Solid operational performance drives Tharisa’s H1 earnings higher

JOHANNESBURG (miningweekly.com) – Platinum and chrome producer Tharisa’s platinum group metals (PGM) concentrate production for the six months to March 31 increased by 15.2% year-on-year to 69 100 oz, as ore mined increased by 3.8% to 2.45-million tonnnes.

CEO Phoevos Pouroulis noted that the record solid operational performance underpinned the miner’s competitive cost advantage and demonstrated its ability to deliver “constant, quality results”, with Tharisa achieving a 5.4% year-on-year increase in chrome concentrate production to 636 800 t.

The higher production boosted Tharisa’s earnings before interest, taxes, depreciation and amortisation by 451% to $81-million, while headline earnings a share rose by 1 500% to $0.16.

The company expects its strong operational performance will continue in the second half of the year, with a focus on improving the run-of-mine chrome feed grades and continued improvement in recoveries for both PGM and chrome concentrates.

The miner on Tuesday said it was on track to achieve production of 147 400 oz of PGMs and 1.3-million tonnes of chrome concentrates, of which 300 000 t are specialty grade chrome concentrates, for the full year.

OWNER-MINED STRATEGY
Tharisa earlier this month reported that it had entered into a binding term sheet with MCC Contracts to buy certain of MCC’s equipment, strategic components, site infrastructure and spare parts at the Tharisa platinum group metals and chrome mine in the Bushveld Complex, as part of the miner’s intention to transition from a contract-mining to an owner-mining model.

Pouroulis highlighted that the company hoped to achieve the transfer of some 185 pieces of yellow fleet equipment, as well as the 900 employees at the mine, to its books by September 30, the scheduled long stop date.

In terms of the transfer of employees, Pourolis pointed out that the wage agreement previously reached with employees would be transferred, with the agreement currently being in its first year of a three-year agreement.

Under the terms of the agreement with MCC, Tharisa will also lease 14 machines, including drill rigs, excavators and off-highway dump trucks, from MCC.

Tharisa CFO Michael Jones added during the company’s results presentation that, if these leases were debt-funded, Tharisa’s debt-to-equity ratio would stand at 23.2%. “This is above our target of 15%, but it is still a very comfortable level, where, at the end of the prior year, we were at a 28.4% debt-to-equity ratio,” he said.

Jones further highlighted that the cost of a new fleet would be around $135-million, compared with the $23-million the MCC fleet is costing Tharisa. “Yes, it is used equipment, but it gives us a low-cost entry into the transition to an owner-mining model,” he stated.

Pourolis added that Tharisa had, over the last 18 months, worked on strengthening its in-house mining expertise. “We have been building our competencies with a strong mining management team, our own geologists, input supervisors and surveying and planning brought in-house. It was a natural transition for us to consider moving into the owner-mining model,” he noted.