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Tharisa the biggest miner to list in London for some years

Shares in Tharisa have ticked up after it listed on the main board of London and released interim results

Spiral-circuits-at-Tharisa-mine-plant.jpg
Spiral circuits at the Tharisa mine plant

No money was raised, but the arrival of Tharisa PLC (LON:THS) onto the main board of the London Stock Exchange represents one of the biggest signs yet that the mining markets are reviving.

On listing on 8th June Tharisa had a market capitalisation of just over £94 mln.

Come the following week that had ticked up to closer to £100 mln after financial results for the six months to March showed an increase of over 6% in gross margin.

Sales of platinum and chrome for the period rang in at US$86 mln and allowed for gross profits of US$21.1 mln, while net cash flows rose 18.2% to help cut net debt by almost 25% to US$30.9 mln.

What’s clear is that although it may be new to the London markets, this is a company that’s already up and running well. And why wouldn’t it be?

Tharisa has been listed on the Johannesburg Stock Exchange since April 2014, and is 47%-owned by the Pouroulis family, well-known in South African mining circles for being behind such successes as Petra Diamonds (LON:PDL) and Chariot Oil & Gas (LON:CHAR).

But what’s it like operating a platinum mine in today’s unforgiving market?

The answer, according to Tharisa chief executive Phoevus Pouroulis, in large part depends upon the quality of your asset.

Unlike most of the platinum mining on South Africa’s prolific Bushveld complex, the Tharisa mine is an open pit.

This allows the company to produce at a cost of US$492 per ounce of platinum, which is low for the sector, and at a cost of US$102 per tonne of chrome concentrate – also on the low side.

The current platinum price stands at around US$995 per ounce, so there’s plenty of room for manoeuvre there, and while pricing for chrome is a little more opaque the 6% increase in overall gross margin does tell some of the story.

The plan now is to keep production rolling on steadily throughout the rest of the financial year, such that overall production for the year to end September is likely to hit 129,400 ounces of platinum and 1.25 mln tonnes of chrome concentrate.

For full year 2017 the target is 147,400 ounces of platinum and 1.3 mln tonnes chrome concentrate.

At this stage, Pouroulis isn’t revealing what the costs are likely to be, in part because currency fluctuations between the rand and the dollar make predictions on that score something of a moveable feast.

But there’s also work ongoing to improve recoveries and the possibility at least that commodities prices will improve too.

Other growth opportunities may arise too, although there’s nothing corporate on the agenda at this stage.

The immediate plan now is to consolidate the London listing.

“It’s always been our objective to raise the profile of Tharisa in London,” says Pouroulis. “Now that things are stabilising in terms of the maturity of our cashflow we’re opening up our share register.”

With that in mind, he’ll be visiting London in the next couple of weeks, arguing the case for Tharisa’s lower risk profile and lower cost base.

The market’s livened up over the past few months and he’s likely to get a decent hearing.

 

 

Quick facts: Tharisa PLC

Price: 66 GBX

LSE:THS
Market: LSE
Market Cap: £175.96 m
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