pc next year". The graphic actually shows POLY at 12.4% but think that's a mistake. Think they forecast 12.4% for Rio Tinto and 12.2% for BHP in article itself, but would think these forecasts for industrial metals miners more susceptible to major slowdown in China.

Baron - change can also happen far far slower than we all think too. As an example nuclear fusion has always been "10yrs away" for the last 50yrs! Still unclear where all the lithium and cobalt will come from to allow adoption of EVs en masse, where all the electricity will come from, particularly with continued development of Africa, South America, India etc. and their demand for energy, oil and gas. UK is a minnow in the grand scheme of fossil fuel demand, particularly going forward.

I'm very pessimistic UK can meet their 2030 targets, Europe their 2035 targets (automakers already lobbying to push this back by 5-10yrs), let alone rest of the world.

Thanks for posting the Proactive interview, would have missed it otherwise. Great to note:
- payback period for Vulcan Fine Chrome is only 2yrs (subject to chrome price). So considering Capex was $55m, Vulcan Fine Chrome alone will generate free cashflow of $27.5m p.a., possibly more or less depending on where Chrome price currently at $165tn goes from here.
- Gearing up to achieve 200K PGM oz p.a. over next 24 months (from current annualised 160K PGM Oz p.a.)
- Zim Great Dyke Karo Resources Implementation Studies complete, Resource & Reserve statements being declared, with THS coming to market shortly with update on that. As reminder under Zimplats which relinquished this Asset, they estimated a 96 Moz 4E resource (platinum, palladium, rhodium and gold) grading at 3.2g/t, declared by Zimplats in 2017.

I should add don't personally want a Takeover (nor do I think it's likely), as longer-term once the semi-conductor shortage abates, I think there is room for large capital growth + meaty dividends (particularly with bulk of Vulcan complete), but never say never and just thought interesting to put it in perspective compared to current THS market cap

Great news today on Vulcan and very well drafted RNS ticking all the boxes on production/ financial (effectively 20% increase in chrome production through efficiencies at minimal cost, pushing down overall chrome AISC per ton through economies of scale), ESG (increase in efficiency/ recoveries and therefore reduction in waste, carbon footprint etc.) and very importantly 90% of Capex in-country SA great for local content/ beneficiation. Just one of many arguments for Chrome SA as to why a Chrome Tax is terrible idea - it is energy costs that is the issue for ferro-chrome smelters, not the export of chrome ore.

With Vulcan being the only large scale plant to produce chrome concentrates from chrome ultra-fines, R&D in-house, with a great reliable large low cost open pit mine (2MT chrome p.a., 200k PGMs in future p.a., 14yr open pit, 40yr underground), it surely must be a prime takeover target for one of the big boys like Anglo American, Sibanye or Northam, for the right price if the Pouroulis family were interested. At very least must be on their radars! Pouroulis family sold Eland in the past to Xstrata (Glencore) and moved on to new ventures, so whether they do it again who knows. Any acquirer would be getting a great mine, great management and could apply large ultra fine chrome recovery plant proprietary designs to their own mine sites. Whilst everyone is focused on the demand side due to the autos semi-conductor shortages impacting autos production, longer term there's still a major supply issue with deep underground platinum, palladium + rhodium mines being near exhausted, uneconomical (particularly if we see Sotolo's prediction of Rh collapsing into the 1000s) and unsafe. Added to this if any imminent PFS and later DFS + BFS shows Karo Resources Zim Great Dyke site to be a huge open pit platinum mine as anticipated, they would be buying into this too (of course subject to usual Zim Gov approvals too) - which once again would be another open pit mine to replenish/ replace deep uneconomic underground mines. Zimplats (Impala) were forced to relinquish Great Dyke assets originally, which is why I mention the other major players as better fit.

It's interesting to note when Pouroulis family sold Eland to Xstrata in Aug 2007, it's resource was 22.7m Oz PGM open pit + underground with estimated production 280k Oz p.a. 4E PGM resources (wasn't even in production until later that year), PGM basket of $1,424 per oz Aug 2007. It was sold for $1bn. THS SA resource alone is 172 Mt in contained Cr2O3 and 42.8m oz PGMs, 200k 4E PGMS p.a. anticipated in future (currently circa 160K p.a.), 2MT Chrome, which at present prices is PGM Eq of > 125k oz, so in total >325K oz PGM Eq Oz, current basket of $2,440 per Oz. So on all metrics THS SA asset alone (let alone Zim Great Dyke) is superior to Eland with larger resource and higher PGM basket, THS is £281m market cap ($379m), compared to Eland sale of $1bn.

I'm with HL too and it's a bit of a joke you can't transfer your dividends cash from Income to Capital Account with the App. Still waiting on mine too...

You really are a bizarre person Gavster, as can be seen from your previous posting on the BP board. It's just complete lies PAF's PE is below 6 (I guess you incorrectly don't normalize for Net Debt) and I never said Evander makes up the most production, it makes up the vast majority of their RESOURCES. So PAF's actual economic mine life is far lower than the resources imply, hence it will always have a low PE coupled with being in SA. As for the report you mention, where do you think I took PAF's uncompetitive AISC of $1,200 and the huge Capex required for Egoli. Perhaps take your erroneous pumping elsewhere.

When you take into account PAF's Net Debt of $33m, their PE is actually over 6, which is about right for a SA mid-tier mining play and the associated SA risks. There's much better SA plays in the precious metals mining business with far lower PEs below 5 if you wanted to go down that route (THS, SLP) or even the larger PGM miners. So would not recommend PAF at all over a FTSE100 large cap like BP, which is far less risky play.

PAF have very high costs (AISC > $1,200) and the vast majority of their reserves are linked to incredibly costly underground mine Evander. They will need to spend a very large amount of Capex to get next Project Egoli up and running (which doesn't increase production but plug gaps).

It's not a joke at all, it's an extremely clear policy and makes no bones about clearly stating the lower of Net Profit OR free cashflow.

With very clear projections on Capex and growth particularly in 2022 & 2023 in the same presentation, it should be obvious to most there will be no divs until late 2024/ 2025, depending on gold price and repayment terms + timetable for any finance/loan packages. Who knows could be earlier depending on whether they go for financing/loans or a mix of equity.

Overall its a very good presentation, step change in both concise and detailed information and due to quality should have been a RNS if just to get more attention/ exposure.

Apart from market specific news on PGMs, Chrome and Semi-conductor chips situation, isn't much company specific news until:

1) 12 Oct - FY Q4 Production Report
2) 02 Dec - FY2021 Results
3) Zimbabwe Karo Resources news should be imminent according to last THS presentation, whereby 2 stages of exploration were already complete and studies were underway due for completion by FYE Sep 2021. Subsequent to this THS outlined 3 steps of "declaration of resource and reserve; Publication of implementation study; and Completion of financing package". Project focus on +10yr open pit mine life and Project execution and development within 24 months (pg.18 of THS presentation released 12-Jul-2021).

I assume you mean $100million not £100,000 p.a. Sotolo?! It's great you've kept board alive as I like others lurk everyday, but with no company specific news I haven't really posted and with 1st travelling and now family issues, haven't had time. You still appear to be rather prone to daily panic/ hyperbole on the negative side, which feels like you're over-invested/ over-leveraged and worry excessively about each and every gyration. I see you've given both barrels on here and ADVFN! THS is my largest holding, but with large holdings in other high dividend paying companies (BP, RDSB, POLY, FRES, FXPO etc.), many other minnows (ALTN, SLE, SRB, AAZ etc.) and cash on sidelines after trimming my FXPO position, I try to tend not to panic.

No one "poo pood" your concerns Rh will fall further, I did however poo poo your contention it would fall to the very low 1000s again, $2,000 as you state on ADVFN. Whilst the autos semi-conductor chip shortage is going on longer than anticipated, particularly considering earlier financial articles a couple months back stating autos production could be back to normal by late Q3/Q4 2021, this now looks to be pushed back to 2022 for normality. So let's see if your prediction is realized.

I also think it's more constructive putting the declines in to correct context, rather than solely to panic:

a) THS has market cap of £288m ($397m)

b) THS has Net Cash position of $41.8m (end Jun-21) and Trade Balance in THS favour of $76.8m (end of Mar-21). That's a combined total of $118.6m (albeit fair value calc for trade receivables would have reduced due to PGM basket change).

c) Looking forward to FYE Sep 2022 based on these current PGM ($2,500oz) + Chrome Prices ($175tn) and their respective production (160k PGMs and 2m tns Chrome), THS will have earnings of $100m from 6E PGMs and $95m from Chrome = $195m.

d) Taking into account D&A/ Stay In Business (SIB) Capex of $50m (largely same/ 2 sides of same coin), SA Tax (26%) and BEE interest of 24% in THS Minerals, THS Net Profit would be circa $82m. Considering Vulcan is now also nearing completion, bearing in mind other Growth/ Expansionary Capex (different to SIB), free cashflow going forward may not be dissimilar to THS Net Profit. Of course we have Zimbabwe assets and other SA assets, but assume proceeding with Zim assets would be subject to separate financing, after we receive updated technical studies.

So taking into account THS Net Cash + Trade Balance ($118.6m) and THS Net Profit $82m, THS is on a Forward PE of less than 4 based on current PGM + Chrome basket.

At these oil prices the $1.4bn buybacks are intended to be every quarter though, so it will eclipse any staff incentive schemes

Iron Ore CNH100 spot on IG Markets is up whopping 6-7% today. Perhaps the bottom in iron ore is in, however let's see what market makes of US Fed at Jackson Hole this week and ongoing China supply-demand dynamics.

In an article mainly on oil prices, Goldman covers many commodities incl iron and seems to think bottom could be in:

"we expect an improvement in China’s steel demand trends in Q4 (vs Q3) though the trend will be closer to flat y/y into next year. In this context we also see iron ore as oversold after a near 30% fall. A combination of improving steel demand, policy developments and a stabilizing physical market should act as upside catalysts for iron ore."

https://www.zerohedge.com/markets/why-goldman-sees-oil-hitting-new-highs-after-recent-rout

Of course take Goldman with pinch of salt, don't trust much of what they say, but on commodities they're not too bad.

1) What big institutional investors (plural) are you referring to? FIL has been selling down and has been selling a number of miners across their portfolio for long time now - who knows if they're now out/ stopped. Rance Holdings % has not really changed over the years and fluctuates between 14-15%. Fujian has gone from 7.2% in Sept 2020 to 10.2% as of last update in July 2021. We also appear to have new II in Maaden at 3.8%. I'd be far more worried about Africa Asia Capital selling down their holding in SLP.

2) THS are expanding into Zimbabwe and we're due update imminently on Karo Resources, a huge PGM project. On metals THS is in both PGMs and Chrome. You mention SLP being a better investment than THS, yet they're far less diversified, so it's a strange contradictory statement to make. SLP are in PGMs only and SA only, with no way to expand. They are also solely reliant on Samancor who provide the Chrome Tailings, whereas THS operate their own mine.

3) THS has an Investor Relations Rep and social media is only 1 part - THS provide useful update on their twitter, on market intelligence and the company itself, it hardly has an obsession. What I would like to see though and maybe they perform this already, SLP did a great job twice a year behind the scenes of performing "road shows" presentations in London across major IIs/ financial institutes as part of their Interims and Financial Reports release.

I said at the time when THS and SLP had the same market cap it was absolutely ridiculous and not based on any fundamentals. And here we are with this downturn in the market and THS have held up far better - THS at £308m market cap, SLP £256m. Both undervalued in long-term, but still the gap between the 2 should be far wider. In short-term the markets are extremely choppy and concern seems to be building over Delta in Asia and Australasia. However long-term it may prove to be overdone and the FED and others Central Banks talk of "tightening" will soon reverse to the exact opposite.

Sotolo - you miss the point that in the world of low PEs for South African miners, THS PE is half that of its peers (PAF, Impala etc.) and irrespective of metal prices which move all these companies, should be 2x its current market cap. You keep banging on about "metals may be at peak" and you may inadvertently be right if Delta causes China to crash and burn, but once again that impacts all PGM and mining companies. Hell if China crashes, it will impact the entire global stock markets.

On dividend, I once again, partly, respectively disagree for number of reasons:

1) THS don't put "83% of profit back in the ground". THS dividend policy is 15% Net Profit After Tax (NPAT), but routinely pay out 17% which I assume is where you get your 83%. However the NPAT is before the Black Economic Empowerment (BEE) equity of the THS SA Minerals assets of 26%, so the 17% NPAT is more like 20-25% of actual free cashflow.

2) On your comment that "profit back in the ground may or may not give future returns", what is your opinion on Vulcan Fine Chrome which has capex of $50m, should add 500k tn chrome p.a. and $40m+ EBITDA p.a.?. Do you think that project's IRR "may or may not give future returns"? Or would you prefer just to get a big dividend and let THS be idle at 1.5MT chrome with no growth prospects? All miners need to grow or else stagnate and will all have their own internal IRR metrics to future proof and stress test projects versus metal price movements.

3) I completely understand Ragnar's frustration on the Zim assets as we don't yet have detailed analysis or IRRs for Projects, nor the SA Manganese or Greek JV which I do think are distractions, but very minor in grand scheme, however we will be getting studies, financing options very soon for the major Zim PGM Project and can make up our minds then. I personally believe THS' Zim asset which is likely open pit with very good IRR will be transformational. Is it likely to mean global oversupply of PGMs in long-term? Yes, but then it is the unsafe, underground PGM mines of the majors that would suffer, not THS.

4) On dividend, now THS are Net Cash, I would agree it should at very least be 25-30% NPAT and THS should still be able to fund its SA growth prospects, with Zim growth subject to separate financing. But I always find the impatience quite bizarre. It was not long ago THS was in Net Debt position and looking at developing Vulcan with financing options. I prefer that THS have built up a healthy Net Cash position.

Asking someone where a share price will be in 4 months time is asking them to predict where Rhodium, Palladium, Platinum and Chrome will be in 4 months time. What will happen to China with the Delta variant. What will happen with the semi-conductor chips shortages in autos which appear to have abated, the global health of the economy and USD. The best analyst at any investment bank with all the algorithms and insider knowledge would not be able to answer this.

PAF
1) Market Cap: £309m
2) Production: 195 – 200k oz Gold (less than THS’ 230-240k Oz PGM Eq Oz)
3) Margin: $1,730 - $1,100 AISC = $620 oz (less than half of THS’ $1,345 oz margin). On AISC, we really need to see PAF’s next set of financial results ending June 2021, but their aspiration of $1,000 is always out of reach, I do not think they can consistently achieve this, but do think they will improve upon the last reported $1,252 oz.
4) Forward EBITDA: $121 - 124m ($620 x 190-200k oz) (just over a third of THS’ EBITDA)
5) LoM & Resources: Barberton (70-80k oz p.a., 20yrs) BTRP (20k oz p.a., 2023 + potential 6yr extension), Elikhulu (50-60k oz pa, 2030), Evander 8-shaft (30k oz pa, 2-3yrs + potential extensions through new shafts), Resources of 37.6m oz, of which Reserves 10.9m oz. Not only is this already less than THS resources, but is far more complex and the bulk of these Reserves & Resources is Evander, an extremely costly underground mine and likely uneconomic. PAF constantly running into problems through the years due to complexity of their mine sites.
6) Capex: to ensure “steady state around 180 - 200k oz”, PAF have revolving list of projects, shafts etc. and appear to spend ZAR 700m ($45-50m) per year on average. So their SIB Capex is same as THS’ $50m
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$33.8m as of June 2022 (on top of this, taking on significant further debt for Egoli expansion or extending the Egoli development eating up more free cashflow). So THS Net Cash position circa $75m in better shape and generating cash far quicker than PAF.
9) Trade Balance (Receivables – Payables): -$37m owed by PAF (Interims End Dec 2020). Includes liabilities PAF don’t include in Net Debt. So THS books are $110m+ in better shape.
10) Dividend Yield: <4% and unlike THS with the “good problem” of investors complaining the dividend could be more generous, PAF to sustain production have lots of capex to fund and still Net Debt position, so may struggle to increase dividend, unless at detriment of balance sheet.

To say THS market cap should be x2 PAFs market cap on all metrics is bit of an understatement, but at a more general level not taking into account the superior THS resource (size, consistency, margin per oz etc. etc.) + expansion opportunities, doubling of THS market cap would align THS’ PE with PAFs, when it has the superior asset + expansion plans.

THS
1) Market Cap: £307m
2) Production: 160k oz p.a. 6E PGMs (aspiring to 200k oz) & 1.5Mt Chrome (increasing to 2MT from Oct 2021 onwards), which is 230 – 240k Oz “PGM Equivalent Ounces”
3) Margin:
a) PGMs: $2,705 ($3,128 basket x 86.5% to take account of refiner’s fees etc.) - $1,360 AISC = $1,345 oz
b) Chrome: $170tn ($180tn chrome ore x 95% for certain discounts/ fees) - $105 AISC = $65tn
4) Forward EBITDA: $345m, of which PGMs $215m (PGMs $1,345 x 160k oz) & Chrome $130m ($65tn x 2Mt). Haven’t even included the PGMs 200k Oz p.a. goal in this.
5) LoM & Resources: Open Pit until 2034, thereafter Underground Mine 40yrs+. Resources of 42.79m oz contained 6PGE+Au* & 172 MT IN CONTAINED Cr2O3.
6) Capex: $50m p.a. of “Stay In Business” SIB Capex & for FYE Sep 2021 $50m for Vulcan Fine Chrome (to be completed Sept/ Oct 2021)
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. Now imminent so I have included it in calcs above
b) Increase of PGMs from 160k to 200K Oz.
c) 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. Studies + financing options imminent.
d) Vertical downstream expansion to refine PGMs, capturing the 13.5 - 15% revenues lost by sending PGM concentrates to refiners like Impala.
8) Net Cash: US$41.8m (calendar Q2 2021)
9) Trade Balance in THS favour (Receivables – Payables): $76.8m owed to THS (Interims Mar 2021)
10) Dividend Yield: circa 6% and that’s arguably on a metric that can be vastly improved, subject to growth opportunities.

Ragnar - I completely agree a companies PE can not be viewed in a vacuum, which is why I always compare companies I invest in to others of its regional peers or indeed other peers if it helps. However in the correct context, I think normalized PE is the best way of valuing a company, taking into account geopolitical/ regional norms and key company attributes such as Life of Mine, Resources - Size, Quality, Consistency, Complexity etc. As an example, if you have a great gold mining company churning out profit, but only has LoM of 5yrs, the PE of course discounted should be far less than 5.

So whilst I agree with you on the broad strokes, I respectfully disagree with you on the application of this to THS. There's wide disparities between THS and its regional peers and simply lumping them all in as "PE <5 is far from unique" does a major disservice. There's a huge difference with THS being on a normalised PE of 2.5 versus PAF of nearer 5. For THS to revert to its peers of Impala and PAF, it would have to double in market cap for its PE to revert to higher end of 5. A heck of a lot of space in terms of peers being <5 when THS is at the lower end of that very wide grouping.

I'm not sure how you calculated THS' 3.2x PE, if this is normalised for its Net Cash position of $41.8m or if its forward looking based on current PGM and Chrome prices (your calcs are normally bang on, so I trust it is accurate based on the metrics you've taken it from), but I get closer to < 2.5 Forward PE and that's taking into account of course Net Profit, after Tax and BEE Interest 26%. I will admit I've plugged in 2MT Chrome now we're less than 2 months away from Vulcan coming on line and used most up to date PGMs + Chrome prices. Also unlike all of its mining rivals who are at the top of their supply chain and have very large Trade Payables deficits payable to Contractors, due to THS' current unique nature of providing concentrates to refiners, it is owed a huge amount of monies and has very large Trade Receivables balances in its favour of over $75m at last count (SLP of course has similar model) and is often overlooked on balance sheet. If this balance was correctly normalised, it pushes THS normalized PE down yet further to 2.

"The global semiconductor shortage we have been reporting on for the better part of the last year looks as though it could finally be turning a corner for the automotive industry. Smartphone production, however, may have to continue to suffer deficient supply until well into 2022, according to a new report by Reuters."

https://www.zerohedge.com/markets/semi-shortage-may-be-nearing-end-autos-overall-supply-will-remain-limited-until-second

The above article provides a good, relatively bullish update on autos supply concerns dissipating in the autos sector. Amid a complete collapse in autos production due to the semi conductor shortage in last few Qs, which in turn must have caused a collapse in catalytic converters and hence the raw materials, PGMs that went into them, Rhodium only went down to $18,000 area where it is today (a "higher low"). If autos production now returns to normal, what do you think that will do to Rhodium demand and hence pricing? There certainly hasn't been much increase in Rh supply that I can see, which remains inelastic. Rebound in autos production will no doubt take time and Rh could continue to creep lower, but I can see it recovering once more if this major supply disruption managed to only get Rhodium back to the $17-18k area. I don't think the "market" quite realises how tight both the palladium and Rhodium supply is, nor how overground supplies are near exhausted.

If the market was "right", no one would ever make any money. COVID has been awful for economies, lives and political decisions making the whole thing even worse, however it's created incredible opportunities in the markets.