Why Tharisa is yet to win over more investors

CHROME saved the day for resource group Tharisa, which registered a 28% decline in its average platinum group metal (PGM) price during its 2024 financial year ended September. Comprising 68% of Tharisa’s total revenue, chrome has been driven by strong growth in the Chinese stainless steel industry.Despite this resilience, Tharisa is a company with a love deficit. This could have some interesting outcomes, according to one stockbroker.“If the market doesn’t react soon and rerate the stock, we would expect the industry to further consolidate,” say analysts at the UK’s Tamesis Partners. Based on valuations before its year-end numbers were announced, Tharisa ought to be trading at 90p-£1.20 a share. It’s now at about 69p, up a modest 6% in the year to date.What don’t investors like? The absence of a significant rebound in PGM prices certainly hangs over the investment case, as with all PGM miners.Amid basic supply deficits and signs that hybrid and petrol cars are likely to remain more popular with consumers longer than many expected, the flattish performance of palladium and platinum is disappointing.For Tharisa, specifically, investors are waiting on the terms of the firm’s final finance package for Karo Platinum, a $440m PGM project in Zimbabwe.To date $131m has been spent on Karo, with $305m remaining on the project. This was after Tharisa slowed its capital plans earlier this year while it negotiated a financing package. The decline in PGM prices was so steep that lenders were unsurprisingly hesitant about stepping in.“The project is cash generative at current prices, but the capital structuring is preventing us from finalising the debt,” said Tharisa CFO Michael Jones in December. What this means is that Tharisa is constrained, in that there’s a minimum level of debt it can take on at current PGM spot prices. Ilja Graulich, head of investor relations, says there’s “no way” the company is issuing equity to finance Karo.Richard Hatch, an analyst with Berenberg, says: “The key question for the equity story is the timing of the Karo PGM project, which is on hold due to weak PGM prices; this will clarify cash outflows and the timing of capex spend.” Amid all this, the firm’s balance sheet is in good shape, ending the year with net cash of $117.5m.There’s also an unresolved negotiation with the Zimbabwean government over the project’s fiscal environment. Announced in early 2022 at a then capital cost estimate of $250m, Karo ought to have been in production in mid-2025.Tharisa CEO Phoevos Pouroulis was at pains to state that the project is moving forward, however. It will take 15 months to build once the finance is in, compared with the 20 months estimated when it was first announced.Pouroulis also made the following, slightly unusual statement, suggestive of underlying frustration. He said: “We have chosen to be developers of mines — a process that takes time, patience, capital and conviction to invest through commodity and economic cycles.”The enthusiasm of others for Tharisa remains undimmed. “Ongoing PGM deficits should drive improving prices over time, reinforcing cash generation,” said analyst Peel Hunt after the numbers announcement last week. It has a buy rating on the company and a mouth-watering target price of £1.95 a share.The post Why Tharisa is yet to win over more investors appeared first on Miningmx.Weiter zum vollständigen Artikel bei Mining.com Weiter zum vollständigen Artikel bei Mining.com