Tharisa lowers full-year output target despite strong bounce

Tharisa, an SA-focused chrome and platinum group metals (PGMs) producer, has bounced back strongly from the country’s pandemic lockdown, but has lowered its full-year production forecast.

Tharisa is one of the first sizeable mining companies to report production results showing the effect of the lockdown on its operations. It has just one opencast mine near Brits.

Unlike the large, underground mines in SA, opencast operations were able to return to production sooner, limiting the negative effects of the lockdown.

Tharisa, listed in Johannesburg and London, lifted the suspension on its production guidance for the year to end-September, notifying the market to expect PGM output to be between 130,000oz and 135,000oz and chrome concentrate production to range between 1.25-million and 1.3-million tonnes.

This compares to its forecast of between 155,000oz and 165,000oz of PGMs and up to 1.55-million tonnes of chrome.

“We believe that management has factored a healthy dose of conservatism into these estimates, given the strong plant and mining run rate in the quarter, but we are conscious of the rise in the Covid-19 infection rate in SA as the company goes through its winter, which has the potential to affect operations despite the company’s best efforts and prevention procedures,” analysts at Berenberg said in a note.

SA’s government ordered a strict lockdown of the economy from March 27 to curtail the spread of the coronavirus, shutting mines and industry before gradually relaxing conditions in phases.

For the June quarter, Tharisa reported surprisingly robust production despite the severe disruptions at its operations in April. It only returned to full capacity from May 10.

“Operating results for the quarter have been exceptionally strong with both May 2020 and June 2020 achieving consecutive record run-of-mine output levels,” said CEO Phoevos Pouroulis.

“These efforts, together with a very credible performance from the processing team has ensured our quarter-on-quarter production levels for both PGMs and chrome concentrates have shown increases at a time when we were not operating at full capacity,” he said.

Tharisa’s PGM production increased to 35,000oz, up from 32,100oz for the March quarter and 34,100 in the same quarter a year earlier.

Chrome concentrate increased by nearly 4% over the same period to 321,400 tonnes, but it was significantly lower than the 334,000 tonnes in the June quarter a year earlier.

“Tharisa has sold its output for the quarter notwithstanding that rail and port logistics remain constrained,” Pouroulis said.

Third-party chrome output fell to zero from 55,000 tonnes in the March quarter.

There was no production at the K3 chrome plant that receives material from Sibanye-Stillwater. The plant should resume production later in July.

Tharisa was “confident of replicating” the performance in its final quarter of the 2020 financial year, Pouroulis said.

The rand price for the basket of six PGMs Tharisa produced in the quarter increased to an average R29,266/oz, up from R27,690/oz in the March quarter.

The price of metallurgical chrome, which is used in stainless steel manufacturing, increased to $143/tonne or R2,560/tonne compared to $129/tonne or R1,965/tonne.

Tharisa reported the death of one of its staff due to complications arising from a Covid-19 infection.

seccombea@businesslive.co.za