09 Jul - 7 min read
Production report for the third quarter FY2021 ended 30 June 2021
Production report for the third quarter FY2021 ended 30 June 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 THIRD QUARTER FY2021(1)ENDED 30 JUNE 2021 Highlights - Achieved 5 million fatality free shifts - Delivered record mining rates and tonnes processed - Record quarterly chrome concentrate output and increased PGM production supported by stronger pricing - Balance sheet strengthened with cash increasing to US$80.5 million post US$10.8 million interim dividend payment - FY2021 guidance maintained Key Operating Numbers Quarter Quarter Quarter on Quarter Year on ended 30 ended 31 quarter ended 30 year June 2021 March 2021 movement June 2020 movement % % Reef mined kt 1 507.8 1 233.2 22.3 1 291.3 16.8 PGMs produced (6E) koz 39.0 35.8 8.9 35.0 11.4 Chrome concentrates produced kt 379.7 358.4 5.9 321.4 18.1 (excluding third party) Average PGM basket price US$/oz 3 804 3 290 15.6 1 593 138.8 Average metallurgical grade US$/t 160 155 3.2 143 11.9 chrome concentrate contract price (1) Tharisa’s financial year is from 1 October 2020 to 30 September 2021 Phoevos Pouroulis, CEO of Tharisa, commented: “Operationally, the third quarter was one of the strongest in the Company’s history, with record mining and processing rates, supported by strong PGM and chrome pricing. Combined with reaching 5 million fatality free shifts and another excellent LTFIR, Tharisa remains on track to deliver safe and sustainable returns for all of our stakeholders. Revenues and margins continue to be healthy as the combination of our favourable PGM basket saw record prices, in addition to a steady increase in the pricing of our chrome concentrates. These price increases are a direct result of the increase in demand for our critical metals as economies focus on rebuilding post the global pandemic. Moreover, given the rapid adoption of decarbonisation initiatives, we see these prices being sustainable for the foreseeable future. Despite the headwinds of South Africa being placed on Alert Level 4 in its fight against the COVID-19 pandemic, with its impact on our employees and stakeholders, our operational performance continues to benefit from the ongoing optimisation programmes, underpinned by the robustness and consistency of the Tharisa Mine with 14 years of open pit and 40 years underground mine life. Our growth projects remain on track, with the construction of the proprietary Vulcan fine chrome recovery plant on schedule for commissioning by year end, adding an additional 20% chrome to our current production levels and these at very low operating costs. Our new development project in Zimbabwe, Salene Chrome, is progressing well and is planned to be in production start-up before the end of the calendar year. The continued improvement in our mining, underpinned by the consistency of the Tharisa Mine, provides Tharisa with confidence in delivering on our guidance for the full year.” Health & Safety - Safety is a core value and Tharisa continues to strive for zero harm at its operations - Achieved 5 million fatality free shifts on 1 June 2021 - Industry-leading safety record with a LTIFR of 0.12 per 200 000 man hours worked - South Africa is at an adjusted Alert Level 4 as Wave 3 reaches peak - Tharisa has recorded an increase in active COVID-19 cases from prior waves Market Update - Tharisa’s PGM basket price was 15.6% higher quarter on quarter (Q3 2021 vs Q2 2021) and remains above US$3 000/oz at the time of writing, despite the recent decline in the rhodium price, highlighting the unique prill split benefits. The use of PGMs in the hydrogen economy has not been fully recognised as the market is focused on the premature decline of the internal combustion engine. PGMs play a vital role not only in emission control in traditional drive engines but a major role in hydrogen fuel cells, the greening of the economy and PGMs continue to be a critical component of the changing drive train make-up. We remain confident that the unique and flexible PGM metal properties will have a robust outlook, being evident in the demand for the precious metals in a number of growing diversified industries, while PGM production increases across the industry remain limited, therefore supporting stronger long-term prices - Higher chrome ore prices were achieved in the quarter despite subdued demand owing to a reduction of ferrochrome production in China, caused by electricity control measures. Stainless steel producers are operating at historic high levels, creating robust demand for ferrochrome, resulting in tightness of supply and consequently increasing the price of ferrochrome at the end of the quarter, which bodes well for the current and future chrome ore price. The Company was successful in meeting its delivery obligations, despite continued inland logistical challenges in South Africa and limited shipping availabilities. Sea borne logistics costs continued to trend upwards Operational Update - Record reef mined at 1.5 Mt, up 22.3% QoQ and 16.8% YoY - Record tonnes processed at 1.4 Mt, up 5.0% QoQ and 15.8% YoY - PGM production up 8.9% QoQ to 39.0 koz (up 11.4% YoY) as rougher feed grade improved by 7.8% to 1.52 g/t - Record chrome concentrate tonnes produced at 379.7 kt, up 5.9% QoQ and 18.1% YoY - Stripping ratio 10.9 m3: m3 ahead of LOM requirements - PGM recoveries impacted by now resolved secondary mill motor issues - Optimisation programmes remain on track, with Vulcan construction completion by end September 2021 Cash Balance and Debt Position - Tharisa had a cash balance of US$80.5 million (31 March 2021 US$72.8 million) at the end of the quarter and debt of US$38.7 million (31 March 2021 US$43.0 million) resulting in a positive net cash position of US$41.8 million (31 March 2021 US$29.8 million). The Company paid out an interim dividend of US$10.8 million on 30 June 2021 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 guidance is premised on the current level of economic activity being maintained Paphos, Cyprus 9 July 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 firstname.lastname@example.org Financial PR contacts: Bobby Morse / Augustine Chipungu / James Husband +44 207 466 5000 email@example.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 / Varun Talwar / 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 also owns the Salene Chrome project, a development stage, low cost, open pit asset, located in the Great Dyke in Zimbabwe. Tharisa is listed on the Johannesburg Stock Exchange (JSE: THA) and the Main Market of the London Stock Exchange (LSE: THS). Quarter Quarter Quarter on Quarter Nine months ended ended quarter ended ended 30 Jun 31 Mar movement 30 Jun 30 Jun 2021 2021 % 2020 2021 Reef mined kt 1 507.8 1 233.2 22.3 1 291.3 3 975.3 Stripping ratio m3: m3 10.9 11.8 (7.6) 12.0 11.3 Reef milled kt 1 413.1 1 345.2 5.0 1 220.2 4 171.9 PGM flotation feed kt 1 072.3 1 023.9 4.7 909.9 3 176.5 PGM rougher feed grade g/t 1.52 1.41 7.8 1.52 1.46 PGM recovery % 74.4 77.1 (3.5) 78.7 76.8 6E PGMs produced koz 39.0 35.8 8.9 35.0 114.1 Platinum produced koz 21.8 19.8 10.1 19.6 63.1 Palladium produced koz 5.5 5.4 1.9 5.6 17.7 Rhodium produced koz 3.9 3.5 11.4 3.4 11.1 Average PGM contained metal US$/oz 3 804 3 290 15.6 1 593 3 159 basket price Platinum price US$/oz 1 185 1 164 1.8 751 1 105 Palladium price US$/oz 2 794 2 399 16.5 1 975 2 588 Rhodium price US$/oz 24 232 21 521 12.6 7 401 19 999 Average PGM contained metal ZAR/oz 53 801 49 273 9.2 29 266 46 733 basket price Cr2O3 ROM grade % 18.0 18.0 - 18.2 17.9 Chrome recovery % 63.0 62.4 1.0 61.1 62.8 Chrome yield % 26.9 26.6 1.1 26.3 26.6 Chrome concentrates produced kt 379.7 358.4 5.9 321.4 1 110.4 (excluding third party) Metallurgical grade kt 280.8 272.8 2.9 250.9 832.2 Specialty grades kt 98.9 85.6 15.5 70.5 278.2 Third party chrome production kt 59.0 49.5 19.2 - 170.6 Metallurgical grade chrome US$/t CIF 160 155 3.2 143 149 concentrate contract price China Metallurgical grade chrome ZAR/t CIF 2 274 2 304 (1.3) 2 560 2 220 concentrate contract price China Average exchange rate ZAR:US$ 14.1 15.0 (6.0) 18.0 14.9 Date: 09-07-2021 07:05:00 Produced by the JSE SENS Department. 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