[miningmx.com] – CHROME and platinum group metal (PGM) producer, Tharisa, recorded its maiden positive share earnings and said it hoped the performance was the shape of things to come as it sought to pay down $99m in debt.
Headline profit per share for the six months to the end of March was a slim $0.01/share, but it was achieved despite a 12% and 6% decline in the dollar and rand-denominated PGM basket price respectively.
Chrome production at some 563,000 tonnes was also (marginally) lower but PGM production was 49.5% higher at 57,400 ounces (6E). The profit before tax was $7.1m compared to a loss of R31m in the interim period of the previous financial year.
Tharisa mines from an open-pit operation situated on the southern end of the Western Bushveld Complex in South Africa’s North West province. It also has processing facilities and a logistics company that manages the firm’s dispatch and delivery functions.
Commenting in its interim results announcement, Tharisa said that debt of $99m may increase in the short term taking gearing beyond the current 49.4% level, but that it had targeted long term gearing of 15%.
“The debt is not unreasonable for our company in its current life cycle,” said Michael Jones, CFO of Tharisa. “We have just completed a major capital project. All our capital is sunk and now we’re looking mostly at sustaining capital,” he said.
There is, however, an optimisation project at the firm’s processing facilities with which to contend once an appropriate technology has been established. An attributable R180m in capital will also be required to build a rail siding in joint venture with Transnet.
“The payback on that is relatively quick however,” said Jones who added that the siding would cut transportation costs and material losses during handling. The group’s senior debt facility could be repaid in two to three years, he said.
Shares in Tharisa have been hammered since the company listed last year. It was last trading at R6,30/share valuing the company at R1.6bn, compared to its listing price of R38/share.
Said Phoevos Pouroulis, CEO of Tharisa: “The share is trading in a technical area at the moment. We try not to think about it too much but it does concern us. We just have to keep proving the investment case”.
Commenting in its results announcement, Tharisa said steady-state production of 144,000 ounces of PGMs and chrome production of 1.5 million tonnes had been targeted for the 2016 financial year.
