Wrap Text
Production report for the fourth quarter and full year ended 30 September 2020
Tharisa plc
(Incorporated in the Republic of Cyprus with limited liability)
(Registration number HE223412)
JSE share code: THA
LSE share code: THS
A2X share code: THA
ISIN: CY0103562118
LEI: 213800WW4YWMVVZIJM90
('Tharisa' or the 'Company')
PRODUCTION REPORT FOR THE FOURTH QUARTER AND FULL YEAR ENDED 30 SEPTEMBER 2020
Exceptional production performance positions Tharisa for PGM price bonanza
Highlights:
- LTIFR of 0.09 per 200 000 operating hours worked
- Platinum Group Metals ('PGM') production up 15.7% quarter on quarter ('QOQ') to 40.5 koz and
up 1.78% year on year ('YOY') to 142.1 koz (6E basis)
- Chrome concentrate production (excluding third party) up 15.4% QOQ to 370.8 kt and up 4.2%
YOY to 1 344.8 kt
- Reef mined up 8.9% QOQ to 1 405.7 kt and up 7.4% YOY to 4 971.1 kt
- Reef milled up 14.9% QOQ to 1 401.8 kt and up 4.1% YOY to 5 036.1 kt
- Stripping ratio up 8.3% QOQ to 13.0 m3:m3 and up 45.7% YOY to 12.1 m3:m3 ahead of the life of
open pit requirements
- Average PGM basket price for the year increased to US$1 704/oz (ZAR27 691/oz) due to high
rhodium (9.51%) and palladium (16.19%) prill split
- Average metallurgical grade chrome price for the year of US$140/t (ZAR2 231/t)
- Restart of the Vulcan project
South African Government imposed national lockdown due to COVID-19
- Sequential reduction in nationwide restrictions in South Africa from a risk adjusted Level 5 to Level 1
- Tharisa has recorded 53 positive COVID-19 cases, of which 3 are active, equivalent to an infection rate
of less than 1.7% for the Company with a recovery rate at present of over 90%
- During the national lockdown, Tharisa has retained its employment complement on full pay and
fulfilled its payment obligations to suppliers
Guidance for FY2021
- FY2021 production guidance 155 koz to 165 koz PGMs (6E basis) and 1.45 Mt to 1.55 Mt of chrome
concentrates
Commenting on the production results, Tharisa CEO Phoevos Pouroulis, said:
“Growing the business and increasing production not just on a quarter on quarter, but a year on year
basis despite the challenges of COVID-19, is a tribute to the extraordinary resilience and resourcefulness
of all of our employees at Tharisa.
With exposure to PGMs, particular our favourable prill split towards palladium and rhodium, the latter of
which we produced over 13 500 ounces for the year with the metal trading at record spot prices in excess
of US$ 13 000/oz, ensures Tharisa has an excellent financial and operating platform to progress the
business through its next phase of growth. The rapid development of the hydrogen economy and the
move to even cleaner emission standards will benefit the PGM market and Tharisa for some years to
come.
Our flagship Tharisa Mine delivered significant operational improvements following the investment in
our assets, the ongoing optimisation of the pit, and the flexibility of our processing and distribution
capacity.
Our cost control, together with a robust balance sheet, ensures Tharisa is set to build on this
performance as we restart construction of our Vulcan plant and continue to assess complementary
opportunities to further de-risk our business. Our focus will be on continuously improving the quality of
mining, increasing the productivity of our mining fleet and the efficiency of our processing capacity, to
deliver further returns for our stakeholders.
The impact of COVID-19, along with the national lockdowns and the disruptions associated with the
pandemic, has been significant in South Africa, the African continent, and globally. The ongoing impact
of the pandemic is likely to remain for the foreseeable future and as a business we have adapted
accordingly, protecting our staff, suppliers and other stakeholders as best as we can, whilst continuing to
deliver on our stated strategic targets.”
Safety
Safety is a core value, and Tharisa continues to strive for zero harm at its operations. An LTIFR of 0.09
per 200 000 man hours worked was recorded.
The Company achieved a number of safety milestones throughout the year:
- 28 September 2020 – 5 year fatality free
- 16 September 2020 – 365 days LTI free for the mining production team
- 30 July 2020 - Genesis Plant achieved 365 lost time injury free days
- 19 June 2020 - Tharisa Mine achieved 4 million fatality free shifts
- 5 March 2020 – 5 years lost time injury free for the Tharisa laboratory
The Company has a continuous education campaign to prevent complacency around the COVID-19
pandemic. For full details on all the preventative measures Tharisa has implemented, please go to
https://www.tharisa.com/pdf/covid-19/covid-19-presentation-of-compliance.pdf
Quarter Quarter Quarter on Quarter Year Year
ended ended quarter ended ended ended
30 Sep 30 Jun movement 30 Sep 30 Sep 30 Sep
2020 2020 % 2019 2020 2019
Reef mined kt 1 405.7 1 291.3 8.9 1 248.2 4 971.1 4 627.1
Stripping ratio m3: m3 13.0 12.0 8.3 10.3 12.1 8.3
Reef milled kt 1 401.8 1 220.2 14.9 1 291.2 5 036.1 4 836.0
PGM flotation feed kt 1 062.5 909.9 16.8 965.2 3 765.9 3 605.9
PGM rougher feed grade g/t 1.54 1.52 1.3 1.44 1.46 1.47
PGM recovery % 77.1 78.7 (2.0) 84.7 80.1 82.1
6E PGMs produced koz 40.5 35.0 15.7 38.0 142.1 139.7
Platinum produced koz 22.7 19.6 15.8 20.9 78.7 77.0
Palladium produced koz 6.1 5.6 8.9 6.4 23.0 23.6
Rhodium produced koz 3.9 3.4 14.7 3.6 13.5 13.2
Average PGM contained metal US$/oz 1 951 1 593 22.5 1 211 1 704 1 081
basket price
Platinum price US$/oz 901 751 20.0 868 876 840
Palladium price US$/oz 2 283 1 975 15.6 1 560 2 147 1 415
Rhodium price US$/oz 10 482 7 401 41.6 3 910 8 348 3 018
Average PGM contained metal ZAR/oz 32 978 29 266 12.7 17 792 27 691 15 531
basket price
Cr2O3 ROM grade % 18.0 18.2 (1.1) 18.3 18.2 18.1
Chrome recovery % 62.3 61.1 2.0 61.0 62.1 62.0
Chrome yield % 26.4 26.3 0.4 26.5 26.7 26.7
Chrome concentrates produced kt 370.8 321.4 15.4 341.9 1 344.8 1 290.0
(excluding third party)
Metallurgical grade kt 277.6 250.9 10.6 252.4 1 023.2 977.9
Specialty grades kt 93.2 70.5 32.2 89.5 321.6 312.1
Third party chrome production kt 52.8 - 100.0 69.4 169.8 241.1
Metallurgical grade chrome US$/t CIF 142 143 (0.7) 148 140 162
concentrate contract price China
Metallurgical grade chrome ZAR/t CIF 2 376 2 560 (7.2) 2 203 2 231 2 525
concentrate contract price China
Average exchange rate ZAR:US$ 16.9 18.0 (6.1) 14.7 16.2 14.4
Operations update
Despite the unprecedented headwinds of COVID-19 throughout the year, all of the Tharisa owned
operations were able to operate far beyond expectation, achieving near pre-COVID guidance despite the
significant impact on the sector. The open pit nature of the operations, and our ever improving mining
fleet efficiency provided flexibility to successfully navigate the turbulent environment and provide
sustainable and increased production of PGMs and chrome.
Tharisa has received strong support from its stakeholders, led by government and the DMRE, key
suppliers and the local community, enabling the Company to perform optimally in these tough times.
Mining
Reef tonnes mined for the quarter totalled 1 405.7 kt up 8.9% compared to 1 291.3 kt in the previous
quarter, resulting in milling of 1 401.8 kt, up 14.9% compared to the third quarter. For the year,
4 971.1 kt were mined, which is a 7.4% increase, with milling 4.1% higher at 5 036.1 kt for the year.This
performance is particularly impressive given that these volumes were attained whilst increasing our
stripping ratio to 13.0 m3:m3, well ahead of the LOM requirements of 9.8 m3:m3, as we aim to increase
further access over the reef systems we mine at Tharisa. This opening of the pit, which has seen bench
lengths increase, has also meant we have had improved flexibility in the reef mix we feed into our
plants, with over 360 kt of ROM stockpile ahead of the plant.
Processing
Both plants again performed above nameplate capacity, with steady feed grades of 1.54 g/t for the
rougher feed grade on the PGMs and 18.0% ROM grade on the chrome resulting in PGM recovery rates
of 77.1% and 62.3% on the chrome.
Total PGM production for the year was up just under 2% at 142.1 koz, with the fourth quarter delivering
40.5 koz of the total.
Chrome concentrate production was 370.8 kt for the quarter of which 277.6 kt was metallurgical grade
and 93.2 kt was specialty grade. This resulted in an annual output of 1 344.8 kt of chrome, of which
321.6 kt was specialty grade.
Production at the K3 Plant was interrupted for a longer period due to the COVID-19 restrictions on
underground mining, resulting in annual production of 169.8 kt.
Tharisa has also approved the project restart of the construction of the Vulcan Plant with anticipated
completion in 12 months using internal cash flows and available facilities to finance the construction.
Market update
Record PGM prices coupled with the Company’s agility to sell its chrome inventory ensured maximum
revenue generation for the quarter.
The PGM market saw record prices for some of the group elements. The overall basket price received
by Tharisa reached record highs, notably on the back of palladium and rhodium price increases for the
quarter under review. The average basket price for the quarter was US$1 951/oz and for the year
US$1 704/oz. A weaker exchange rates caused by COVID-19 and global macro forces, saw the PGM
basket price rally to ZAR32 978/oz for the quarter and ZAR27 691/oz for the year.
As previously reported, the force majeure imposed by the PGM offtakers was lifted and normal inventory
cycles have resumed.
The chrome market had a weak start to the year, however, prices spiked during the peak of COVID-19 in
South Africa, as buyers competed for material. Published prices were reported at US$165/t at the start
of the quarter, before retracting to US$135/t. The average sales price achieved for the year was
US$140/t, 13.6% lower than for the previous year. In port chrome ore inventories in China have
reduced by 600 kt from 4.3 Mt at the start of the previous quarter to approximately 3.6 Mt with current
spot pricing at US$138 -140/t.
Outlook
Tharisa’s co-product model utilising mechanised and low labour-intensive mining in an open pit
environment proved effective during this difficult period. Our increased mine development over the
past year, positions the mine to continue its strong operating performance into this coming year, with
our cost base unlikely to be impacted by above inflationary increases. COVID-19 remains a risk to the
Company and our forecasts and guidance are premised on the current level of economic activity being
permitted by various governments.
Tharisa’s FY2021 production guidance is 155 koz to 165 koz PGMs (6E basis) and 1.45 Mt to 1.55 Mt of
chrome concentrates.
The above information has not been reported on or reviewed by Tharisa's auditors.
Paphos, Cyprus
8 October 2020
JSE Sponsor
Investec Bank Limited
Connect with us on LinkedIn and Twitter to get further news and updates about our business.
Investor relations contacts:
Ilja Graulich (Head of Investor Relations and Communications)
+27 11 996 3500
+27 83 604 0820
igraulich@tharisa.com
Financial PR contacts:
Bobby Morse / Augustine Chipungu / James Husband
+44 207 466 5000
tharisa@buchanan.uk.com
Broker contacts:
Peel Hunt LLP (UK Joint Broker)
Ross Allister / David McKeown / Alexander Allen
+44 207 7418 8900
BMO Capital Markets Limited (UK Joint Broker)
Thomas Rider / Neil Elliot / Michael Rechsteiner
+44 207 236 1010
Berenberg (UK Joint Broker)
Matthew Armitt / Jennifer Wyllie / Detlir Elezi
+44 203 207 7800
Nedbank Limited (acting through its Corporate and Investment Banking division) (RSA Broker)
Shabbir Norath
+27 11 295 6575
Date: 08-10-2020 07:05:00
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