First profit for Tharisa as new mine aims at steady state output

THARISA, a platinum group metals (PGM) and chrome miner, posted its maiden annual profit as its new mine neared steady state production.

With the revenue stream from each of the commodities that can be offset against the cost of producing the other, Tharisa executives feel they can weather the continued weakness in prices for both PGMs and chrome, especially if it reaches steady state output in its 2016 financial year as planned.

Tharisa reported a $4.6m profit on Wednesday for the year to September 30, compared with a $49m loss in the previous year as its PGMs output rose sharply. It did not pay a dividend.

Tharisa generated 118,000oz of six metals making up PGMs, an increase of 51% compared with the previous year, while its output of 1.1-million tonnes of chrome concentrates was 3.4% higher, despite an operationally difficult year.

The company, which operates an opencast mine not far from Marikana in North West, expects to produce PGMs next year at $380/oz, using the proceeds of chrome sales to offset the cost and achieving a minimum 10% reduction in costs.

Tharisa hopes to have a railway siding and 1.2-million tonnes a year loading station within two years at its mine. This would save the cost of trucking ore to the Marikana siding 6km away, said CEO Phoevos Pouroulis.

About 88% of Tharisa’s chrome is sent to Richards Bay or Durban for export to China and other Asian countries, he said. At steady state production, Tharisa will generate 144,000oz of the six metals making up PGMs and 1.5-million tonnes of chrome. It has an offtake agreement with the producer of chemical-grade chrome.

Mr Pouroulis said Tharisa was looking for an acquisition opportunity in platinum, chrome or steel-related minerals, but had not yet found the right fit.

Tharisa has current liabilities of $81.7m and assets of $71.4m. It has ring-fenced $10.6m to service debt if it cannot make a quarterly repayment on its bank borrowings. It had cash of $24m at the end of September.

To help bring the mine to a steady state, Tharisa has used mining contractors, who are more flexible with the fleet of equipment they use in different stages of development.

Once the mine has settled into steady production and the incumbent contractor’s agreement expires in five years, Tharisa could consider the economic merits of buying its own fleet and mining the deposit itself, Mr Pouroulis said.

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