Tharisa positioned to pay special dividend after PGMs starring rhodium fire up interim numbers

Phoevos Pouroulis, CEO, Tharisa

THARISA paid a four cents a year interim dividend – exceeding its year-end payout – and closed the period ended March net cash after booking record platinum group metal basket prices (PGM), especially rhodium, and improved production.

Tharisa CEO, Phoevos Pouroulis, said today the PGM basket improvement bore the hallmarks of a world economy on the rebound following the Covid-19 pandemic of the previous 12 months. “With our favourable PGM basket we saw prices trading at historic record levels breaking through $4,000 per Tharisa PGM basket ounce,” Pouroulis said.

The outcome for the period under review was interim share earnings of 21.4c/share, a near 500% year-on-year increase. The company is now $29.3m net cash and is set for a stellar full-year performance, assuming metal prices continue at their current clip.

The average PGM basket price for the period was $2,823/oz compared to $1,612/oz in the previous interim period. However, the spot price for the basket is $3,900/oz, suggesting major upside is to come.

Tharisa pays a minimum 15% of net profit after tax. The payout for the interim was about 14% but Pouroulis said this would be topped up, and perhaps even bettered.

“It is a discussion at the board level where I think it will be looked upon favourably,” said Pouroulis when asked about the prospect of a special dividend. “If there is this additional cash generation that we are forecasting for the second half we will look at a special type of dividend,” he said.

Rhodium, a metal to which Tharisa is particularly exposed, was the stand-out performer. Its contribution to the PGM segment revenue was 65% even though it comprises about 9.7% of total production. This is a result of its price increasing to $18,354/oz from $7,522/oz in the comparative period.

“The reality is that demand is strong,” said Pouroulis of the PGM market. “Supply is contained, particularly in rhodium which is in a deficit position. As for platinum, there is a view as to whether it is in deficit or in balance. If you take investment demand in view and peg forecast on that it does look like it’s in deficit so it’s got room to appreciate.

“While we are seeing volatility in rhodium on the back of the sentiment, demand is strong. Speaking to automakers, they are seeing demand has never been better, and they are struggling to get supply.

“We are in a good position and in the medium term, PGM prices should remain strong. There will always be volatility. That’s the nature of commodities,” he said.

Pleasingly for the group, amid the price excitement, there was a solid operational performance. PGM production increased 12.9% to 75,100 oz (6E) whilst the production of chrome concentrate increased 12% to 730,000 tons. Full-year guidance has been maintained at between 155,000 to 165,000 oz for PGMs and 1.45 to 1.55 million tons for chrome.

There was the possibility of mining inflation setting in with freight rates were on the rise. “We are seeing the exit price increasing so we will have to allow for that,” he said.┬áTharisa agreed a new four year wage deal with its employees last year.