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Metals producer riding high on strong selling prices and planned operational changes
Thursday 13 Apr 2017 Author: Daniel Coatsworth

Tharisa (THS) 142.5p

Gain to date: 83.9%

Original entry point: Buy at 77.5p, 29 September 2016

South African miner Tharisa (THS) says chrome prices are holding up better than some people might have expected.

Low stockpiles in Chinese ports saw chrome soar to $390 per tonne late last year. One might have expected the price to drop significantly after customers restocked inventories, but that hasn’t happened.

THARISA (LON) - Comparison Line Chart (Rebased to first)

‘We’re encouraged to see prices settle at higher levels than in the past upon restocking, helped by positive stainless steel growth,’ says Tharisa’s chief finance officer Michael Jones.

Tharisa achieved $338 per tonne average selling price in the first three months of 2017, up 35.2% on the previous quarter. It also enjoyed a 5.8% increase in average selling price for its basket of platinum group metals.

Jones says metal recovery rates should improve in the three months to 30 June this year. He also says Tharisa should firm up a transaction in the same timeframe to buy equipment and hire staff from its mining contractor MCC.

Tharisa will become the mine operator now it has proved up enough resources to support a long mine life. It believes this change will result in both cost and operational benefits.

Broker Peel Hunt has a 215p price target implying that shareholders could still enjoy 50% upside over the next 12 months, despite the shares having already rallied since last summer. We share its positive view; keep buying. (DC)

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