Chrome and platinum group metals (PGMs) miner Tharisa showed what it means to have a strong operating performance coupled with rising commodity prices as the company leapt into a net cash position and declared a dividend.
Tharisa, which is listed in Johannesburg and London, operates a single mine near Brits. It benefited from a 12% increase in output in chrome and PGMs as the price for the latter hit a record high.
With a near two-thirds increase in revenue to $314m (R4.3bn) for the six months to end-March, Tharisa posted post-tax profit of $76m compared to $12m in the same period a year earlier.
Its earnings before interest, tax, depreciation and amortisation (ebitda), which is almost an operating profit metric, for the interim period was $124m, far outpacing the ebitda for the full years since 2017.
Tharisa declared a $0.04 interim dividend after withholding a half-year payment in 2020 as the Covid-19 pandemic swept the world. The final dividend declared for that year was $0.035.
“Tharisa was able to convert its operating performance into healthy cash generation,” said CEO Phoevos Pouroulis.
“PGMs have remained the standout performer for the past 12 months, with current spot prices trending over $1,000/oz higher than the prices achieved for the six months under review,” he said.
Tharisa moved to net cash of $30m from net debt of $26m at the end of 2020.
“With PGM prices sustained at record levels and given Tharisa’s back-end weighted production profit for financial year 2021, we expect strong cash flow generation continuing into the second half of financial 2021,” BMO Capital Markets said in a note.
Tharisa kept its full-year production outlook at up to 165,000oz of the six metals making up its PGM production and up to 1.55-million tonnes of chrome concentrates.
At the half-year market, PGM output was up nearly 13% at 75,100oz and its chrome concentrate production increased 12% to 730,700 tonnes.
The standout performance during the interim period came from rhodium, with the price more than doubling to $18,354/oz from $7,522/oz a year earlier.
The global rhodium market is in a long-running deficit as makers of petrol engines increase the content of the metal in their anti-pollution devices installed in exhaust systems to meet stricter emissions regulations in Europe, North America and China.
Tharisa was in a position to buy the whole of Salene Chrome in Zimbabwe for $3m during the interim period, giving it a second project and diversifying its risk.
Tharisa is building its Vulcan plant in SA to extract fine chrome, which is a powdery substance rather than the rougher and bigger form of chrome concentrate most companies produce and sell.
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