THARISA pressed the button today on its Zimbabwe expansion announcing it had taken control of Karo Mining Holdings which owns the Karo Platinum Project.
The Johannesburg-listed company will issue The Leto Settlement $27m in shares in order to increase its stake in Karo Mining to 66.3% stake from 26.8% previously. The Leto Settlement will hold the balance of Karo Mining.
Karo Mining has an 85% stake in the Karo Platinum Project which Tharisa said today was a 20-year PGM endeavour in its first phase costing $250m in capital to build. At some 150,000 ounces a year in PGM concentrate production, it would double Tharisa’s PGM footprint when complete – about 24 months after construction begins.
The Zimbabwe government will own the 15% balance in Karo Platinum Project, held on a free funded carry basis with an option to increase its stake 11% for cash. Tharisa’s and the government’s shares are held in a subsidiary company, Karo Zimbabwe Holdings.
“The long life Karo Project, when added to the more than 60-year life of mine of the Tharisa PGM chrome operations in South Africa, sets the foundation for Tharisa’s growth, particularly in the downstream value-enhancing beneficiation sector,” said Phoevos Pouroulis, CEO of Tharisa.
“Tharisa will develop and deliver its next PGM mine, Karo Platinum, in a world class geological district that is supported by a pro-mining environment,” he said. “The Karo Project is strategically located within a Special Economic Zone with the Mining Lease valid for the life of mine.”
Based on Tharisa’s assessment, Karo Platinum will have a 20-year life of mine and a project post tax net present value of $770m at current PGM spot prices. It has initial probable reserves of 35.5 million tons grading at 2.31 grams a ton and yielding 2.6 million oz. Of this production about 45% would be platinum with palladium (42%), rhodium (4%) and gold (9%) comprising the balance. There would also be “material” base metal credits, Tharisa said.
“Karo has very good base metal content which talks squarely to the battery electric vehicle drive-train,” Pouroulis told Miningmx in an interview. “Where you might lose out on palladium you gain on the others,” he said.
Funding of the project, which is expected to peak at $310m, is currently under discussion with the focus falling on export/import finance, including political and commercial guarantees to provide the senior debt. Tharisa’s equity contribution to project funding would be supplied from internal cash flow and other facilities. The preferred split between debt and equity is yet to be determined, the company said.
The complete the transaction Tharisa will issue 13.69 million new shares equal to 4,85% of the company’s share capital. The deal is effective March 30.
Pouroulis, as with the rest of the PGM sector, is bullish on the direction of metal prices. “We’ve got great belief in the hydrogen economy and we believe that platinum group metals will play a vital goal in the zero emission energy solution,” he said in December.
“I don’t see the internal combustion engine falling off the end of the earth. The hybrid drive train seems to be the solution before you can electrify the mining fleet.
“As an interim step you see these more accessible technologies being rolled out. There are natural limitations, so there will be a balance and a blend of technologies.”