In a way, the Tharisa share price graph makes for glum viewing.
Platinum and chrome production was affected after an unprecedented level of rainfall at the company’s South African operations last year.
Across the same time period initial fears about supply constraints in the metals markets in the wake of Russia’s invasion of Ukraine were subsequently allayed.
Tharisa’s share price rose, and then fell.
Tharisa shares have been bumping around at their current level for the past six months
The shares have been bumping around at their current level for the past six months or so – below the five-year high that was hit when the Ukraine war started but nevertheless two-and-a-half time higher than the depths plumbed during the worst of the covid ravages.
At the current level, the market values Tharisa at just over £300million, and well and good – the company has a track record of production at the eponymous Tharisa mine that runs back several years, and it hasn’t made many mistakes.
What’s really been lacking though, until now, is growth. This year looks like being one in which Tharisa starts to change that.
As a cornerstone, for this year, production guidance for the Tharisa mine is set at between 175,000 and 185,000 ounces of platinum group metal, and between 1.75million tonnes and 1.85million tonnes of chrome, not too far away from the 2022 numbers.
There’s also more than $200million in the bank. But it’s Tharisa’s drive towards developing new assets in new jurisdictions that really looks set to transform the company.
The first cab off the rank in this growth strategy is the Karo platinum mine in Zimbabwe, which is held through a 70 per cent stake in a vehicle that owns 85 per cent of the project. The other 15 per cent is owned, free-carried, by the Zimbabwean government.
The project is already well advanced, with various ceremonies already having been held.
Ground was broken in December 2022, and construction is now moving forward, after a non-dilutive $38million in bonds was raised on the new Victoria Falls stock exchange.
Tharisa is hoping to dig out platinum and other materials from its Karo mine in Zimbabwe
Tharisa doesn’t hesitate to refer to Karo as a world-class asset, based on an assessment that the project holds almost 10million ounces of platinum group elements at an average grade of just over two grams per tonne.
The key elements are platinum, palladium, rhodium and gold, with some additional upside from copper and nickel.
The plan is to develop a mine with a 20-year life, and that produces around 150,000 ounces of platinum group elements in concentrate per year.
This is fairly high-level stuff for a platinum project, and the kind of thing you don’t see in many other parts of the world.
Indeed, the Great Dyke of Zimbabwe, in Mashonaland West, around 80 kilometres south of Harare, is arguably second only to the Bushveld region of South Africa when it comes to potential for platinum group metals.
The only other area that bears comparison is Norilsk in Russia, but that’s primarily a nickel producing operation, although its output of PGMs is admittedly very significant.
Either way, Karo is big, it’s got the right geological address, and from Tharisa’s point of view, it’s got the right geographical address too.
This development takes the company out of its original country of operation, South Africa, but not too far, and to a country where mutual ties are strong, and mutual benefits are well understood.
Mining has been one of the few industries that’s kept Zimbabwe’s economy going over the past decade or two, and the new Mnangagwa government hasn’t been slow to recognise that.
At the ground-breaking ceremony in December, the Zimbabwean minister present, Winston Chitando, spoke of the 1,000 permanent jobs that will likely be created by the project, as well as the 7,000 jobs that will be created by the construction.
Mention was also made of Karo’s green potential, as much of the power will come from a new solar facility that’s also in the works.
Some more funding will be needed to get Karo up and running, but the economics are compelling.
The net present value is set at just over $770million, with the post-tax internal rate of return likely to run at just over 47 per cent.
It’s not hard to see why Tharisa is committing to Karo, and not hard to see what success would mean either.
Not only would a significant amount of production be added to the company’s annual output, but a significant marker will have been laid down.
This is a company that’s willing and capable of expanding on all levels.
First production is expected from Karo in 2024, but it wouldn’t be surprising if the shares start moving long before that.