Tharisa Minerals, the first mining group to list on the main market of the London Stock Exchange in five years, represents one of the biggest signs yet that the mining markets are reviving, ProactiveInvestors reported.
No money was raised, but shares in Tharisa, which mines platinum and chrome in South Africa, ticked up after it listed on the London main board and released interim results.
The Tharisa Mine in the North West Province is the largest single chrome mineral resource deposit in the world, according to a MTU report.
On listing June 8, Tharisa had a market capitalization of just over 94 million pounds ($133.7 million US). By the following week that had ticked up to closer to 100 million pounds ($142.27 million) after financial results for the six months to March showed an increase of 6 percent plus in gross margin.
Tharisa mines platinum and chrome in the Bushveld complex northwest of Johannesburg.
Its model of mining two minerals in the same mine should hedge it against falls in either market, the company said, according to a report in the Telegraph.
Tharisa’s low-cost model is based on operating an open-pit mine, as opposed to underground pits. Open pits are less expensive. Most of the platinum mining on South Africa’s prolific Bushveld complex is done underground.
Tharisa is 47-percent owned by the Pouroulis family and sought to “raise the international profile” of the company and increase the liquidity of its shares, said CEO Phoevos Pouroulis.
The price of platinum group metals fell 27 percent during the six months through March 31, while chrome prices fell 32 percent on average. Tharisa increased its production during that time, helping to bring down the cost per unit. A weakness in the South African rand, the currency in which Tharisa operates, also helped lower costs and protect margins.
“We saw some fairly dramatic price movements in the first half of the year,” Pouroulis said. However a strong recovery in chrome prices, and a slower rise in platinum since the end of March, is “encouraging,” he told the Telegraph.
Tharisa listed in Johannesburg two years ago after raising most of its funding to build its mine. Most of the company’s capital spending needs had already been met, Pouroulis said.
“Our key asset is our long-term advantage of being a low-cost producer through our 20-year Tharisa mine,” Pouroulis said. “It gives us a life-long competitive advantage.”
Shares in Tharisa were hit hard since the 2014 JSE listing, itself a decision to help founding investors redeem their positions, MiningMx reported.
The stock peaked at 27 rand per share in 2014 before falling to a low of 4 rand in January. Shares in Tharisa have recovered some of their lost ground.
Do investors view the company as either a PGM or chrome producer? Less is known about Tharisa’s exposure to the chrome market, said Michael Jones, company CFO.
“The platinum group metal market is fairly well understood, but we’ve had to do a bit of talking about chrome which is less understood,” he said. Almost half the company’s turnover — about 45 percent — is from chrome mining activities.
While 2016 has seen a recovery in chrome prices, third quarter trade in chrome is likely to be seasonally quiet in China which largely shapes the market, MiningMx reported.
“The feedback from the (marketing) team is that there is very positive demand from China,” Jones said.
The Pouroulis family is well- in South African mining for being behind such successes as Petra Diamonds and Chariot Oil & Gas, according to ProactiveInvestors.
Pouroulis plans to visit London in the next few weeks, arguing the case for Tharisa’s lower risk profile and lower cost base. The market has livened up over the past few months and he’s expected to get a decent hearing.
