The financial year ended September 30, saw platinum group metals (PGMs) and chrome miner Tharisa position itself to deliver on its strategy to increase production of both PGMs and chrome concentrates from the Tharisa mine.

Simultaneously, the miner also made significant progress with its exploration assets in Zimbabwe, according to CEO Phoevos Pouroulis.

However, the year saw curtailed production at the Tharisa mine as the miner embedded its owner-miner approach at the asset and redesigned the mining operation, with investment in training and machinery to support the company’s long-term production goals.

Despite the curtailed operational output, Pouroulis said on Thursday that the miner had managed to generate cash at the Tharisa mine.

The miner’s efforts to develop a significant new PGM and chrome complex were also given a significant boost with the granting of special economic zone (SEZ) status for the area post the financial year-end.

This, Pouroulis added, would add momentum to the company’s strategy as Tharisa now had the key fiscal framework in place to guide the project’s development.

“We have also progressed studies on the Salene chrome asset after receiving approvals from the Environmental Management Authority (EMA),” he commented, adding that this was in line with Tharisa’s performance targets as set out in its ‘Vision 2020’ programme.

After having spent the last 15 months reconfiguring the openpit to access more ore, the pit had now progressed towards finalising the hauling access, which would ensure smoother transport routes that lead to longer benches and allowing for more controlled blasting, all with the aim of achieving the economies of scale and mining efficiencies required to attain Vision 2020, with production of two-million tonnes of chrome concentrate and 200 000 oz of PGMs on an annualised basis.

However, the company is “not content” with the progress it has made so far, and has continued to “push the limits” of PGM recoveries, with Tharisa having achieved a step change in chrome recovery at the Tharisa mine.

The miner’s research team in Arxo Metals subsequently proved the miner’s proprietary fine chrome recovery technology in a demonstration scale environment, which led to the company approving a $54.2-million investment to build the new Vulcan plant, which will increase production of chrome concentrate by 25%, while lowering unit costs.

FINANCIAL OVERVIEW

Tharisa CFO Michael Jones, meanwhile, said the period under review had been characterised by the miner operating in an environment with volatile commodity prices.

He said that, given the requirements for sustaining investment in both the mining fleet and processing optimisation at the Tharisa mine, coupled with investing in external growth opportunities, the focus for the financial year under review had remained on the implementation of the company’s capital requirements and matching those with the internally generated cash and external capital forms.

The financial results of the group benefitted from the co-product business model for both PGMs and chrome concentrates, with prices for the key commodities reflecting opposing trends.

According to Jones, the PGM basket prices on ruthenium, rhodium, palladium, osmium, iridium, and PGM metals basis increased by 17.1% to $1 081/oz, as palladium (16.7%) and rhodium (9.8%) showed robust price increases based on strong market fundamentals.

However, he added that the metallurgical-grade chrome concentrate price had decreased by 12.9% to $162/t.

Group revenue for the period totalled $342.9-million, of which $130.1-million was derived from the sale of PGM concentrate and $177.9-million from the sale of chrome concentrate.

Overall, revenue decreased by 15.6%, as a result of lower sales volumes and a decrease in the chrome price compared to the 2018 financial year.

Gross profit amounted to $60.4-million with a gross profit margin of 17.7%. The major factors contributing to the reduced gross margin were the lower production levels with the embedded fixed cost component and an increase in the stripping ratio moving 0.7% more waste while producing 5.1% fewer run-of-mine tonnes, Jones explained.

Electricity costs, while not a significant input cost at 6.4% of the on-mine cost of production, increased by 6.8% per kilowatt hour. On a unit cost basis, the reef mining cost increased by 17.6% from $21/t to $24.7/t.

Selling costs incurred with the transport of the metallurgical-grade chrome concentrate from the mine to the customer at China’s main ports increased marginally by 1.6% from $62/t to $63/t. Administrative expenses decreased from $39.2-million to $37.3-million.

After accounting for administrative expenses, the group achieved an operating profit of $24.2-million. Earnings before interest, taxes, depreciation and amortisation amounted to $51.6-million.

Profit before tax was $11.2-million.

Basic earnings a share for the year amounted to $0.04, with headline earnings a share at $0.05.

Diluted earnings a share were $0.04, with diluted headline earnings a share at $0.05.