Tharisa halves capital raising to R500m

[miningmx.com] – THARISA, a platinum and chrome producer, is to raise R500m as part of its debut on the Johannesburg Stock Exchange, half the capital it first intended to muster owing to difficult market conditions.

The issue price of shares had also been reduced to R38/share after the company said it hoped to get the shares away for about R42.70/share.

“The offer has been scaled back owing to a timing issue and because of general sentiment in the sector,” said Nic Bennett, spokesman for Tharisa. Tharisa was obliged to list the company now in order to meet an agreement with a group of preference share holders in Hong Kong who helped finance the company in 2011.

“The general feedback from investors is that they liked the story but just want to see how things play out,” said Bennett. “The main thing was to get the company listed.”

A large portion of South Africa’s platinum sector is currently idle owing to a strike called on January 23 by the Association of Mineworkers & Construction Union (AMCU). The union has demanded a basic salary for workers of R12,500 per month – a level miners have said will sink a large portion of the sector if accepted.

The Pouroulis family and Singapore trading house Noble Group will take up the shares in a private placement with Tharisa due to debut in Johannesburg on April 10. As part of its $20m placement, Noble has entered into an offtake agreement.

Phoevos Pouroulis, CEO of Tharisa, said feedback from investors had been “exceptionally good” and that the company’s investment case ticked all the boxes.

“Timing was an issue and also where they would support the company post its IPO in terms of other investment points,” he said.

The R1bn initially anticipated optimising the company’s mine, settling debt, building up stockpiles, and buying spare parts and long lead capital items. Pouroulis said the focus would now fall on prioritising the optimisation programme.

The company would look at alternate funding in lieu of the R500m it failed to raise including the possibility of securing export credit lines and infrastructure funding as well as financing the business with free cash flow it generated.

Tharisa currently owns 74% of Tharisa Minerals which operates an opencast mine on the south-west limb of the Bushveld. The balance of the shares belong to an empowerment company (20%) and a community trust (6%).

The open cast mine had a life of about 23 years with the option of developing underground for a further 36 years of operation.

It had targeted average steady state production of 144,000 ounces a year of PGMs and 1,85 million tonnes a year of chrome concentrate in its 2016 financial year.

The mine was “operationally cash flow positive” and was operating at about 87% of full capacity, the company said. It could produce its own PGM and chrome concentrate, and had an offtake agreement with Impala Platinum.