Tharisa pays out record dividend, eyes five good years for platinum metals

• The group expects continued good fortune as elevated chrome and PGM prices help it more than double profit in its year to end-September

Chrome and platinum group metals (PGMs) miner Tharisa has paid shareholders a record $24.2m (R388m) for its 2021 year, saying it is optimistic the elevated prices for the metals mostly used in reducing vehicle emissions will hold up for at least five more years.

Tharisa’s favourable metals mix, the development of new applications for PGMs, and strong global automotive demand were reasons for optimism, CEO Phoevos Pouroulis told Business Day, shortly after his company said it had more than doubled both its profits and shareholder payout for 2021.

Even as the global push to combat climate change through the adoption of electric vehicles ramps up, they may struggle to find traction in more rural areas, Pouroulis said. Tharisa also expects market developments in terms of other applications for the metals, such as hydrogen technology.

“I think the internal combustion engine is not going to disappear, but it is going to get cleaner and cleaner,” Pouroulis said.

PGM prices have been boosted by global car demand as well as supply disruptions, including flooding at Russian mines and load-shedding in SA.

Tharisa, which is also listed in London, operates a mine near Brits in North West and has two plants to recover chrome and PGMs, Voyager and Genesis. It also owns Salene Chrome, a development-stage, low-cost, open-pit asset located on the Great Dyke in Zimbabwe.

Revenue increased 46.9% to $596.3m in the year to endSeptember and headline earnings, the primary measure of profit that strips out certain oneoff items, surged 129.6% to $103.1m, allowing it to boost its annual dividend 157.1% to 9 US cents, a $24.2m payout.

Rhodium, which has pulled back from $30,000/oz highs notched up this year but still hovers around the record set before the pandemic, brought in 60% of Tharisa’s PGM revenue in 2021, from 51% a year before.

Even at current prices rhodium is high relative to its peers, while Tharisa also has the highest mix — 12% on a 4E basis, referring to a basket of four metals. The average on the UG2 reef was just under 9%.

PGM production of 157,800oz was up 11% and chrome production of 1.5million tonnes was up 12%, with the average price of metallurgical-grade chrome up 10.2%.

Bank of America (BofA) is bullish about platinum prices for 2022, saying in a research report on Thursday that substitution and the hydrogen economy should increasingly stabilise prices.

Tharisa ended 2021 with a $46.6m net cash pile, from debt of $21.3m previously, supporting its plans to bulk up in Zimbabwe in 2022.

The group’s priority would be to exercise its options for Karo Mining in Zimbabwe, Pouroulis said. He added that as an openpit mine at which development could be fast-tracked, it was a compelling investment case.

“With majors fighting over underground assets, we are in a very fortunate position,” he said, referring to recent interest from both Northam and Impala Platinum in Royal Bafokeng Platinum.

EXPANSION PLANS

Tharisa had acquired a 26.8% shareholding in Karo Mining Holdings in 2018 for $4.5m (about R60m at the time), at a more than 80% discount to fair value, with options for a controlling stake. No price has been given for this option, but Pouroulis said the discount was between 50% and 60%.

Tharisa is also gearing up for better production, and in October began extensive testing of its R1bn Vulcan ultrafine chrome recovery plant. This is on track for its first saleable production in December, and the project, developed in-house, will improve chrome recoveries.

In November, Tharisa also announced that following an annual review of its reserves, its flagship Tharisa Mine’s open-pit mining will now continue through to 2041, seven years longer than previously planned, while also derisking the development of the transition to underground mining.

Tharisa’s shares had fallen 4.73% to R26.01 in afternoon trade on Thursday, down from a peak of R32.70 reached in March. They have, however,

THE INTERNAL COMBUSTION ENGINE IS NOT GOING TO DISAPPEAR, BUT IT WILL GET CLEANER AND CLEANER

risen more than three-quarters over the past two years, giving the group a market value of R7.15bn.