Tharisa in talks to do its own mining

Platinum and chrome mining group Tharisa believes it is ready to switch from contract to owner-mining after having spent the past two years developing and honing the skills it needs to make the transition.

CEO Pheovus Pouroulis said on Tuesday that, open-pit mines having a life of 18 years it had always been management’s intention to make the move to the owner-mining model.

“Over the past two years, and as part of the normal course of managing our mining operations, the company has developed mining, engineering and geological skills that are integral to in-house mining,” said Pouroulis.

Taking direct control over its mining operations would eliminate the contractor’s risk premiums and profit margins.

“By controlling the stripping and reef grades ourselves, we believe we can deliver improved quality ore to our processing plants, thereby optimising the feed and recovery within our plants.

“Over the longer term, this should allow us to reduce our mining costs and improve our recovery and production of platinum group metals and chrome concentrate,” he said.

Tharisa contracts its mining operations to MCC Contracts. MCC’s parent company, Extract, announced a strategic decision to align its capital allocations with the current mining environment and to review its business model. As a result, Tharisa has the opportunity to buy MCC’s existing onsite plant and equipment, as well as to employ skilled employees now in service at the Tharisa mine.

Pouroulis said Tharisa was obtaining third-party valuations on the fleet it would need.

“This information will be used as the basis of the discussions with MCC. It is premature to comment on the likely cost until these discussions have progressed further,” he said.

Tharisa’s share price has rocketed in the past year. A year ago, the shares were trading at about R6.80 and they closed at R23 on the JSE on Monday.

In the year to September 2016, the Johannesburg- and London-listed firm more than doubled its profit to $15.8m from $6m. It declared its first dividend of $0.01 a share.

R6.80 the level at which Tharisa shares were trading on the JSE a year ago

$15.8m the profit in the year to September 2016, more than double that of a year ago