Solid Tharisa to pay interim dividend
The miner shifts into high gear as a producer of chrome and platinum group metals
Tharisa, a chrome and platinum group metals miner, has ramped up its dividend payments and will introduce an interim return to shareholders as the cash-generative business moves towards becoming a far larger producer of both minerals.
It would be fair to say Tharisa had a strong financial year, reporting a final dividend of $0.05 per share, up from $0.01 per share in 2016, and a 50% increase in its dividend policy to 15% of consolidated net profit after tax as well as the proposed interim dividend.
Tharisa recorded operating profit of $95.9m compared to $32m a year earlier and posttax profit of $67.7m, up from the previous year’s $15.8m.
"We see the potential in generating large free cash from this business," said CEO Phoevos Pouroulis — the company was regarded as trading at a discount relative to its peers.
Since the mine reached steady state production in 2014 the assets have generated operational free cash flow, said chief financial officer Michael Jones.
Tharisa generated 143,600oz of platinum group metals and 1.3-million tonnes of chrome concentrate, of which 323,100 tonnes was specialty-grade chrome that fetched an average $50 a tonne premium on top of the $200-a-tonne price for chrome concentrate during the year to end-September.
Tharisa forecast 150,000oz of platinum group metals for 2018 and 1.4-million tonnes of chrome concentrate, of which 350,000 tonnes would be specialty grade.
The miner’s target for 2020 was 2-million tonnes of chrome concentrate and 200,000oz of platinum group metals, with the increase coming from three projects. The first — a platinum flotation circuit — would be funded internally and the next two chrome-related projects funded independently and ring-fenced using debt and cash, Jones said.
Tharisa is in talks with Transnet about the construction of an 8km loop on the Marikana rail line to coincide with the 2020 production target.
The company would need to fund about R185m of the cost of building a loading station. It was considering an application for infrastructure funding to speed up the construction of the line and immediately lower the cost of the ore it trucks to Johannesburg, Pouroulis said.
Another little-discussed arm of the business was the wholly owned subsidiary Arxo Logistics and trading, which the board had mandated to grow, providing services to other companies, Pouroulis said.