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[TOP STORY] Tharisa update on PGMs, chrome and Covid precautions

Rhodium has hit $20 000/oz, which one couldn’t have dreamt a year ago: Tharisa Minerals CEO Phoevos Pouroulis.

SIMON BROWN: I’m chatting now with Phoevos Pouroulis. He is, of course, CEO of Tharisa Minerals. The company had a production update yesterday that was for the quarter ending December. 

Phoevos, good morning. I really appreciate your time again. These were really solid production numbers. I want to delve into a few sort of moving parts, perhaps, around the numbers. The first is that rhodium price. Rhodium is still up around $18 000 an ounce. When you’re mining PGMs, that basket, are you able to sort of direct your operations to areas of maybe higher rhodium? Or is it just going to be a case of this is the scheme that you have and it’s almost – I don’t want to say luck – beyond your control as to what amount of rhodium you get from that basket?

PHOEVOS POUROULIS: Good morning, Simon, and nice to be on your show again. I think it’s a function of the geology and the ground, and so one can’t target a specific platinum group metal in your closed split  I think we’re fortunate in the fact that our little group reef horizons contain just short of 10% rhodium in our closed split. And, just out of interest, this morning I was looking at the Hong Kong fix. Rhodium has now hit $20 000/oz. You couldn’t have dreamt this a year ago. It’s really unprecedented.

SIMON BROWN: I’m sure I have a memory of once seeing rhodium at under $1 000, and we’re going way back. I mean way, way, way back.

PHOEVOS POUROULIS: Not too long ago. But below $1 000. Yes.

SIMON BROWN: And so you’re getting about 10% rhodium and that is,  a bit fudging it aside, what your reef is more or less delivering, and therefore your expectation going forward.

PHOEVOS POUROULIS: Correct, yes. The geology is pretty consistent, so if you look at the prospects, we have around 55% platinum, and it’s good to see platinum breaching the $1 000/oz mark – about 16% palladium. And then obviously important to that, just shy of 10% rhodium, which is a real boost to our earnings and margins.

SIMON BROWN: You’ve got your Vulcan processing plant – that’s the chrome concentrate, which is on track to start producing in the financial year 2022 and onward. How much is that going to add to your current chrome operations?

PHOEVOS POUROULIS: It’s a unique process that we developed in-house, and we’re very excited about the commissioning of that by September this year. That should add around 400 000 tons of chrome concentrate a year to our production. So around a 25% boost. And importantly, it’s a type of scavenger plant. So the operating costs are very low in terms of the fact that we are processing a tailing stream that we would deposit on our waste-storage facilities.

SIMON BROWN: And how is chrome traded? Is it a contract trade? Is it a spot market, like the other commodities?

PHOEVOS POUROULIS: It doesn’t have an exchange-traded market, so it’s typically on a bilateral basis, and it’s mostly on a spot-market basis. 

SIMON BROWN: Okay. I want to turn quickly to Covid. Naturally, you mentioned it a fair bit in your update yesterday. It is the story of last year and truthfully again to be of this year. My sense from your update, from chatting to you with the results a quarter ago, is that mining is at its core around safety, and I suppose Covid kind of just added an extra sort of process to that safety. But perhaps in some senses, mining as an industry was better positioned to integrate Covid processes into the operations. Is that a fair comment?

PHOEVOS POUROULIS: Yes, I think it is fair, Simon. What we did last year at the onset of the Covid-19 pandemic was we put in all the precautionary measures, we invested in a quarantine facility in clinics and so forth to manage that sort of potential first wave of infections, which fortunately didn’t transpire. 

I think of concern now is the infection rate that we are seeing post the festive season, people returning and the active cases. So I think, just by the nature of safety is a core value of ours in the industry, we were better prepared to deal with implementing these systems and protocols. Having said that, it still remains a risk in terms of business continuity across the globe, I suppose.

SIMON BROWN: It’s most definitely a risk. There’s obviously cost, and you mentioned putting in those initial processes upfront – clinics and quarantines and the like. That’s a one-off cost. The ongoing cost is a cost you’re obviously happy to take because it’s protecting staff. Is it significant? Is it an important line item, or is it a cost that a company such as Tharisa, which is producing, is able to take quite comfortably?

PHOEVOS POUROULIS: I think the cost is secondary to the health and safety of our employees and it remains a priority. So I think the cost is not significant when you look at it in the big picture, and in terms of the potential impact that an outbreak could have on an operation. So we’re very happy to keep contributing and investing in the health and safety of our employees. 

SIMON BROWN: That’s a great point. It’s a cost which keeps the operations working. We’ll leave it there. Phoevos Pouroulis, CEO of Tharisa, I really appreciate your early morning.

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