• Tharisa's Q3 report: Strong production, higher cash balance
  • Platinum and chrome prices remain firm
  • Political instability concerns pose risks

Sandton- Tharisa, the dual-listed platinum group metals (PGMs) and chrome co-producer, has released its production report for the third quarter of FY2023, ended 30 June 2023. The report highlights the company's strong balance sheet, with cash on hand increasing by US$36.8 million to US$242.6 million, resulting in a net cash position of US$141.5 million, which will support the company's growth while providing returns to shareholders.

Tharisa's PGM output increased to 37.0 koz quarter on quarter, with chrome output marginally lower at 378.8 kt, as mining volumes remained constrained. However, metallurgical grade chrome concentrate prices were up 7.8% quarter on quarter, averaging US$290/t. The Karo Platinum Project remains on track, with major milestones of the first concrete pour and pilot mining commencing, as Tharisa's equity contribution of US$135 million is being drawn down to match capital requirements with cash flow.

Despite domestic headwinds and macro events that have pressured the business, Tharisa's CEO, Phoevos Pouroulis, stated that the nature of Tharisa with modern, low-cost structures leaves it well positioned to weather the environment and continue to provide returns to shareholders while actively and sustainably growing the business.

Tharisa's production report comes at a time when the platinum market is showing signs of strength, with platinum getting firmer commodity prices in recent years due to its use in electric vehicles and steel. The World Platinum Investment Council (WPIC) has revised its platinum deficit forecast for 2023, up 77% to 983 koz, as demand grows by 28% and supply decreases by 1% year-on-year.

The chrome market is also performing well, with solid demand leading to prices that averaged well above those achieved in previous quarters. However, inland logistics in South Africa remain challenging, and the supply pipeline remains tight, particularly as there have been no major primary output increases in the local market due to the lack of available resources and power constraints for smaller producers unable to access standby power.

One of the key countries where Tharisa has a virgin project is going to presidential polls in the coming month, and the country has a history of failing to repatriate shareholder dividends. The political instability could affect Tharisa's future in the region. Moreover, electricity remains a key concern at Karo, with Zimbabwe encouraging miners to build their solar plants for their own electricity use.

In terms of ESG issues, Tharisa said it is committed to reducing its carbon emissions by 30% by 2030, and the development of a roadmap is continuing to be net carbon neutral by 2050.

In conclusion, Tharisa's strong balance sheet, coupled with the firm platinum and chrome prices worldwide, positions the company well to weather the current economic environment and provide returns to shareholders. However, political instability and electricity concerns in the region and ESG issues remain critical factors that could affect the company's future outlook.

Respect Gwenzi, Chief Analyst at Equity Axis, commented on Tharisa's Q3 production report, noting the company's strong revenue, cost, and profitability metrics, as well as its commitment to ESG issues. Gwenzi also highlighted the importance of ESG concerns as a key corporate benchmark, and praised Tharisa's approach to reducing carbon emissions and becoming net carbon neutral by 2050. However, Gwenzi also noted the risks posed by political instability and electricity concerns in the region, which could affect Tharisa's future outlook. Overall, Tharisa's Q3 report was positive, with strong production and higher cash balance, but the company will need to navigate these risks in order to maintain its growth trajectory.

-Equity Axis News