TIDMTHS
RNS Number : 2555J
Tharisa PLC
09 April 2020
Tharisa plc
(Incorporated in the Republic of Cyprus with limited
liability)
(Registration number HE223412)
JSE share code: THA
LSE share code: THS
A2X share code: THA
ISIN: CY0103562118
LEI: 213800WW4YWMVVZIJM90
('Tharisa' or the 'Company')
Second quarter production report for the quarter ended 31 March
2020
South African Government imposed countrywide lockdown due to
COVID-19
-- Lockdown imposed as of afternoon shift on 25 March 2020 for 21 days
-- Reduced mining activities commenced week of 6 April 2020
utilising the 300 ktpm Voyager Plant
-- Force majeure declared on metallurgical chrome contracts
-- Tharisa has received force majeure notifications from its PGM concentrate off-takers
-- Ongoing capital projects have been suspended
-- Lenders proactively supporting business
-- Stockpile financing in progress
Salient features for the quarter ended 31 March 2020
-- Reef tonnes mined 1 131.1 kt and tonnes milled 1 166.9 kt
-- Platinum Group Metals ('PGMs') recovery at 83.7% with the
production of 32.1 koz on a 6E basis
-- Chrome recovery at 61.8% with concentrate production of 310.1 kt
-- Stripping ratio of 12.2 m(3) :m(3) ahead of life of open pit requirements
-- LTIFR of 0.08 per 200 000 operating hours worked
Salient features for the six months ended 31 March 2020
-- Reef tonnes mined 2 274.1 kt with 2 414.1 kt milled
-- PGMs recovery at 82.9% with production of 66.5 koz on a 6E basis
-- Chrome recovery at 62.5% with concentrate production of 652.6 kt
-- Third party chrome production of 117.0 kt
-- Stripping ratio ahead of life of open pit requirements at 11.6 m(3) :m(3)
-- PGM basket price of US$1 612/oz (ZAR24 178/oz)
-- ZAR:US$: Exchange rate weakened to 15.0:1.0
Commenting on the production results, Tharisa CEO Phoevos
Pouroulis, said:
"The quarter under review showed a strong performance with
Tharisa operating at consistent mining and stripping rates, with
solid performances from ore processing. As such, we are pleased
with the stable performance over this past quarter which was in
line with reaching our Vision 2020 targets for the end of calendar
2020.
The impact of COVID-19 remains a significant and unquantifiable
threat to South Africa's economy - Tharisa fully supports the
Government's initiatives to combat this global pandemic. Since the
commencement of the lockdown, Tharisa has fully complied with the
DMRE to ensure that the Tharisa Mine is able to continue reduced
operations during the lockdown period. Tharisa is a significant
producer of chemical and foundry grade chrome concentrates which
are used in a number of essential industries.
I am extremely proud of our team working tirelessly with the
DMRE and the Minerals Council to enable the Tharisa Mine to
continue operations during the lockdown period, whilst safeguarding
our employees in terms of social distancing and improved health
measures in an already open air, low labour intensive
environment."
Safety
Safety is a core value and Tharisa continues to strive for zero
harm at its operations. An LTIFR of 0.08 per 200 000 man hours
worked was recorded at the end of the quarter.
Tharisa fully supports the Cypriot, South African and Zimbabwean
government's initiatives in dealing with the COVID-19 pandemic and
has implemented and will continue to adhere to all measures as
instructed by the respective governments, applying best practice
protocols.
Production update
The production update for the quarter and six months ended 31
March 2020 is as follows:
Quarter Quarter Quarter Quarter Half
ended ended on quarter ended year
31 Mar 31 Dec movement 31 Mar ended
2020 2019 % 2019 31 Mar
2020
------------ -------- -------- ------------ --------
Reef mined kt 1 131.1 1 143.0 (1.0) 1 132.9 2 274.1
m(3)
Stripping ratio : m(3) 12.2 10.9 11.9 7.4 11.6
Reef milled kt 1 166.9 1 247.1 (6.4) 1 145.0 2 414.1
PGM flotation feed kt 872.4 921.0 (5.3) 850.3 1 793.5
PGM rougher feed
grade g/t 1.37 1.41 (2.8) 1.46 1.39
PGM recovery % 83.7 82.2 1.8 85.5 82.9
6E PGMs produced koz 32.1 34.4 (6.7) 34.0 66.5
Average PGM contained
metal basket price US$/oz 1 822 1 406 29.6 1 048 1 612
Average PGM contained
metal basket price ZAR/oz 27 690 20 745 33.5 14 694 24 178
Cr(2) O(3) ROM grade % 18.2 18.3 (0.5) 18.0 18.2
Chrome recovery % 61.8 63.1 (2.1) 62.9 62.5
Chrome yield % 26.6 27.5 (3.3) 27.0 27.0
Chrome concentrates
produced (excluding
third party) kt 310.1 342.5 (9.5) 308.7 652.6
Metallurgical grade kt 233.6 261.0 (10.5) 232.6 494.6
Specialty grades kt 76.5 81.5 (6.1) 76.1 158.0
Third party chrome
production kt 54.7 62.3 (12.2) 60.3 117.0
Metallurgical grade
chrome concentrate US$/t
contract price CIF China 129 145 (11.0) 162 138
Metallurgical grade
chrome concentrate ZAR/t
contract price CIF China 1 965 2 120 (7.3) 2 268 2 052
Average exchange
rate ZAR:US$ 15.3 14.7 4.1 14.2 15.0
----------------------- ------------ -------- -------- ------------ -------- --------
Mining
Tharisa's mining performance was tracking the requirements to
attain the Vision 2020 production volumes. This was enabled
primarily through the pit redesign, which was an area of focus
during the 2019 financial year, and is bearing fruit as reef volume
availability and bench length provide the necessary flexibility to
attain the increased production targets planned under Vision
2020.
Mining was interrupted by the government imposed lockdown on 25
March 2020, impacting the last ten days of March. Tharisa is fully
supportive of the measures put in place by the South African
Government and is committed to applying best practice protocols as
advised by the relevant authorities. The safety and wellbeing of
our employees, contractors and stakeholders is paramount to the
business.
Reef tonnes mined for the quarter totalled 1 131.1 kt,
comparable to the 1 143.0 kt mined in Q1 2020, totalling 2 274.1 kt
for the six months ended 31 March 2020. The stripping ratio
improved to 12.2 m(3) :m(3) for the quarter and recorded 11.6 m(3)
: m(3) for the six month period.
The pit and the mining equipment was placed safely on care and
maintenance, prior to Tharisa receiving permission to continue
limited mining production during the lockdown.
Processing
The two independent processing plants at Tharisa, namely Genesis
and Voyager, continued to perform above nameplate capacity prior to
the lockdown. Pleasingly the quarter saw an increase in PGM
recovery, up by 1.8% to 83.7% and averaged 82.9% for the six
months, resulting in the production of 32.1 koz and 66.5 koz
respectively on a 6E basis. Rougher feed grade was 1.37 g/t for the
quarter and 1.39 g/t for the half year.
Chrome concentrate production was 310.1 kt for the quarter,
comprising 233.6 kt of metallurgical grade and 76.5 kt of specialty
grade, which when added to Q1 performance resulted in total chrome
concentrate production of 652.6 kt for the six months, split into
494.6 kt of metallurgical grade chrome and 158.0 kt of speciality
grades.
Third party chrome production was lower this quarter at 54.7 kt,
as the K3 plant started work late in January 2020 aligned to the
operations of the concentrator. Six months third party chrome
production was 117.0 kt. K3 remains fully suspended during the
lockdown.
As a result of the lockdown, Tharisa's Vulcan Project is
suspended until further notice.
Update on South African government imposed lockdown due to
COVID-19
Tharisa makes reference to its announcements of 24 March 2020
and 26 March 2020, noting the decision by the President of South
Africa, Cyril Ramaphosa, to implement a three-week national
shutdown, as part of wide-ranging interventions to combat the
spread of COVID-19. Lockdown for 21 days began at midnight on
Thursday, 26 March 2020, and will continue until midnight on
Thursday, 16 April 2020.
Since the imposed lockdown, Tharisa has developed and submitted
an interim essential production plan that would see operations
continue with a significantly reduced number of personnel on a
shift basis.
This plan has received government support and permission,
particularly as Tharisa is one of the world's key suppliers of
chemical grade chrome concentrates, a material used in a number of
essential industries.
The safety and health of our people at Tharisa is a core value
and one that will not be compromised. And as such, only the
required operational teams will be onsite during the essential
production plan. Included in the staff complement are the necessary
health and safety crews.
Notwithstanding the reduced staff complement and as part of our
commitment to our local communities, Tharisa will also continue to
supply essential services to parts of the greater Marikana
community, including freshwater and waste collection services, and
maintain road infrastructure within the community.
The interim essential production plan has since commenced, and
production on the reduced basis has been steady since Monday, 6
April 2020. The plan sees run of mine material fed only into the
Voyager Plant (nameplate capacity of 300 ktpm), and aiming to have
the Voyager Plant operate at an economically optimal rate.
We believe this interim plan is a sustainable solution, and as
part of the mining plan, we continue to move waste material at the
stipulated life of mine strip ratio. Tharisa will ensure optimal
balance between ROM material to feed the Voyager Plant and waste
removal so as to ensure the pit development is not compromised.
Market update
The period under review saw a further divergence of the prices
for our products, with PGM's achieving record highs during the
quarter and half-year under review, resulting in an average PGM
basket price of US$1 822/oz (ZAR27 690/oz) for the quarter and US$1
612/oz (ZAR24 178/oz) for the six months, with palladium and
rhodium again being the driving force.
The average metallurgical chrome price received for the quarter
was US$129/t with current Chinese domestic prices trading at
US$130/t, on the back of reduced pipeline supplies from South
Africa as a result of the operational lockdown experienced by most
large producers. For the six months, Tharisa achieved an average
metallurgical price of US$138/t which is 14.8% lower than the
average price of US$162/t received for FY2019.
Subsequent to the reporting period, there is additional margin
support for Rand based costs, with the South African Rand trading
at above ZAR:US$ 18.00 and oil prices having weakened significantly
with South African diesel costs dropping by 10% per litre in April
2020.
Outlook
As stated in the announcement on 24 March 2020, Tharisa's
guidance for the year was suspended and will remain so until the
Company is in a position to quantify the impact of the COVID-19
pandemic and the South African lockdown.
Our co-product model utilising mechanised and low labour
intensive mining in an open pit environment, is optimally
positioned to rapidly resume full-scale operations upon lifting of
the lockdown restrictions.
The above information has not been reported on or reviewed by
Tharisa's auditors.
Paphos, Cyprus
9 April 2020
JSE Sponsor
Investec Bank Limited
Investor relations contacts:
Ilja Graulich (Head of Investor Relations and
Communications)
+27 11 996 3500
+27 83 604 0820
igraulich@tharisa.com
Financial PR contacts:
Bobby Morse / James Husband
+44 020 7466 5000
tharisa@buchanan.uk.com
Broker contacts:
Peel Hunt LLP (UK Joint Broker)
Ross Allister / David McKeown
+44 207 7418 8900
BMO Capital Markets Limited (UK Joint Broker)
Thomas Rider / Neil Elliot / Michael Rechsteiner
+44 020 7236 1010
Berenberg (UK Joint Broker)
Matthew Armitt / Jennifer Wyllie / Detlir Elezi
+44 20 3207 7800
Nedbank Limited (acting through its Corporate and Investment
Banking division) (RSA Broker)
Shabbir Norath
+27 11 295 6575
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END
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