Having taken on the risk this year of investing in two exploration projects in Zimbabwe, which is trying to reinvigorate interest in its mining industry, Johannesburg-headquartered integrated resources group Tharisa CEO Phoevos Pouroulis says the country’s mining environment is improving.
Zimbabwe opened its doors to foreign mining investors in December 2017 when it scrapped its controversial Indigenisation and Economic Empowerment Act that limited foreign shareholding in mining ventures to 49%. However, platinum and diamonds have not been included to this point, with a 51% to 49% shareholding requirement for platinum yet to be repealed.
So far, Pouroulis says Tharisa is pleased with its interactions with government on the development of the Karo Mining and Salene Chrome assets on the Great Dyke of Zimbabwe, which contains the world’s largest-known platinum group metals (PGMs) deposits outside South Africa.
“The engagement with the regulator has been very accommodating and amenable to our efforts in Zimbabwe. We haven’t begun exploration, but in terms of the environmental-impact assessment (EIA) consultation process, things have been going very well.”
He adds that the Zimbabwe government has also been accommodating of any potential investor in Zimbabwe and the country’s communication and messaging is consistent through its departments, whether it be the environment or finance department. “There is a consistent will to attract investment and make it viable for foreign direct investment.”
Underpinning Pouroulis’s sentiment, President Emmerson Mnangagwa said in October that the Zimbabwe government will soon open the platinum sector to all interested investors, while a diamond policy, of which there was none before, will be announced soon.
According to media reports, Mnangagwa is committed to opening Zimbabwe’s economy to the rest of the world to attract the foreign direct investment critical to reviving its wilted economy.
Pouroulis says the liquidity of the economy poses one of the larger challenges for any new investment in Zimbabwe, noting that the revival of the economy is a longer road to walk and a journey that will be dictated a lot by how easy it is to invest in the country.
Tharisa’s decision to invest in Zimbabwe was taken, owing to the first-mover advantage and knowing that there is a well-established mining industry in the country, where “a new policy and regime are presenting opportunity”, he notes in a telephone interview with Mining Weekly.
Tharisa acquired a 26.8% shareholding in Karo Mining in June, giving it access to a tier one PGM and base metal resource on the Great Dyke for a cash consideration of $4.5-million. This followed its acquisition in May of a 90% stake in Salene Chrome, the holder of special grants over an area of about 9 500 ha of highly prospective illuvial chrome properties on the eastern side of the Great Dyke.
Karo Mining and the Zimbabwe government entered into an investment agreement in March this year under which Karo Mining has undertaken to establish an integrated mining and refining complex that could generate up to 15 000 direct jobs across the value chain.
The first of the projects that has been awarded to Karo Platinum, an indirect 50% held subsidiary of Karo Mining, comprises PGM mining rights under a special grant covering an area of 23 903 ha in the Mashonaland West District of Zimbabwe. This area of land was recently released by Zimbabwe Platinum Mines from its mining lease area in support of government’s efforts to enable participation by other investors in the platinum mining industry in Zimbabwe. The remaining 50% shareholding in Karo Platinum is held by an investment company wholly owned by the government of Zimbabwe.
Tharisa has agreed to provide a $8-million debt facility to Karo Platinum for the initial geological exploration and sampling work to determine a compliant mineral resource. Tharisa will manage the exploration and oversee the subsequent bankable feasibility study.
Through its shareholding in Karo Mining, Tharisa also has an option to participate in other downstream projects through discounted farm-in arrangements at a later stage. The planned integrated mining and refining complex will encompass platinum mining, precious metals and base metals refining, and a 300 MW solar power plant.
“The Karo Platinum and Salene Chrome resources are once in a lifetime opportunities and gaining access to them requires timing and risk appetite. The timing was opportune. If we had to wait five years for stability before making a move, we may not have these opportunities,” explains Pouroulis.
He says the decision to expand geographically and evaluate new commodities has been embedded in Tharisa’s strategy since day one, adding that the company was never destined to be a single-asset investment holding company.
Therefore, when the opportunity came in Zimbabwe with the change in regime, and a policy shift opened the country for potential exploration, Tharisa looked at the country’s alluvial chrome and the much larger PGMs resource on the Great Dyke with a lot more interest.
In terms of Tharisa’s future growth, Pouroulis says the company is open to opportunities in Southern Africa predominantly and is looking to invest in commodities such as electric vehicle raw materials – commodities that are forecast to be in deficit in future.
Tharisa is currently completing the EIAs for both the Karo Platinum and Salene Chrome projects. “The assessment for Selana Chrome will be submitted in October and, on approval, we will start with the trenching process to verify the resource. We hope that, in short order, we will have our first processing plant producing chrome concentrate,” notes Pouroulis.
On the Karo Platinum side, Tharisa is expecting to submit an EIA this month and, thereafter, start a diamond core drilling programme to verify the resource of some 96-million ounces 4E (gold, platinum, palladium and rhodium) and advance the project to the feasibility stage, whereby Tharisa can decide on the viability of investing in development and processing capacity.
“So, these projects are going through your typical exploration phase. While we do know the resources are there, mitigating the risk involved, it is still about verifying the viability of the resources to validate our capital investment decision,” Pouroulis points out.
Looking to the Future
During the 2019 financial year, he expects to have started seeing tangible results from Tharisa’s exploration projects in Zimbabwe, first in terms of chrome and, thereafter, PGMs.
With the Salene Chrome project, the intention is to commission a pilot plant to gain insight into the recoverability and mineralogy of the illuvial chromite in the footprint, providing a blueprint to roll out a full-scale processing plant. “Within this 12-month period, I think we should see a lot of information, particularly around resource delineation, and potentially some early production from the illuvial chrome pilot plant.”
He says the Tharisa mine, on the south-western limb of the Bushveld Complex, has upgraded its guidance for 2019 to produce 1.5-million tons of chrome concentrate at 160 000 oz through the deployment of numerous optimisation programmes, including the commissioning of a fourth-stage crusher, in October, and PGM flotation upgrades.
On Tharisa’s performance over the 2018 financial year, Pouroulis notes that the company exceeded market guidance and did it in a safe manner, receiving best in class safety awards.
“A strong core value of ours is the safety of our employees, and we strive for a zero-harm safety environment, and, while we are doing well, we still have room for improvement.”
He says the performance over the period was really underpinned by the recovery of metals. “We have a lot of focus on process technology innovation to improve the recovery of metals that flow through the processing plant.” Tharisa’s PGMs recovery for 2018 was 84.1%, up from 80% for the previous financial year, and chrome was up 3% to 66%, compared with the prior reporting period.
“These incremental improvements not only result in increased production units of chrome and PGMs but also an increased margin because more value is being extracted from the same fixed overhead. Therefore, the constant improvement of metals recoveries is imbedded in our culture.
“We are committed to our dividend policy and to remaining a dividend payer through strong capital discipline, while offering our shareholders and potential new shareholders growth in a very prospective new territory,” Pouroulis concludes.