Tharisa PLC (LON:THS) said its growth strategy remains on track after a first half that saw steady improvements in mined and processed tonnes.
Revenue in the six months to the end of March rose 61.2% to US$313.6mln from US$194.6mln the year before. The group said platinum group metals concentrate generated US$193.3mln of sales while US$102.1mln was derived from the sale of chrome concentrate.
Underlying earnings (EBITDA) shot up 243% to US$124.2mln, from US$36.2mln 12 months earlier, while profit before tax rocketed 498% to US$104.6mln from US$17.5mln.
Operating cash flow improved to US$104.9mln from US$39.7mln previously, leading to the company moving into a positive net cash position of US$29.8mln compared with a deficit of US$26.2mln at the end of March 2020.
The platinum group metals (PGM) miner has declared an interim dividend of four cents, which is roughly equivalent to 2.82p.
READ Tharisa ups production, benefits from strong platinum group metals prices
The company maintained full-year production guidance of 155,000 – 165,000 ounces of PGMs and 1.45mln – 1.55mln tonnes of chrome concentrates.
“All our major commodities, namely platinum group metals (PGMs) and chrome basket prices rose, as the world economy started to recover post the impact of the COVID-19 pandemic. With our favourable PGM basket, we saw prices trading at historic record levels breaking through the US$4,000 per Tharisa PGM basket ounce,” said Phoevos Pouroulis, the chief executive of Tharisa.
“Tharisa was able to convert its operating performance into healthy cash generation, leading to balance sheet deleveraging and an interim dividend higher than the previous annual dividend, bringing our total cash return to shareholders to date to nearly US$50 million, while also showing a net cash balance of just under US$30 million,” he added.
“Our growth strategy remains well on track, with Vulcan construction progressing as planned and Tharisa post-half-year announcing the consolidation of its ownership in Salene Chrome, a strategic building block to capture the significant geological endowment of Zimbabwe’s Great Dyke,” Pouroulis said.
Peel Hunt said it was caught on the hop a bit by the strength of the cash flow, which resulted in earnings being a bit above its expectations.
"Low cash tax payments (we had assumed the tax shield was fully utilised in the prior year) meant very strong operating cash flows of US$104mln. This meant the group closed the period with a net cash position of US$30mln," the broker said.
"Looking forward, the strength in PGM prices is likely to more than offset the rising freight costs for the chrome concentrate side of the business relative to our present estimates. We expect the business to strengthen its balance sheet further - despite a 2H weighting to capex spending. This we believe would allow the board to propose a substantial step up in dividends," it added.
The broker rates the shares as a "buy" with a target price of 220p.
Tharisa shares currently trade at 144p, up 4.4% on the day.
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