Platinum group metals (PGMs) and chrome producer Tharisa Mining’s volume recovery was slower than expected in the quarter ended March 31 owing to continued adverse weather, which impacted on flexibility in the openpit.

To address this issue, Tharisa appointed a contractor on a short-term basis to assist with waste mining from May 1.

Challenging weather conditions notwithstanding, Tharisa, which is dual-listed in London and on the JSE, reported a lost-time injury frequency rate of 0.27 for every 200 000 man hours worked.

The company maintained processing capacity by using run-of-mine (RoM) ore stockpiles and strategic RoM ore purchases, even though PGMs output was lower at 34 300 oz, compared with 42 700 oz in the previous quarter, owing to reduced recoveries from a suboptimal ore mix.

By contrast, chrome output increased by 5.7% to 404 800 t from 383 100 t in the first quarter, with RoM grades at 18.4%. The company's metallurgical-grade chrome concentrate prices rose by 20.6% quarter-on-quarter and 52% year-on-year.

“While chrome production was up, the ore mix saw PGMs output in January and February fall below expectations for the quarter.

“With our operational improvement implemented during the quarter already delivering results, and the additional flexibility that both new equipment and the additional waste contractor will bring to the pit, the second half of our financial year will see an improvement at our flagship Tharisa mine,” Tharisa CEO Phoevous Pouroulis said.

He advised that, owing to the challenges experienced in December through to February, the company’s management lowered full-year guidance by 10% to be prudent.

“The unique and unparalleled properties of our orebody, however, were once again shown to reap rewards as the chrome price reached levels as high as $300/t and, while the PGM prices have pulled back recently, even at these levels we continue to generate healthy margins,” he said.

The company also reported the conclusion of a $130-million debt facility with financial institutions Société Générale and Absa Bank, which remains undrawn.

Moreover, Tharisa has received an additional $5-million subscription in the Karo Mining Holdings bond, increasing the total proceeds to $36.8-million.

As of the end of the March quarter, Tharisa's cash on hand stood at $205.8-million, down from $213.9-million at the end of December last year. Nevertheless, the company's net cash position improved to $106.8-million, up from $101.1-million at the end of December.

“Tharisa continued to generate healthy free cash flow in the second quarter of our financial year despite the significant impact of severe weather conditions on our openpit mining operations.

“Tharisa’s Vision 2025 strategy of reaching optimal and sustainable production from the Tharisa mine remains intact, and we will benefit from the significant progress being made at Karo, our second tier one mine,” Pouroulis said.  

He added that the Karo platinum project was progressing on track and on budget, with ground clearance and civil contractors having begun work on site.

First ore will be delivered to the mill in the second half of 2024.

MARKETS

Pouroulis noted that PGM prices came under pressure during the quarter under review as demand softened and destocking weakened the strong pricing seen in the last financial year.

Rhodium and palladium prices were the most affected, with rhodium suffering from a small, tight and illiquid market influenced by a single seller.

He said the PGMs basket price was lower than most analysts had forecast because of generally directionless commodity markets in the quarter as macro events dominated fundamentals, along with a slower-than-anticipated economic uplift following the easing of Covid-19 restrictions in China.

However, Tharisa’s outlook for the PGMs basket remains strong as it expects tight supply and strong demand to ensure that prices strengthen, with platinum being the standout metal as the continued shift into a supply deficit becomes more evident.

Chrome prices remained robust following on from a strong first quarter, Pouroulis reported, with a spot price of about $285/t at the time of the release of the results.

He said stockpiles in China continued to hover at historically low levels, while demand for the product from South Africa remained strong. However, supply was being hampered by loadshedding and inland logistics challenges.

“While we will see some short-term interruptions in China as some furnaces undergo maintenance, the long-term fundamentals for the metal remain firmly intact, in particular due to the supply concentration and the operational challenges some competing industry players have cited publicly, which will have an impact on the already tight supply-demand fundamentals,” Pouroulis said.