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THARISA PLC - First quarter production report for the quarter ended 31 December 2018

11 January 2019 - 06:05 AM
THA
First quarter production report for the quarter ended 31 December 2018

Tharisa plc
(Incorporated in the Republic of Cyprus with limited liability)
(Registration number HE223412)
JSE share code: THA
LSE share code: THS
ISIN: CY0103562118
('Tharisa')

First quarter production report for the quarter ended 31 December 2018

Tharisa maintains its focus on optimising mining and processing performance

Salient features for the quarter ended 31 December 2018
- PGM production of 33.6 koz (6E basis) and chrome concentrate production of 305.4 kt
    - This represents quarter on quarter ('QoQ') decreases of 5.9% and 10.0% respectively, primarily
         as a result of reduced recoveries due to processing commissioning tailings
    - Partially offset by PGM rougher feed grade improving by 7.4% for the quarter to 1.59 g/t and the
         Cr2O3 ROM feed grade improving by 1.1% to 18.5% for the period
- Reduced recoveries driven by the processing of commissioning tailings to maintain plant
    throughput, following reduced availability of ROM material
    - Decline in QoQ mining as a result of reduced availability of equipment, particularly in the drill
         and blast operations
    - Ongoing planned maintenance programme to return the mining fleet to OEM standards
    - Good progress on implementing the maintenance strategy to achieve planned mining rates
    - Additional drilling capacity being added and new excavator being commissioned to address
         backlog in waste extraction
- From the end of January 2019, 24 hour continuous mining operations on the East Pit to increase
    capacity by c.15%
- The average PGM contained metal basket price for the first quarter was US$983/oz (ZAR14 050/oz),
    an increase of 5.9% in US$ terms from the last quarter and 7.5% in ZAR terms
- Sound safety performance with LTIFR of 0.17 per 200 000 man hours worked (0.18 per 200 000 man
    hours in Q4 2018)
- FY2019 production guidance revised to between 150 koz and 160 koz of PGMs (6E basis) and 1.4 Mt
    to 1.5 Mt of chrome concentrates

Commenting on the production results, Tharisa CEO Phoevos Pouroulis, said:
Although we had planned for a slower Q1 in terms of mining production, we did not anticipate the full
impact that blending tailings material would have on our overall recoveries. We will revert back to
processing fresh run of mine material from mid- January and will achieve our targeted recoveries. We are
addressing the operational performance of the mining division with particular reference to equipment
availability and utilisation through pro-active maintenance and enhancing the capacity of our drill and                                                                                                      
blast operations. We remain fully committed to our Vision 2020 targets and we are confident that the
processes currently underway will see an improved performance in the months to come. 

Safety
Safety is one of Tharisa's core values and Tharisa continues to strive for zero harm at its operations. An
LTIFR of 0.17 per 200 000 man hours worked was recorded at the end of the quarter.

Production update
The production update for the quarter ended 31 December 2018 is as follows:

                                              Quarter     Quarter       QoQ        Quarter         Year
                                               ended       ended    movement        ended        ended
                                               31 Dec     30 Sept         %         31 Dec      30 Sept
                                                2018        2018                     2017         2018

Reef mined                      kt            1 090.6     1 179.7         (7.6)     1 245.3     4 875.0

Stripping ratio                 m3: m3            6.7         7.2         (6.9)         7.8         7.9

Reef milled                     kt           1 192.5*     1 216.7         (2.0)     1 310.2     5 105.3

PGM flotation feed              kt              901.3       892.8          1.0       959.6      3 718.1

PGM rougher feed grade**        g/t              1.59        1.48          7.4         1.49        1.51

PGM recovery                    %                76.5        84.1         (9.0)        84.3        84.1

6E PGMs produced                koz              33.6        35.7         (5.9)        38.8       152.2

Average PGM contained metal     US$/oz            983         928           5.9        865         923
basket price

Average PGM contained metal     ZAR/oz         14 050      13 067           7.5     11 827       12 038
basket price

Cr2O3 ROM grade**               %                18.5        18.3          1.1         18.1        18.2

Chrome recovery                 %                58.9        64.5         (8.7)        65.5        66.0

Chrome yield                    %                25.6        27.9         (8.2)        27.9        28.4

Chrome concentrates produced    kt              305.4       339.2        (10.0)      365.8      1 448.0
(excluding third party)

  Metallurgical grade           kt              233.4       240.3         (2.9)      277.7      1 080.3

  Specialty grades              kt               72.0        98.9        (27.2)        88.1       367.7

Third party chrome production   kt               52.2        56.0         (6.8)        52.8       221.8

Metallurgical grade chrome      US$/t CIF         164         164            -         179         186
concentrate contract price      China

Metallurgical grade chrome      ZAR/t CIF       2 311       2 313         (0.1)       2 426       2 415
concentrate contract price      China
                                                                                                        
Average exchange rate           ZAR:US$          14.3        14.1          1.4         13.6       13.1
*   includes the processing of 75.9 kt of commissioning tails through the processing plants
** mined   ore only


Mining
Tharisa's mining division mined 1 090.6 kt of ROM during the quarter, a 7.6% decrease QoQ. A total of
2.1 Mm3 of over- and inter- burden was mined for the quarter. The stripping ratio of 6.7 on a m3:m3
basis remained below the LOM average of 9.5. The decline in QoQ mining was mainly due to reduced
availability of equipment, particularly in the drill and blast operations and there were therefore delays in
opening up adequate waste and reef benches to enable volume extraction. This was, in part, a result of
an ongoing planned maintenance programme to return the mining fleet to OEM standards.

Several key initiatives are underway as the mining division focusses on improving its performance:
- three additional drill rigs are currently on site as the efficiencies of the drill and blast operations are
   addressed. This is essential to achieving the targeted stripping ratio, and enables us to drill in excess
   of 100 km per month which will provide capacity to produce in excess of 5.2 Mt and achieve the
   Vision 2020 target of 5.6 Mt
- implementation of the necessary preventative maintenance systems to drive equipment availability
   and utilisation increases
- by the end of January 2019, mining of the East Pit will be moved to 24 hour continuous operations
   (currently 20 hour operation) to mirror the processing operations, thereby increasing capacity by
   some 15%
- new Caterpillar 6050 excavator commissioned to increase waste removal capacity as part of the
   planned asset replacement programme

In spite of the lower mined production volumes, the grade control initiatives have yielded positive
results, with the PGM rougher feed grade improving by 7.4% for the quarter to 1.59 g/t and the Cr2O3
ROM feed grade improving by 1.1% to 18.5% for the period.

Processing
The reduced level of ROM material was supplemented with the re-processing of 75.9 kt commissioning
tailings to maintain plant throughput, comprising 6.4% of combined mill throughput, allowing for a total
of 1 192.5 kt of reef to be milled in the first quarter, a 2.0% decrease from the last quarter of FY2018.
The processing of commissioning tailings negatively impacted on the overall production and recoveries
for the quarter, with PGM production decreasing by 5.9% to 33.6 koz (6E basis), a recovery of 76.5%,
and chrome concentrate production decreasing by 10.0% to 305.4 kt, a recovery of 58.9%. The
production of specialty grade chrome concentrates decreased by 27.2%, from 98.9 kt in the last quarter
of FY2018 to 72.0 kt.

The chrome production for the quarter from the Lonmin K3 chrome plant was 52.2 kt, a reduction of
6.8% from the previous quarter. This was caused by lower throughput due to the December holiday shut
down.

                                                                                                                        
Market update
The average PGM contained metal basket price for the first quarter was US$983/oz (ZAR14 050/oz), an
increase of 5.9% in US$ terms from the last quarter and 7.5% in ZAR terms.

The average metallurgical grade chrome concentrate price was US$164/t (ZAR2 311/t), which remained
flat in US$ terms and was marginally lower in ZAR terms for the quarter.

Specialty chrome concentrates, which accounted for 23.6% of Tharisa's quarterly chrome production,
continued to attract a significant premium to metallurgical chrome concentrate prices.

Outlook
In light of the Q1 performance, Tharisa updates its FY2019 production guidance to output of between
150 koz and 160 koz of PGMs (6E basis) and 1.4 Mt to 1.5 Mt of chrome concentrates, of which 25% will
be speciality grade chrome concentrates. The Tharisa team will continue to implement the Vision 2020
projects during FY2019, which will ensure that Tharisa delivers 200 koz of PGMs and 2.0 Mt of chrome
concentrates in 2020 from the Tharisa Mine.

The above information has not been reported on or reviewed by Tharisa's auditors.

Paphos, Cyprus
11 January 2019

JSE Sponsor
Investec Bank Limited

Financial PR contacts:
Bobby Morse / Augustine Chipungu
+44 020 7466 5000
tharisa@buchanan.uk.com

Broker contacts:
Peel Hunt LLP (UK Joint Broker)
Ross Allister / James Bavister / David McKeown
+44 207 7418 8900

BMO Capital Markets Limited (UK Joint Broker)
Jeffrey Couch / Thomas Rider
+44 020 7236 1010

Berenberg (UK Joint Broker)
Matthew Armitt / Sara MacGrath
+44 20 3207 7800

Nedbank Limited (acting through its Corporate and Investment Banking division) (RSA Broker)
                                                                                                   
Shabbir Norath / Reginald Demana
+27 11 295 6575

Investor relations contacts:
Daniel Thole / Ilja Graulich
+27 61 400 2939 / +27 83 604 0820




                                    

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