Second quarter FY2017 Production Report

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')

 

Second quarter production report for the period ended 31 March 2017

Another quarter of steady production

 

Highlights for the three months ended 31 March 2017

·     Reef mined of 1 219.2 kt continues to exceed the required run rate of 4.8 Mtpa on an annualised basis

·     PGM production of 34.3 koz and chrome concentrate production of 314.6 kt

·     Specialty chrome production of 75.4 kt, 24.0% of total chrome production

·     PGM recoveries at 76.2% and chrome recoveries at 62.5%

·     Average per ounce PGM basket price of US$783, US$43 an ounce higher quarter-on-quarter

·     Average contracted metallurgical chrome prices at US$338/t, up 35.2% quarter-on-quarter

 

"Tharisa is proud to have performed at consistent levels for the fifth consecutive quarter.  With substantially increased chrome concentrate prices achieved during the first half of FY2017, together with solid operational performance, we continue to deliver on our low cost, profitable co-product business model," said Tharisa CEO Phoevos Pouroulis.

 

Safety

Safety remains a top priority and Tharisa continues to strive for zero harm at its operations. We recorded an improved LTIFR of 0.11 per 200 000 man hours worked.

 

Production update

The production update for the quarter ended 31 March 2017 is as follows:

		Quarter ended 31 Mar  2017	Quarter ended 31 Dec  2016	Quarter on quarter movement %	Quarter ended 31 Mar 2016	Half year ended 31 Mar 2017
Reef mined	kt	1 219.2	1 229.9	(0.9)	1 234.2	2 449.1
Stripping ratio	m³ waste/m³ reef	7.5	9.0	-	7.1	8.4
Reef milled	kt	1 211.3	1 206.4	0.4	1 199.6	2 417.7
PGM flotation feed tonnes	kt	897.9	885.1	1.4	942.3	1 783.0
PGM rougher feed grade	g/t	1.56	1.52	2.6	1.74	1.54
6E PGMs produced	koz	34.3	34.8	(1.4)	36.0	69.1
PGM recovery	%	76.2	80.5	(5.3)	68.5	78.3
Average PGM contained metal basket price	US$/oz	783	740	5.8	685	760
Average PGM contained metal basket price	ZAR/oz	10 355	10 287	0.7	10 849	10 306
Cr₂O₃ ROM grade	%	17.5	17.5	-	18.3	17.5
Chrome recovery	%	62.5	64.3	(2.8)	63.9	63.4
Chrome yield	%	26.0	26.7	(2.6)	27.7	26.3
Chrome concentrates produced	kt	314.6	322.2	(2.4)	332.3	636.8
Metallurgical grade	kt	239.2	245.1	(2.4)	259.9	484.3
Specialty grades	kt	75.4	77.1	(2.2)	72.4	152.5
Metallurgical grade chrome concentrate contract price	US$/t CIF China	338	250	35.2	81	278
Metallurgical grade chrome concentrate contract price	ZAR/t CIF China	4 430	3 488	27.0	1 262	3 783
Average exchange rate	ZAR:US$	13.2	13.9	5.0	15.8	13.6

 

  

Mining

Reef mined from the open pit totalled 1 219.2 kt for the quarter notwithstanding mining operations being affected by unusually high seasonal rainfall.  Total waste of approximately 2.5 Mm³ was moved during the quarter (33% of which was interburden) at a stripping ratio of 7.5 on a m³:m³ basis.  The life of open pit average stripping ratio is 8.9. The ROM stockpile ahead of the processing plants was 230.2 kt as at 31 March 2017.

 

Given the long life of the open pit of 18 years, Tharisa has embarked on the transition to an owner mining operating model.  Tharisa has engaged with its current contractor, MCC Contracts Proprietary Limited ("MCC"), to purchase the requisite fleet from MCC and to employ the employees currently in service at the Tharisa Mine.  Tharisa expects the transition in operating model to be completed in FY2017.

 

Processing

During the quarter 1 211.3 kt were milled, resulting in PGM production of 34.3 koz on a 6E basis and chrome production of 314.6 kt, 75.4 kt (24.0%) of which are specialty grade concentrates.

 

PGM recoveries at 76.2% and chrome recoveries at 62.5% were expected to be marginally lower than the recoveries of the previous quarter mainly due to the weathered ore delivered to the processing plants from the open-pit extension in the central pit and new areas mined within the West pit. Recoveries are planned to return to previous levels in Q3 and this improvement was evidenced in March 2017.

 

Market update

The average per ounce PGM basket price for the three months ended March 2017 was US$783 (ZAR10 355), which is US$43 an ounce higher than the US$740 (ZAR10 287) price achieved in the quarter ended December 2016. 

 

Contracted metallurgical grade chrome concentrate prices increased by 35.2% compared to the previous quarter with an average contract price of US$338 per tonne CIF main ports China achieved during the quarter.  Specialty chrome concentrates continue to attract a premium above the contracted metallurgical chrome concentrate prices. The metallurgical grade chrome concentrate market remains robust with prices maintaining current levels in spite of lower liquidity in the Chinese market. Chinese port stocks continued to be restocked from critically low levels seen in August 2016 and reached levels of approximately 2.0 Mt in February 2017 but have systematically been drawn down to approximately 1.6 Mt. The fundamentals of the global stainless steel market remain sound with continued growth expected in 2017, further supporting strong demand for chrome units in the form of ferrochrome and chrome ores.

 

Outlook

PGM and chrome production remains on track to meet the FY2017 production guidance of 147.4 koz PGMs on a 6E basis and 1.3 Mt chrome concentrates, of which 300 kt will be specialty grade chrome concentrates.

 

The half year financial results for FY2017 will be released on or about 16 May 2017.

 

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

 

Paphos, Cyprus

10 April 2017

 

JSE Sponsor

Investec Bank Limited

 

Investor Relations contact:

Tharisa plc

Sherilee Lakmidas

+27 11 996 3538

+27 79 276 2529

[email protected]

 

Broker contacts:

Peel Hunt LLP (Joint Broker)

Matthew Armitt / Ross Allister

+44 207 7418 8900

 

BMO Capital Markets Limited (Joint Broker)

Jeffrey Couch/Neil Haycock/Thomas Rider

+44 020 7236 1010

 

Financial PR contacts:

Bobby Morse/Anna Michniewicz

+44(0) 20 7466 5000