JOHANNESBURG (miningweekly.com) – The share price of the JSE-listed Tharisa plc rose strongly in Johannesburg on Wednesday on a turnaround in the profitability of the platinum group metals (PGMs) and chromium concentrates producer.

The share price of the Cyprus-domiciled but South Africa-focused company, which increased PGMs production by 49.5% to 57 400 oz in the six months to March 31, rose 12.7% in early trade to R7.10 a share before falling back to R6.99 a share later in the day.

“It’s pleasing to report a turnaround,” said Tharisa CEO Phoevos Pouroulis of his company generating a before-tax profit of $7.1-million in the six months to March 31, compared with the $31.1-million loss in the corresponding six months of 2014.

Milestone records set in March included the pushing down of costs to a level of $458/oz contributing to a gross PGM margin of 39.1% and record chrome concentrate shipments of 135 000 t at stable prices.

“We shot the lights out in terms of recovery and PGM output,” Pouroulis told Creamer Media’s Mining Weekly Online in a telephone interview on the company's performance for the month of March.

Based on the current showing, Tharisa is on track to produce at a steady-state rate of an eventual 144 000 oz/y, with PGM recoveries higher than expected.

“We’re confident we’ll get there,” he added, pointing out that, other than for stay-in-business capital, the company had no significant requirement for major capital expenditure, most of which had already been sunk into the development of Tharisa’s openpit mine on the south-western limb of South Africa’s Bushveld Complex, where the advantageous co-production of PGMs and chrome concentrates takes place.

Should technology be deployed to improve chrome recoveries and go-ahead be given for the on-site public-private railway siding, both projects would be ring-fenced for funding by either cash flow, or debt, or both.

Incentivising go-ahead for the planned public-private on-site railway siding partnership are its quick payback as well as its scale for bulk exportation, which attracts better prices than containerised exportation.

“The fact that we’ve got such healthy margins in a PGMs’ industry that’s struggling, is really the take-away here,” said Pouroulis.

Tharisa CFO Michael Jones pointed out to Mining Weekly Online that operating cash flow before working capital requirements in the six months to March 31 was $18.2-million and this was likely to increase on the back of a run-of-mine stockpile providing a throughput of 400 000 t a month and higher PGM output providing increased receivables.

The higher throughput plus improved logistics is also poised to boost chrome concentrate production, which was 563 300 t in the six months to March 31.

Group logistics company Arxo has sufficient storage capacity at both the Richards Bay dry bulk terminal and the Durban container port to manage the full production capacity of the Tharisa mine.

Tharisa currently transports the chrome concentrate to the Marikana rail siding in the North West province, for loading on to rail wagons, which took 83% of it to the Richards Bay dry bulk terminal in the six moths to March 31.

The company is guiding a repeat of first-half output in the second half of its financial year to September 30, maintenance of its Voyager Plant’s crushing clipping 12% off production time in the current quarter.

Despite revenue being down 1.9% to $123.7-million on a lower PGM basket price in the six months to March 31, earnings before interest, taxes, depreciation and amortisation rose 37.7% to $17.9-million and operating profit 63.5% to $12.1-million.

Headline profit a share rose 150% to $0.01 a share from the pro forma amount of $0.004 a share last year.

The company said in a Stock Exchange News Service announcement that production of both PGMs and chrome concentrates were expected to continue to increase as the mining operation provided consistent feed and the plants process mined ore only.

During the transition period and as planned, commissioning tailings were reprocessed through the Genesis Plant in addition to mined ore.

The average PGM basket price fell by 12.4% in dollar terms while the contract price for metallurgical grade chrome concentrate rose by 3.3% in the period.

A total of 58 400 oz PGMs are sold to Impala Refining Services, a subsidiary within the JSE-listed Impala Platinum group, as part of the offtake agreement with the mine’s prill split of 56.5% platinum contributing to a favourable PGM basket price.

A total of 461 500 t of metallurgical grade chrome concentrates were sold to China, 83% shipped in bulk and the balance in containers.

The company reported that it had entered into a further offtake agreement with Rand York Minerals for the majority of its production of chemical grade chrome concentrates.

Pouroulis said Tharisa’s main current priority was to improve chrome recovery, with operational flexibility being provided by its two processing plants, the 300 000-tonne-a-month Voyager Plant and the 100 000-tonne-a-month Genesis Plant.

Steady state chrome production had been revised to 1.5-million tons in the 2016 financial year as a result of the installed wet high intensity magnetic separation units not achieving the expected improvement in chrome recoveries.

From the start of June, blended mined ore had been fed into the processing plants in a bid to improve recoveries to design levels.

The proven and probable openpit and underground mine reserve of 125.9-million tonnes was reduced by 4.8-million tonnes as a result of depletion in the six months to March 31.

Following the tragic fatality the company suffered on November 5, the mine is continuing to implement risk management processes, strategies, systems and training to ensure a safe working environment, with its lost-time injury-frequency rate now at 0.07 for every 200 000 person hours worked.

Multiple mineralised layers with different, but defined, PGM and chrome contents were mined using a multiple-contractor mining model, which was yielding production gains.

A total of 1.95-million tonnes of ore at an average grade of 1.65 g/t of six-element (6E) PGMs and 18.7% chrome was mined and 5.6-million cubic metres of waste rock was moved in the six months to March 31.

This allowed the appropriate blend of ore to be processed through the Voyager Plant while reprocessing commissioning tailings through the Genesis Plant during the change to a multiple mining contractor model and during periods of power supply reductions.

A total of 2.2-million tonnes of reef and commissioning tailings were processed through the two plants to produce the 57 400 oz of contained 6E PGMs and 563 300 t of chrome concentrates.

Plant throughput equates to 91.7% of combined nameplate capacity of the plants for the six months.

The Voyager Plant achieved a recovery of 78.8% in March, demonstrating the significant improvements yielded from the optimisation initiatives such as the high-energy flotation circuit.

The reprocessing of commissioning tailings through the Genesis Plant impacted negatively on the overall chrome recoveries, particularly chemical and foundry grades, and pushed chrome production down 1.1%.

A total of 47 400 t of higher value add chemical and foundry grade chrome concentrates were produced compared with 69 400 t in the corresponding previous six months.

The average chrome recovery across all plants was 56.4%, falling short of the current plant capacity design of 65%.

Brian Chi Ming Cheng has been appointed to the board as a nonexecutive director, reflecting the considerable Chinese shareholding, and domestically the black economically empowered (BEE) Thari Resources owns 20% of the mining company and the Tharisa Community Trust the remaining 6%, which meets the BEE ownership requirement of South Africa’s Mining Charter.

On the company receiving a "letter before action" from a firm of solicitors representing a shareholder, on the issue of the compulsory conversion of the convertible redeemable preference shares into ordinary shares, Pouroulis told Mining Weekly Online that there was nothing further to say except that the company had made no provision for claims.