Tharisa to launch $50m bond on Zimbabwe exchange to finance expanded Karo Platinum

Phoevos Pouroulis, CEO, Tharisa

THARISA is to issue a $50m, three-year bond on Zimbabwe’s Victoria Falls Stock Exchange as part of some $440m in project and working capital costs required for its first phase Karo Platinum project.

In an update today, Johannesburg-listed Tharisa, which also produces chrome, said project required for Karo’s first ore to mill increased to $391m. This was partly because the project had been expanded to 194,000 ounces annually in platinum group metals (PGMs) compared to a previous production estimate of 150,000 oz/year.

Inflation on steel and transportation also played a role in the capital cost lift as well as the inclusion of a $45m contingency. Tharisa previously estimated a capital cost of $250m for Karo Platinum which is an orebody situated on Zimbabwe’s famed platinum-rich Great Dyke geological formation.

Bernard Pryor, head of Tharisa’s Karo Platinum project, said a book-build on the proposed bond had started “a few weeks ago”. It aimed to capitalise on an estimated $1.8bn to $2bn in stranded assets in Zimbabwe. The bond would be launched in November. “We’ve got a lot of interest on the bond,” said Pyror.

The balance of total capital required for Karo Platinum would be sourced from $260m in project finance and $130m raised against the company’s existing assets.

There was no plan to put any equity on the table, although Pouroulis said the company had “Plan B and Cs” that might include royalty streams on Karo and existing Tharisa production. There would be no change to Tharisa’s undertaking on dividend payments, he said.

Once built, in about two years from the start of construction, Karo Platinum would make Tharisa a near-400,000 oz/year PGM producer. Pouroulis said it represented the making of the company with combined PGM production for 17 years ahead of anticipated sustained deficits for the metals.

According to Tharisa assumptions of an average PGM 6E price of $2,140/oz and cast cost of $1,096 per PGM oz, Karo would generate a return on capital invested of 30.1% and an internal rate of return of 26.1%. “We have a tier one project that is robust with world class economics,” Pouroulis said.