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THARISA PLC - Production Report for the second quarter FY2021 ended 31 March 2021

Release Date: 13/04/2021 07:05
Code(s): THA     PDF:  
Wrap Text
Production Report for the second quarter FY2021  ended 31 March 2021

Tharisa plc
(Incorporated in the Republic of Cyprus with limited liability)
(Registration number HE223412)
JSE share code: THA
LSE share code: THS
A2X share code: THA
ISIN: CY0103562118
LEI: 213800WW4YWMVVZIJM90
('Tharisa' or the 'Company')


PRODUCTION REPORT FOR THE SECOND QUARTER FY2021(1) ENDED 31 MARCH 2021


Resilient production performance feeding into a strong pricing environment keeps Tharisa on track to
achieve full year guidance

Tharisa, the leading integrated platinum and chrome producer with operations in South Africa,
announces a solid quarter of production for the period ended 31 March 2021 remaining on track to
deliver on its annual production guidance.

Health & Safety
   - Industry-leading safety record with an improved LTIFR of 0.06 per 200 000 man hours worked
   - Currently no active COVID-19 cases
   - South Africa is at alert level 1 – the lowest risk level – with economic activity mostly normalised,
     with protocols and health guidelines in place

Key Operating Highlights
                                     Quarter      Quarter     Quarter     Quarter     Year on
                                      ended        ended    on quarter     ended         year
                                          31       31 Dec   movement      31 Mar    movement
                                      March     December            %      March            %
                                       2021         2020                    2020

    Reef mined             kt         1 233.2     1 234.3         (0.1)   1 131.1         9.0

    6E PGMs produced       koz          35.8         39.3         (8.9)      32.1        11.5

    Chrome concentrates    kt          358.4        372.3         (3.7)     310.1        15.5
    produced (excluding
    third party)


Footnote
(1) Tharisa’s financial year begins 1 October each year, and finishes on the following 30 September.
 
 Average PGM             US$/oz     3 290       2 399         37.1      1 822        80.5
 contained metal
 basket price

 Average metallurgical   US$/t        155         136         14.0       129         20.1
 grade chrome
 concentrate contract
 price


Metal Pricing
   - Average PGM basket price for the quarter increased by 37.1% to US$3 290/oz (ZAR49 273/oz) in
     Q2 FY2021 vs Q1 FY2021 and up 80.5% vs Q2 FY2020
   - Following continued strength in PGM prices post-quarter end, current spot basket price for
     Tharisa’s prill split is US$4 011/oz with spot prices for the major PGMs as follows:
            o Platinum             US$1 239
            o Palladium            US$2 630
            o Rhodium              US$27 823
   - The PGM markets remains tightly balanced, with a bias towards supply deficits, particularly given
     production constraints at some of the larger producers. Demand for all PGMs remains globally
     robust
   - Average metallurgical grade chrome price for Q2 FY2021 up 14% to US$155/t (ZAR2 304/t), vs Q1
     FY2021 of US$136/t (ZAR2 114/t) and up 20.1% vs. Q2 FY2020 of US$129/t (ZAR1 965/t). The
     current market price for metallurgical grade chrome is US$155/t to US$160/t
   - Demand for chrome ore remains healthy and Tharisa, despite the logistical bottlenecks
     experienced in South Africa, has been able to deliver its products. Prices are expected to remain
     elevated, in part to compensate for the increase in freight costs

Operational Overview
   - PGM production was up 11.5% year on year ('YoY') on a 6E basis to 35.8 koz vs 32.1 koz in Q2
     FY2020 but 8.9% lower compared to Q1 FY2021
   - Chrome concentrate production (excluding third party) was up 15.5% YoY to 358.4 kt vs 310.1 kt
     in Q2 FY2020 and marginally lower versus 372.3 kt in Q1 FY2021
   - Specialty grade chrome production was up 11.8% YoY to 85.6 kt vs 76.5t k in Q2 FY2020 versus
     93.8 kt in Q1 FY2021 (23.9% of total chrome production)
   - Mining volume has been impacted by exceptionally high seasonal rainfall, with severe lightning
     storms impacting in-pit operation time
   - PGM output was affected by a secondary mill motor failure impacting on recoveries
   - Operations at the mill have been restored to full capacity

Cash Balance and Debt Position
   - Tharisa had a cash balance of US$73.1 million (Q1 FY2021 US$49.8 million) at the end of the
     quarter and debt of US$41.7 million (Q1 FY2021 US$45.0 million) resulting in a positive net cash
     position of US$31.4 million
Guidance for FY2021
   - Guidance is maintained at 155 koz to 165 koz PGMs (6E basis) and 1.45 Mt to 1.55 Mt of chrome
     concentrates
   - COVID-19 remains a risk to the Company and our forecasts and guidance are premised on the
     current level of economic activity being maintained.


Phoevos Pouroulis, CEO of Tharisa, commented:

“Tharisa’s second quarter performance saw an exceptional safety performance underpinned by solid
production in what is traditionally our weakest quarter of the year. With the much higher commodity
prices, Tharisa was able to convert production into cashflow, shown in our increased net cash balance,
this while we are entering the major capital phase for the Vulcan plant which remains on track for
construction to be completed this financial year. Despite the combined headwinds of extreme weather
conditions as well as the ongoing impact of COVID-19 restrictions during the quarter, the continued
optimisation of our operations resulted in consistent mining, underpinning our strategy of generating
sustainable production from our long life assets. We enter the second half of the year on track to deliver
on our production guidance for the current financial year, providing a solid platform for further medium-
term growth”.

Paphos, Cyprus

13 April 2021



JSE Sponsor
Investec Bank Limited

Connect with us on LinkedIn and Twitter to get further news and updates about our business.

Investor relations contacts:
Ilja Graulich (Head of Investor Relations and Communications)
+27 11 996 3500
+27 83 604 0820
igraulich@tharisa.com

Financial PR contacts:
Bobby Morse / Augustine Chipungu / James Husband
+44 207 466 5000
tharisa@buchanan.uk.com
Broker contacts:
Peel Hunt LLP (UK Joint Broker)
Ross Allister / David McKeown / Alexander Allen
+44 207 7418 8900

BMO Capital Markets Limited (UK Joint Broker)
Thomas Rider / Pascal Lussier Duquette / Nick Macann
+44 207 236 1010

Berenberg (UK Joint Broker)
Matthew Armitt / Jennifer Wyllie / Detlir Elezi
+44 203 207 7800


Nedbank Limited (acting through its Corporate and Investment Banking division) (RSA Broker)
Carlyle Whittaker
+27 11 294 0061

About Tharisa

Tharisa is an integrated resource group incorporating mining, processing, exploration and the
beneficiation, marketing, sales and logistics of PGMs and chrome concentrates. Its principal asset is the
Tharisa Mine located in the South-Western Limb of the Bushveld complex, South Africa. The mechanised
mine has a 14-year open pit life of mine (LOM) and the ability to extend operations underground by at
least an additional 40 years. Tharisa is listed on the Johannesburg Stock Exchange (JSE: THA) and the Main
Market of the London Stock Exchange (LSE: THS).
Detailed Production Report

Safety
Safety is a core value, and Tharisa continues to strive for zero harm at its operations. An LTIFR of 0.06
per 200 000 man hours worked was recorded in the quarter which maintains our industry-leading safety
record.

The Company has a continuous education campaign to prevent complacency around the COVID-19
pandemic. For full details on all the preventative measures Tharisa has implemented, please go to
https://www.tharisa.com/pdf/covid-19/covid-19-presentation-of-compliance.pdf



                                                     Quarter     Quarter   Quarter on     Quarter    Half year
                                                      ended       ended      quarter       ended       ended
                                                     31 Mar       31 Dec   movement       31 Mar      31 Mar
                                                       2021        2020            %        2020        2021

 Reef mined                            kt            1 233.2     1 234.3         (0.1)     1 131.1    2 467.5

 Stripping ratio                       m3: m3           11.8        11.3          4.4        12.2        11.5

 Reef milled                           kt            1 345.2     1 413.7         (4.9)     1 166.9    2 758.9

 PGM flotation feed                    kt            1 023.9     1 080.3         (5.2)      872.4     2 104.2

 PGM rougher feed grade                g/t              1.41        1.43         (1.4)       1.37        1.42

 PGM recovery                          %                77.1        78.9         (2.3)       83.7        78.1

 6E PGMs produced                      koz              35.8        39.3         (8.9)       32.1        75.1

     Platinum produced                 koz              19.8        21.5         (7.9)       17.4        41.3

     Palladium produced                koz               5.4         6.8        (20.6)         5.8       12.2

     Rhodium produced                  koz               3.5         3.7         (5.4)         3.0        7.2

 Average PGM contained metal basket    US$/oz          3 290       2 399         37.1       1 822       2 823
 price

     Platinum price                    US$/oz          1 164         946         23.0         937       1 063

     Palladium price                   US$/oz          2 399       2 349          2.1       2 182       2 374

     Rhodium price                     US$/oz         21 521      14 621         47.2       8 760      18 354

 Average PGM contained metal basket    ZAR/oz         49 273      37 410         31.7      27 690      43 051
 price

 Cr2O3 ROM grade                       %                18.0        17.7          1.7        18.2        17.8

 Chrome recovery                       %                62.4        62.8         (0.6)       61.8        62.6

 Chrome yield                          %                26.6        26.3          1.1        26.6        26.5
 Chrome concentrates produced           kt              358.4       372.3         (3.7)     310.1       730.7
 (excluding third party)

   Metallurgical grade                  kt              272.8       278.5         (2.0)     233.6       551.3

   Specialty grades                     kt               85.6        93.8         (8.7)      76.5       179.4

 Third party chrome production          kt               49.5        62.9        (21.3)      54.7       112.4

 Metallurgical grade chrome             US$/t CIF        155          136         14.0        129         145
 concentrate contract price             China

 Metallurgical grade chrome             ZAR/t CIF       2 304       2 114          9.0      1 965       2 203
 concentrate contract price             China

 Average exchange rate                  ZAR:US$          15.0        15.6         (3.8)     15.3        15.3



Market Update

Tharisa’s unique exposure to the rhodium market given its favourable prill split has meant the basket
price received not only benefitted from the rise in the platinum price and steady palladium price, but
the demand driven push for rhodium during the quarter translated into a higher basket price of nearly
40% QoQ. While the debate remains around substitutability of platinum and palladium in the traditional
auto catalyst market, the ‘minor’ PGM metals have performed well and substitutability for these metals,
which is already experiencing a supply deficit, will not be easily attainable for some time, with the added
push by the semi-conductor industry underpinning demand and thus higher prices. Furthermore, Tharisa
continues to benefit from the weaker ZAR currency, which, while having staged a comeback, continues
to provide additional leverage to the PGM prices.

Stainless steel production and demand, and hence chrome demand, were at higher levels in China. Power
and emission controls curtailed production of ferrochrome most notably in Inner Mongolia. This resulted
in a deficit of ferrochrome and a rally in the price. Consequently, chrome ore enjoyed a strong rally in
price which tapered off slightly prior to the end of the quarter. Port inventories in China remained flat
despite the lower ferrochrome production.

While Tharisa has not experienced the rail transport challenges some larger bulk movers have
experienced, logistical bottlenecks remain and Tharisa has diverted additional chrome in-land logistics to
road transport. Furthermore, freight rates have moved higher as global vessel availability remains well
below those levels experienced prior to the outbreak of COVID-19 more than a year ago.

Operations Update

       Mining
       The second quarter of the year is seasonally the weakest for the Company, given the December
       break and inclement weather. The quarter under review saw unseasonably heavy rainfall affect
       the open pit operation, hampering the movement of machinery, while exceptional long lightning
       storms meant pit availability was affected. Nevertheless, reef mined was in line with the
       previous quarter at 1 233.2 kt (vs 1 234.3 kt), and with the supplementation of stockpile
       material, saw mill throughput at 1 345.2 kt (vs 1 413.7 kt). Run of mine stockpile material,
       excluding UG1 material, stands at 160 kt. Waste stripping remains ahead of life of mine
       requirements.

       Processing
       With chrome recovery taking place ahead of PGM recoveries in the circuit at both plants, the
       lower chrome output was a direct result of the lower mill rate with recoveries and ROM grade
       and chrome yield either in line or improving on the previous quarter.

       A mill motor failure at the one secondary mill in the PGM section of the Voyager plant, impacted
       recoveries and lead to lower output. The secondary mill circuit has been fully restored and PGM
       output should improve in the current quarter.

       Construction of the Vulcan plant is progressing on plan and budget with the current quarter
       entering major building milestones.


Outlook

Tharisa maintains its FY2021 production guidance of between 155 koz to 165 koz PGMs (6E basis) and
1.45 Mt to 1.55 Mt of chrome concentrates. COVID-19 remains a risk to the Company and our forecasts
and guidance are premised on the current level of economic activity being permitted by government
regulations.

The above information has not been reported on or reviewed by Tharisa's auditors.

Date: 13-04-2021 07:05:00
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