UK & US

Tharisa benefits from balance of PGM and chrome production

  • Significant high margin PGM production
  • Chrome production supplies steel demand
  • Experienced mining operators

What does Tharisa do?

Tharisa PLC (LON:THS) owns and operates mines in South Africa that produce a basket of commodities, principally chrome and the platinum group metals (PGMs).

The company's production is weighted more heavily towards palladium than others in the PGM space.

What's the latest?

Coronavirus has upset the applecart right across the global economy, but prior to that, Tharisa was doing well.

Interim results in May showed profit before tax for the six months to March jumped 72% year-on-year to US$17.5mln on revenue that climbed 17% to US$194.6mln, helped by a sharp increase in PGM prices.

The average PGM basket price during the period was US$1,612 per ounce, compared to US$1,017 in the corresponding period of 2017/18.

Tharisa has ramped its mine back up to full capacity from 1 May after getting received approval from the South African authorities.

What the boss says

“Rhodium represents approximately 10% of our production and palladium 16%,” says chief executive Phoevos Pouroulis. “Were classified more in the chrome space," he adds.

That means the market doesn't always appreciate the PGM production, and that in turn means there's a chance to catch exposure to PGMs at a relatively advantageous price.

“We are a co-producer, so we cant selectively mine either metal, but our low-cost model that we have still allows us to generate a margin on the chrome and a huge one on the platinum group metals.”

Allowing for a strong recovery after the coronavirus blip, stainless steel demand looks set to stay strong, and Pouroulis says hes “optimistic” around the fundamentals for stainless steel.

What do analysts say?

Analysts at Berenberg said May's half-year results were broadly in line with expectations, with revenues a touRead More – Source