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Platinum group metals and chrome producer is set for an excellent 2022
Thursday 28 Oct 2021 Author: Tom Sieber

An imminent uplift in production and improvement in margins at chrome and PGM (platinum group metals) miner Tharisa (THS) should act as a catalyst for the shares with full year results on 2 December crystallising this positive trend in the market’s mind.

The company has entered cold commissioning on its Vulcan chrome processing plant which is expected to boost chrome output by 20% and lead to lower unit operating costs. It should also lower the company’s carbon footprint.

The latest production guidance for the year to 30 September 2022 is for 165-175,000 ounces of PGMs and 1.75-1.85 million tonnes of chrome, putting Tharisa well on the way to medium-term targets of 200,000 ounces and two million tonnes respectively.

Investment bank BMO estimates that with the impact from Vulcan, guidance for greater recoveries of PGM and the capital costs of setting up the new plant in the rear-view mirror the company will be able to generate free cash flow of $197 million which translates into a free cash flow yield in the region of 30%.

The company is already sitting on net cash of nearly $50 million and the strong cash generation could underpin better than expected dividends with the group offering a near-5% yield based on BMO’s forecasts.


Tharisa is an integrated operator meaning it is active in mining and processing as well as marketing, sales and logistics.

The company produces its metals from the open pit, mechanised Tharisa mine, located some 90 kilometres from Johannesburg. The mine is 74%-owned by Tharisa with the remainder owned by the local community, in line with South African legislation.

PGMs are used across a wide range of metal-contained products, ranging from platinum in jewellery to fuel cells and catalytic convertors.

Chrome is used the production of stainless steel. South Africa supplies 80% of China’s chrome requirements. On an annual basis Tharisa accounts for 10% to 12% of this demand.

Inevitably the business is exposed to volatility in the price of PGMs and chrome which have fallen after a strong start to 2021. This largely reflects the global supply chain issues which have hit areas like car production.

However, CEO Phoevos Pouroulis tells Shares he expects strong fundamentals for PGMs and chrome to support prices once these short-term issues have abated and notes that as a low-cost producer Tharisa is able to generate strong margins at current pricing levels. This should also help the company absorb higher freight costs.

Elsewhere the company has development projects in Zimbabwe to which the market is currently ascribing little or no value.

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