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Tharisa: THE INVESTMENT CASE

Tharisa takes first steps into Zimbabwe with Great Dyke deals

Another change recently was for Tharisa to take over the running of the mine, which involved it buying the fleet from its contractor
chrome pipes
INVESTMENT OVERVIEW: THS The Big Picture
Platinum and chrome often come together

All miners are at the mercy of commodity price movements.

South African group Tharisa PLC (LON:THS) is a canny operator but even its earnings have been hit by a sharp rally in the value of the rand and a drop in chrome prices over recent months.

READ: Tharisa expands footprint in Zimbabwe with stake in Karo Mining

Production of both platinum and chrome rose in the six months to March, but net profits fell 44% to US$28.5mln, though cash generated rose to US$57.1mln. Tharisa also announced a maiden dividend of 2c.

Zimbabwe expansion

Interestingly, the company has also made its first move into Zimbabwe with the acquisition of 90% of Salene Chrome, located on the country’s Great Dyke platinum belt.

Salene has three special grants covering an area of approximately 95sq km on the eastern side of the Great Dyke, which entitles it to mine illuvial chrome at surface.

WATCH: Tharisa makes move into Zimbabwe with Salene Chrome acquisition

Tharisa is acquiring the stake from Leto Settlement Trust, a related party.

Leto will retain a 10% free carried shareholding in Salene and be entitled to a 3% gross royalty from chrome concentrate sales.

The Great Dyke of Zimbabwe contains the world's largest known platinum group metals and high-grade chrome deposits outside of South Africa, said Tharisa with illuvial chrome concentrations of up to 30% Cr2O3 at surface – essentially free dig.

Upfront costs will be nominal, though exploration so far has been insufficient to quantify accurately the value of the net assets. 

Salene will carry out trenching to determine the grade and build a pilot plant to test the deposits. 

Owner miner

Another change recently was for Tharisa to take over the running of the mine, which involved it buying the fleet from its contractor.

Tharisa chief executive Phoevos Pouroulis said the benefits were a greater direct control over the inputs into the processing plant.

This will minimise dilution and with the right feed grades going in at the right level, “should produce more product”.

Evidence of this came through in the latest half year as platinum production rose 11% to 77,000 ounces, helped by higher recoveries while the quantity of chrome rose 15% to 732,500 tonnes.

Karo Acquisition

Tharisa also has a 26.8% stake in Karo Mining Ltd, providing access to an extra 23,903 hectares in the Great Dyke, which is estimated to contain a PGM resource of around 96 Moz.

And the company isn't hanging around when it comes to getting the Karo project running, with chief financial officer Michael Jones saying Tharisa is looking to prove up the resource in the next 12 to 15 months, with big plans ahead.

WATCH: Tharisa PLC acquires stake in a 'once in a lifetime opportunity' in Zimbabwe

“If all goes to plan by 2023 we should have the open pit being mined” Jones says of the Karo project, adding that on preliminary indications, the mine should have an open pit life of 9 years before moving underground which could add a "40-year underground extension”.

Jones also wants to make a quick advance, given the warming political climate in the country: “The government of Zimbabwe … have clearly got an ‘open for business’ sign on the country as a whole, they are relaxing indigenisation requirements, they are looking at legislation that is more investor-friendly and also to attract foreign investment to kick-start the economy and employment … it is an ideal time to take an early mover advantage.”

Family-owned

Tharisa is 47%-owned by the Pouroulis family, a famous name in South African mining who sit behind London-listed success story Petra Diamonds (LON:PDL) among others. 

View full THS profile View Profile

Tharisa Timeline

Newswire
January 31 2018

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Another change recently was for Tharisa to take over the running of the mine, which involved it buying the fleet from its contractor

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