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THARISA PLC - Second quarter production report for the quarter ended 31 March 2018

Release Date: 10/04/2018 08:00
Code(s): THA     PDF:  
Wrap Text
Second quarter production report for the quarter ended 31 March 2018

Tharisa plc
(Incorporated in the Republic of Cyprus with limited liability)
(Registration number HE223412)
JSE share code: THA
LSE share code: THS
ISIN: CY0103562118
('Tharisa')


Second quarter production report for the quarter ended 31 March 2018

Tharisa delivers another robust quarter as it advances plans to increase production


Highlights for the quarter ended 31 March 2018
    -    PGM recoveries at 82.2% exceed targeted recoveries of 80.0%
    -    PGM production of 38.2 koz
    -    Improved chrome recovery at 66.3% exceeded targeted recovery of 65.0%
    -    Record chrome concentrate production of 366.7 kt
    -    Vision 2020 projects on track to produce 200 kozpa PGMs and 2 Mtpa chrome in 2020


Highlights for the six months (H1 FY2018) ended 31 March 2018
    -    PGM production at 77.0 koz, up 11.4% from 69.1 koz in H1 FY2017
    -    Chrome concentrate production at 732.5 kt, up 15.0% from 636.8 kt in H1 FY2017




Safety
Safety remains a priority and Tharisa continues to strive for zero harm at its operations. A LTIFR of 0.12
per 200 000 man hours worked was recorded at the end of March 2018.


During the quarter the operations recorded two safety milestones with the mining operations achieving
1 000 000 fatality free shifts and the Genesis Plant achieving 365 LTI free days.
Production update
The production update for the quarter ended 31 March 2018 is as follows:


                              Quarter    Quarter    Quarter    Quarter     Half year   Half year
                              ended      ended      on         ended       ended       ended
                              31 Mar     31 Dec     quarter    31 Mar      31 Mar      31 Mar
                              2018       2017       move %     2017        2018        2017


 Reef mined         kt        1 206.0    1 245.3    (3.2)      1 219.2     2 451.3     2 449.1

 Stripping ratio    m³        8.5        7.8        9.0        7.5         8.1         8.4
                    waste/
                    m³ reef

 Reef milled        kt        1 287.2    1 310.2    (1.8)      1 211.3     2 597.4     2 417.7

 PGM flotation      kt        936.0      959.6      (2.5)      897.9       1 895.6     1 783.0
 feed

 PGM rougher        g/t       1.54       1.49       3.4        1.56        1.52        1.54
 feed grade

 6E PGMs            koz       38.2       38.8       (1.5)      34.3        77.0        69.1
 produced

 PGM recovery       %         82.2       84.3       (2.5)      76.2        83.2        78.3

 Average PGM        US$/oz    953        865        10.2       783         909         760
 contained metal
 basket price

 Average PGM        ZAR/oz    11 384     11 827     (3.7)      10 355      11 606      10 306
 contained metal
 basket price

 Cr2O3 ROM          %         18.2       18.1       0.6        17.5        18.1        17.5
 grade

 Chrome             %         66.3       65.5       1.2        62.5        65.9        63.4
 recovery

 Chrome yield       %         28.5       27.9       2.2        26.0        28.2        26.3

 Chrome              kt      366.7      365.8       0.2        314.6       732.5       636.8
 concentrates
 produced
     Metallurgical kt        281.2      277.7       1.3        239.2       558.9       484.3
     grade
     Specialty       kt       85.5       88.1      (3.0)        75.4       173.6       152.5
     grades

 Third-party         kt       53.4       52.8       1.1         -          106.2         -
 production

 Metallurgical       US$/t     206        179      15.1        338          193         278
 grade chrome        CIF
 concentrate         China
 contract price

 Metallurgical       ZAR/t   2 444       2 426     0.7        4 430        2 436       3 783
 grade chrome        CIF
 concentrate         China
 contract price

 Average             ZAR:US$ 12.0         13.6    (11.8)      13.2          12.8       13.6
 exchange rate


Mining
The transition to owner mining has progressed well. The fleet purchased from the mining contractor
has been supplemented by additional drill rigs and yellow fleet to optimise the fleet ensuring that it has
the capability of achieving the required mining run rates.
The focus during this period has been on employee training using world class on mine simulators to
ensure competency training and the implementation of preventative maintenance protocols. This has
improved the effective utilisation of the overall mining fleet as demonstrated by the 12.0%
improvement in the waste mined to 3.0 Mm3 during the quarter.
Improvements in the drill and blast operations, in particular, have contributed to improved
fragmentation of run of mine feedstock and therefore more consistent feed into the plants contributing
to the plants operating at above design name plate capacity. PGM rougher feed grades improved by
3.4% to 1.54 g/t while Cr?O? ROM grades remained steady at 18.2%.
The stripping ratio at 8.5 is trending towards the life of mine average of 9.6 on a per cubic metre basis
and ensures ongoing access to the reef horizons whilst maintaining the supply of ore to the processing
plants. Reef tonnes mined totalled 1.2 Mt, marginally lower even though there were fewer working
days in this typically shorter quarter which also saw higher than usual rainfall during the latter part of
the period under review.


Processing
During the quarter, 1.3 Mt was milled, resulting in PGM production of 38.2 koz on a 6E basis (at a
recovery of 82.2%) and chrome production of 366.7 kt, 85.5 kt of which are specialty grades (at a
recovery of 66.3%).


Further improvements in production are expected as the Vision 2020 optimisation projects come on
stream during Q4 FY2018 and Q1 FY2019. The introduction of an additional crusher circuit at the
Genesis Plant will be commissioned in July 2018. The ZAR90 million (approximately US$7.4 million)
project aims to increase the Genesis Plant throughput by 15.0% or about 180 ktpa, targeting an increase
in the higher value specialty chrome grade production by adding approximately 24 ktpa of chemical
grade chrome concentrate and approximately 18 ktpa of foundry grade chrome concentrate.


Market update
The average PGM contained metal basket price (per ounce) for the quarter ended 31 March 2018 was
up 10.2% to US$953 (ZAR11 384), which was US$88 an ounce higher than the US$865 (ZAR11 827)
achieved in the quarter ended 31 December 2017.              PGM basket prices continued to reflect
improvements in palladium, rhodium and ruthenium prices which comprise 16.3%, 9.2% and 13.6%
respectively of the Tharisa PGM basket.


Contracted metallurgical grade chrome concentrate prices increased 15.1% to US$206 per tonne from
US$179 per tonne in the previous quarter due to improved liquidity and consistent stock levels at
ferrochrome and stainless steel producers in China. Current metallurgical chrome spot prices remain
above US$200 per tonne.


As at 26 March 2018, Chinese port stock levels were at 2.8 Mt, around two-and-a-half months’ supply
into the ferrochrome and stainless steel industry. Global growth in stainless steel production remains
robust with an independent market research company forecasting a further rise in worldwide output
of nearly 5.0% in calendar 2018.
Specialty chrome concentrates, which comprised 23.3% of Tharisa’s chrome production in Q2 FY2018,
continued to attract a premium above the contracted metallurgical chrome concentrate prices.


Outlook
Tharisa remains firmly on track to achieve its FY2018 production guidance of 150 koz PGMs and 1.4 Mt
chrome concentrates, of which 350 kt will be specialty grade chrome concentrates. The near term focus
will be on advancing the Vision 2020 projects that will ensure Tharisa delivers 200 kozpa of PGMs and
2 Mtpa of chrome concentrates by 2020.


The above information has not been reported on or reviewed by Tharisa’s auditors.


Paphos, Cyprus
10 April 2018




JSE Sponsor
Investec Bank Limited


Investor Relations contact:
Tharisa plc
Sherilee Lakmidas
+27 11 996 3538
+27 79 276 2529
slakmidas@tharisa.com


Broker contacts:
Peel Hunt LLP (Joint Broker)
Ross Allister / James Bavister / David McKeown
+44 207 7418 8900


BMO Capital Markets Limited (Joint Broker)
Jeffrey Couch / Neil Haycock / Thomas Rider
+44 020 7236 1010
Financial PR contacts:
Bobby Morse / Anna Michniewicz
+44(0) 20 7466 5000
tharisa@buchanan.uk.com

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