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Tharisa production on target for Q2 2021

‘These PGM prices are proving to be resilient and, on the back of fairly significant supply deficit forecasts, I think sustainable’ – CEO Phoevos Pouroulis.

SIMON BROWN: I’m chatting now with Phoevos Pouroulis, CEO of Tharisa. Tharisa had a production update for the second quarter of the financial year 2021. – that’s the quarter ending in March. Their year starts in October. Phoevos, good morning. I appreciate the time. You’re now a year into the pandemic. I imagine safety protocols at mines are pretty much top of mind. Covid is now just part of your daily life, just part of that protocol, along with all the other protocols that existed pre-Covid.

PHOEVOS POUROULIS: Good morning, Simon. Yes, absolutely correct. I think it’s part of our value system of care, health and safety, and it’s entrenched in everything we do – social distancing, sanitising, checkpoint control. We’ve got these thermal scanners monitoring temperatures. You may recall that we invested quite heavily in our own on-site clinics, where we can assess, test and isolate, through our quarantine centres, cases that are picked up through the monitoring system. It’s all about that and tracking. I’m pleased to say we have zero active cases at the moment.

SIMON BROWN: Excellent. So it’s working – the tracking, the tracing, the quarantine, the sanitising. It’s a lot, but I think we’ve all kind of got used to it. 

Your update that came through? As I said, it was for your second quarter of the financial year. There were some fairly significant rains. The farmers like the rain until it gets too much, and then it becomes a problem. For you rains can also be a problem and can potentially hinder mining operations.

PHOEVOS POUROULIS: They can – and in particular when you have these sort of excessive lightning storms, because we run a large open pit, very much like a golf course. We have these storm monitors where we have to evacuate the pit during these heavy lightning storms in particular, and rain as well. We welcome it and we do need rain for operations and for the general environment. But we did experience certain periods of flash flooding and then heavy lightning. But seasonally our second quarter was slightly slow due to weather. So the performance was on target and we’re pleased with it. We were operating at the correct levels, notwithstanding the weather.

SIMON BROWN: You mentioned that seasonally this is usually your slower quarter. Traditionally the mines often have had the sort of year-end shutdowns and the like. It came through strong, and cash balances are looking strong. At the end of the day, a business is around that cash process and you’re generating the cash, which is the core part of it and an indication that the operations are running smoothly.

PHOEVOS POUROULIS: Indeed. And I think we’re very pleased with the PGM basket price – which is up 37% at $3 290/oz – and at being able to produce into this sort of high-price environment, generating cash. We ended with $73 million cash at the end of the quarter. That’s up from almost $50 million the prior quarter and really talking to the strong cash-generative ability of the business. And as I say, these PGM prices are proving to be resilient and, on the back of fairly significant supply deficit forecasts, I think sustainable.

SIMON BROWN: We chatted earlier in the year. I think rhodium then was R20 000/oz. I remember that boggled my brain. Your price for this period was almost R28 000/oz. Rhodium is probably the most valuable commodity on planet Earth right now. But we’ve seen platinum move. We’ve seen palladium move. You made the point there that the market seems tightly balanced. In other words, there is still that sort of bias towards the supply deficit. These prices are probably sustainable. I don’t know for how long, but certainly in the immediate [term].

PHOEVOS POUROULIS: We agree with that. In the sort of short- to medium term, I think we will see these higher prices. There may be fluctuations from day to day, week to week but, generally speaking, I think we are in for a higher PGM basket price. It’s really on the back of that increased demand and increased emission standards globally. And importantly, the Far East and China are increasing their emission standards over a big pool of those PGMs that are desperately needed to clean the emissions of the internal combustion engine.

SIMON BROWN: And that’s ultimately what the PGM is. It’s a green metal and the story is, if we’re looking for a cleaner planet, we need more PGMs.

We’ll leave that there. I appreciate the time. Phoevos Pouroulis, CEO of Tharisa, thanks very much for the early morning, sir. 

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