THARISA is to start underground mining at its North West province chrome and platinum group metal (PGM) mine earlier than planned in order to overcome operating constraints in the open pit currently.
The company was to first run a feasibility study to assess underground mining, but said in its results for the 12 months ended September, published today, it would now start with “shallow underground mechanised operations” in the west pit of the Tharisa mine. There would be no impact on chrome or PGM production, said Phoevos Pouroulis, CEO of Tharisa in an interview.
This “staged approach” to the development of Tharisa mine was to circumvent open pit limitations, largely to do with the nearby community, and enable the company to balance the open pit fleet replacement strategy which it had previously undertaken in an effort to improve mining efficiencies from the open pit.
“This prudent decision will maintain the mines operational flexibility and provides further de-risking,” said Pouroulis. The open pit has a 13 year life of mine – which will not be diminished by this change in strategy – while Tharisa mine’s underground resources are sufficient to support mining for 60 years.
The change in mining approach at Tharisa mine is also partly driven by the deterioration of PGM prices which fell 26.2% in the 12 months to average $1,893 per ounce (2022: $2,564/oz). Coupled with a 19.3% year-on-year decline in PGM output to 144,700 oz, which was due to heavy rains in the first quarter, the outcome was a 49.1% decline in share earnings to 27.4 cents. This was despite a strong showing in chrome where an average price of $263 per ton represented an increase of 25.8% year-on-year. Production of chrome was flat at 1.58 million tons.
The year-on-year decline in PGM production was because Tharisa had focused delivering more higher priced chrome for processing. This had resulted in more oxidised, lower yielding PGMs, said Pouroulis.
Commenting on the PGM market, Pouroulis said there had been structural damage to metal supply which would be “felt for some time” and would ultimately see prices improve. “While current markets are volatile and unpredictable, we believe in the medium-term outlook for PGMs underpinned by a supply-side constrained economy with new and growing applications of these precious metals,” he said.
In October, Tharisa announced it had delayed delivery of its $391m Karo PGM project in Zimbabwe by a year to June 2025 owing to the deterioration in prices. This was to allow for an “aligned to funding availability”.
Commenting today on the project today, Pouroulis said Tharisa had the option of accelerating the project were the PGM markets to recover sufficiently well. But the project was also vulnerable to delays were the PGM price slump to be sustained.
In line with its policy of distributing at least 15% of the annual net profit after tax, Tharisa announced a final dividend of two US cents per share taking the total payout to five US cents compared to seven US cents per share for the 2022 financial year.