TIDMTHS
RNS Number : 9377A
Tharisa PLC
13 June 2016
THARISA PLC
Incorporated in the Republic of Cyprus with limited
liability
Registration number: HE223412
JSE share code: THA
LSE share code: THS
ISIN: CY0103562118
REVIEWED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the six months ended 31 March 2016
Corporate information
THARISA PLC
Incorporated in the Republic of Cyprus with limited
liability
Registration number: HE223412
JSE share code: THA
LSE share code: THS
ISIN: CY0103562118
REGISTERED ADDRESS
Office 108 - 110
S. Pittokopitis Business Centre
17 Neophytou Nicolaides and Kilkis Streets
8011 Paphos
Cyprus
POSTAL ADDRESS
PO Box 62425
8064 Paphos
Cyprus
WEBSITE
www.tharisa.com
DIRECTORS OF THARISA
Loucas Christos Pouroulis (Executive Chairman)
Phoevos Pouroulis (Chief Executive Officer)
Michael Gifford Jones (Chief Finance Officer)
John David Salter (Lead Independent non-executive director)
Antonios Djakouris (Independent non-executive director)
Omar Marwan Kamal (Non-executive director)
Brian Chi Ming Cheng (Non-executive director)
Carol Bell (Independent non-executive director)
Joanna Ka Ki Cheng (Alternate non-executive director)
JOINT COMPANY SECRETARIES
Lysandros Lysandrides
26 Vyronos Avenue
1096 Nicosia
Cyprus
Sanet de Witt
Eland House, The Braes
3 Eaton Avenue
Bryanston
Johannesburg 2021
South Africa
Email: secretarial@tharisa.com
INVESTOR RELATIONS
Sherilee Lakmidas
Eland House, The Braes
3 Eaton Avenue
Bryanston
Johannesburg 2021
South Africa
Email: ir@tharisa.com
TRANSFER SECRETARIES
Computershare Investor Services Proprietary Limited
Registration number: 2004/003647/07
70 Marshall Street
Johannesburg 2001
(PO Box 61051 Marshalltown 2107)
South Africa
Cymain Registrars Limited
Registration number: HE174490
26 Vyronos Avenue
1096 Nicosia
Cyprus
JSE SPONSOR
Investec Bank Limited
Registration number: 1969/004763/06
100 Grayston Drive
Sandown
Sandton 2196
(PO Box 785700 Sandton 2146)
South Africa
BROKERS
Peel Hunt
Moore House
120 London Wall
EC 2Y 5ET
AUDITORS
KPMG Limited (Cyprus)
Registration number: HE132527
14 Esperidon Street
1087 Nicosia
Cyprus
Introduction
Tharisa is an integrated resource group incorporating mining and
the
processing, beneficiation, marketing, sales and logistics of PGM
and
chrome concentrates.
Mission
To maximise shareholder returns
through innovative exploitation of
mineral resources in a responsible
manner
Values
- The safety and health of our
people is a priority
- We take responsibility for the
effect that our operations may
have on the environment
- We are committed to the
upliftment of our local
communities
- We conduct ourselves with
integrity and honesty
- We strive to achieve superior
returns for our shareholders
- We originate new opportunities
and will continue to challenge
convention through innovation
Strategic initiatives
- Implementation of optimisation
initiatives to maximise value extraction
- Growth through innovative research
and development
- Growth through accretive acquisition,
development and operation of large
scale and low cost projects that are in
or close to production
- Leveraging off the established platform
for expansion into multi-commodities
with geographic diversity
- Capital discipline with a dividend
policy of 10% on NPAT and capital
allocation to low risk projects
HIGHLIGHTS H1 2016
PGM PRODUCTION
(6E)
UP 4.5%
60.0 koz
(2015: 57.4 koz)
PGM PRICES
DOWN 27.4%
US$686/oz
(2015: US$945/oz)
REVENUE
DOWN 30.5%
US$86.0m
(2015: US$123.7m)
NET CASH FLOWS FROM
OPERATING ACTIVITIES
UP 18.2%
US$18.2m
(2015: US$15.4m)
ALL IN COST PGM OZ*
DOWN 10.9%
US$492/oz
(2015: US$552/oz)
* including non-cash flow items excluding
financing and capital expenditure
CHROME CONCENTRATE
PRODUCTION
UP 7.3%
604.4 kt
(2015: 563.3 kt)
CHROME PRICES
DOWN 32.1%
US$106/t
(2015: US$156/t)
GROSS PROFIT MARGIN
UP 6.2%
24.6%
(2015: 18.4%)
HEADLINE PROFIT PER SHARE
US$1 cent
(2015: US$1 cent)
ALL IN COST CHROME TONNE*
DOWN 32.9%
US$102/t
(2015: US$152/t)
* including non-cash flow items excluding
financing and capital expenditure
GROUP STATISTICS
Unit % change H1 FY2016 H1 FY2015
------------------------------- --------------- ----------- ----------- -----------
ROM mined Mt 21.1 2.4 1.9
------------------------------- --------------- ----------- ----------- -----------
PGM rougher feed grade g/t 1.8 1.68 1.65
------------------------------- --------------- ----------- ----------- -----------
Chrome grade % (0.3) 18.4 18.7
------------------------------- --------------- ----------- ----------- -----------
ROM processed Mt - 2.2 2.2
------------------------------- --------------- ----------- ----------- -----------
PGM recovery % 1.9 65.0 63.1
------------------------------- --------------- ----------- ----------- -----------
PGM in concentrate produced koz 4.5 60.0 57.4
------------------------------- --------------- ----------- ----------- -----------
Chrome recovery % 6.1 62.8 56.7
------------------------------- --------------- ----------- ----------- -----------
Chrome concentrate produced kt 7.3 604.4 563.3
------------------------------- --------------- ----------- ----------- -----------
PGM basket price US$/oz (27.4) 686 945
------------------------------- --------------- ----------- ----------- -----------
Chrome concentrate price
(42% CIF China) US$/t (32.1) 106 156
------------------------------- --------------- ----------- ----------- -----------
Average exchange rate ZAR:US$ (30.4) 15.0 11.5
------------------------------- --------------- ----------- ----------- -----------
Group revenue US$'000 (30.5) 85 997 123 700
------------------------------- --------------- ----------- ----------- -----------
Gross profit US$'000 (7.3) 21 134 22 805
------------------------------- --------------- ----------- ----------- -----------
Profit for the period US$'000 (36.4) 3 098 4 870
------------------------------- --------------- ----------- ----------- -----------
EBITDA US$'000 (17.9) 14 732 17 937
------------------------------- --------------- ----------- ----------- -----------
Headline earnings US$'000 (13.9) 2 925 3 396
------------------------------- --------------- ----------- ----------- -----------
US$
Headline earnings per share cents - 1 1
------------------------------- --------------- ----------- ----------- -----------
Gross profit margin % 6.2 24.6% 18.4%
------------------------------- --------------- ----------- ----------- -----------
Net cash flows from operating
activities US$'000 18.3 18 230 15 417
------------------------------- --------------- ----------- ----------- -----------
Debt to total equity ratio* % 24.2% 42.7%
------------------------------- --------------- ----------- ----------- -----------
* Net of the debt service reserve account
The percentage change for changes in percentage numbers is
calculated as the difference between the comparable period
percentage
and the current period percentage.
INTERIM MANAGEMENT REPORT
DEAR SHAREHOLDER
Tharisa has delivered on its commitments with exceptional
performance in challenging times. In the six months ended
31 March 2016, the Group again demonstrated how its low
cost business model ensures it can withstand a commodity
price downturn and still deliver robust operational and
financial results.
The first half of FY2016 was a milestone period for
Tharisa with the Company moving closer to steady state
production. Production milestones included:
- reef mining exceeded the steady state required run
rate of 4.8 Mtpa on an annualised basis in Q2 FY2016;
- mill throughput performing at nameplate design
capacity of 400 ktpm;
- contained PGM production on a 6E basis of 144.0 koz
(on an annualised basis in Q2 FY2016) moving closer to
revised steady state target of 147.4 kozpa; and
- increase of specialty chrome production from 10.1% to
17.5% of chrome concentrate production.
Post the half-year results, Tharisa listed on the main board
of the London Stock Exchange under the ticker THS. The
secondary listing increases Tharisa's international profile,
opens up access to a wider pool of investors and will
improve trading liquidity by facilitating the participation
of UK and European investors in the Company. Tharisa's
primary listing remains on the JSE.
The six months under review were characterised by a
challenging macroeconomic environment, where global
commodity prices declined materially before recovering
towards the end of the second quarter. The average PGM
basket price (on a 6E basis) for the six-month period was
US$686/oz, a decline of 27.4% relative to the comparable
period. Similarly, the average metallurgical grade chrome
concentrate price for the six-month period was US$106/t, a
decline of 32.1% relative to the comparable period.
While the macroeconomic conditions are outside the
control of the Group, Tharisa's continued focus on achieving
steady state production yielded positive production results
with a 4.5% increase in production of PGM contained metal
on a 6E basis of 60.0 koz and a 7.3% increase in chrome
concentrate production of 604.4 kt. With the release of the
updated Competent Person's Report dated 31 December
2015, steady state PGM production on a 6E basis was
increased to 147.4 kozpa while chrome concentrate steady
state production was revised to 1.33 Mtpa.
Safety remains a top priority and Tharisa continues to
strive
for zero harm at its operations. Tharisa achieved a Lost
Time Injury Frequency Rate (LTIFR) of 0.3 per 200 000
man hours worked at 31 March 2016. This is among the
lowest LTIFRs in the PGM and chrome industries in South
Africa. Tharisa continues to implement appropriate risk
management processes, strategies, systems and training to
promote a safe working environment for all facilitated by
the opening of the Group's new training centre.
The Group reported a profit before tax of US$4.5 million
for the interim period with net cash flows from operating
activities of US$18.2 million, an improvement of 18.3%.
Tharisa continues to strengthen its competitive position,
benefiting from the shallow open pit and large scale
co-production of PGMs and chrome concentrates.
OPERATIONAL OVERVIEW
31 March 31 March
---------------- ------ ---------- --------- ---------
Unit 2016 2015 Change
---------------- ------ ---------- --------- ---------
ROM tonnes
---------------- ------ ---------- --------- ---------
mined kt 2 358.6 1 948.0 21.1%
---------------- ------ ---------- --------- ---------
Tonnes milled kt 2 197.0 2 198.7 -
---------------- ------ ---------- --------- ---------
On mine cash
---------------- ------ ---------- --------- ---------
cost per tonne
---------------- ------ ---------- --------- ---------
milled US$ 25.6 30.8 (16.9%)
---------------- ------ ---------- --------- ---------
Consolidated
---------------- ------ ---------- --------- ---------
cash cost per
---------------- ------ ---------- --------- ---------
tonne milled
---------------- ------ ---------- --------- ---------
(excluding
---------------- ------ ---------- --------- ---------
transport) US$ 28.7 34.3 (16.3%)
---------------- ------ ---------- --------- ---------
MINING
The Tharisa Mine is unique in that it mines multiple
mineralised layers with different, but defined, PGM and
chrome contents. The mine is a large-scale open pit with
a life of mine of up to 20 years and the potential to extend
the mine by a further 40 years by mining underground.
During the six months under review, 2.4 Mt of ore at an
average grade of 1.68 g/t PGMs on a 6E basis and 18.4%
chrome was mined. Tharisa needs to mine 4.8 Mtpa ROM
to produce at steady state levels of 147.4 kozpa of PGMs
and 1.33 Mtpa of chrome concentrates.
A number of section 54 safety related instructions in Q1
FY2016 adversely impacted on mining production during
the period resulting in the ROM stockpiles being depleted
and impacting on the feed grade into the processing plants.
ROM stock piles have subsequently been rebuilt with 212 kt
of ROM stock and crushed ore being available ahead of the
processing plants as at 31 March 2016.
The focus on opening up access to the full mining strike
length and the benefits of maintaining the correct multi-
reef layer profile are being realised and this contributed
to
providing stable feed grades for processing.
PROCESSING
Tharisa has two processing plants - the Genesis and
Voyager standalone concentrator plants - which have
a combined nameplate capacity of 400 ktpm ROM. The
Genesis Plant incorporates the Challenger Plant on the
feed circuit for the extraction of specialty grade chrome
concentrates principally from natural fines.
During the six-month period, 2.2 Mt of reef was processed
through the two plants producing 60.0 koz of contained
PGMs on a 6E basis and 604.4 kt of chrome concentrates.
The chrome processing circuit of the Voyager Plant
was successfully modified to facilitate an increase in
the production of higher value specialty grade chrome
concentrates. Of the 604.4 kt of chrome concentrates
produced, 105.8 kt or 17.5% of total chrome concentrate
production was specialty grade chrome concentrates - up
from 10.1% for the comparable period.
Plant throughput equated to 91.5% of combined nameplate
capacity of the plants.
Overall PGM recovery was at 65.0%, an improvement
of 1.9% on the H1 FY2015 PGM recovery of 63.1%, and
demonstrates the benefits of stability in the plant feed
grades and the increase in competent ores being processed
with a lower feed of "weathered" ore. The target recovery
remains at 70.0%.
The average chrome recovery across all plants was 62.8%,
a 6.1% improvement from the 56.7% recovery recorded for
H1 FY2015 and bringing chrome recoveries within reach of
the 65.0% target.
Production of both PGMs and chrome concentrates is
expected to continue to increase as the Group achieves its
steady state levels.
There are a number of optimisation initiatives currently
being evaluated with a focus on improving chrome
recoveries and increasing PGM recoveries even further.
COMMODITY MARKETS AND SALES
31 March 31 March
--------------- --------- ------------ ----------------------- --------
Unit 2016 2015 Change
--------------- --------- ------------ ----------------------- --------
PGM basket
--------------- --------- ------------ ----------------------- --------
price US$/oz 686 945 (27.4%)
--------------- --------- ------------ ----------------------- --------
PGM basket
--------------- --------- ------------ ----------------------- --------
price ZAR/oz 10 448 10 888 (4.0%)
--------------- --------- ------------ ----------------------- --------
42%
--------------- --------- ------------ ----------------------- --------
metallurgical
--------------- --------- ------------ ----------------------- --------
grade chrome
--------------- --------- ------------ ----------------------- --------
concentrate
--------------- --------- ------------ ----------------------- --------
contract price
--------------- --------- ------------ ----------------------- --------
- CIF US$/t 106 156 (32.1%)
--------------- --------- ------------ ----------------------- --------
42%
--------------- --------- ------------ ----------------------- --------
metallurgical
--------------- --------- ------------ ----------------------- --------
grade chrome
--------------- --------- ------------ ----------------------- --------
concentrate
--------------- --------- ------------ ----------------------- --------
contract price
--------------- --------- ------------ ----------------------- --------
- CIF ZAR/t 1 562 1 793 (12.9%)
--------------- --------- ------------ ----------------------- --------
Specialty
--------------- --------- ------------ ----------------------- --------
chrome grades
--------------- --------- ------------ ----------------------- --------
FOB price * US$/t 122 153 (20.3%)
--------------- --------- ------------ ----------------------- --------
* Blended average of foundry and chemical grades excluding
the cost of sea freight
Both PGM and chrome concentrate commodity prices
remained under pressure with the chrome commodity
price, in particular, being affected by the devaluation of
the
Renminbi against the US$ and the slowdown in the Chinese
economy. The average US$ PGM contained metal basket
price decreased by 27.4% and metallurgical grade chrome
concentrate contract price declined by 32.1% relative to
the comparable period's average prices. The average ZAR
weakened 30.4% relative to the US$ over the period. As
the cost base of Tharisa Minerals is mainly in ZAR, the
weakening of the ZAR partially offset the decline in US$
commodity prices.
PGM production continued to be sold to Impala Refining
Services under the off-take agreement and a total of
59.1 koz was sold during the period. The Tharisa Mine's
PGM prill split is significant in terms of platinum content
at
56.1%, contributing to a favourable PGM basket price being
realised by Tharisa.
31 March 31 March
----------------------------- ---------------------- -------------
2016 2015
----------------------------- ---------------------- -------------
Tharisa prill split by mass % %
----------------------------- ---------------------- -------------
Platinum 56.1 56.5
----------------------------- ---------------------- -------------
Palladium 15.7 15.6
----------------------------- ---------------------- -------------
Rhodium 9.5 9.4
----------------------------- ---------------------- -------------
Gold 0.2 0.2
----------------------------- ---------------------- -------------
Ruthenium 13.9 13.9
----------------------------- ---------------------- -------------
Iridium 4.46 4.4
----------------------------- ---------------------- -------------
As a result of the depressed chrome prices, Tharisa elected
to defer product sales in December 2015, preferring to
rather wait for higher prices. Prices began recovering after
the Chinese New Year in February 2016. In the interim,
Tharisa diversified its production to increase its
production
of the higher value specialty grade chrome. This allowed the
Group to cushion itself to some extent from the steep fall
in metallurgical chrome prices. Chrome concentrate sales
totalled 481.7 kt.
LOGISTICS
31 March 31 March
---------------- --------- -------------- ------------ --------
Unit 2016 2015 Change
---------------- --------- -------------- ------------ --------
Average
---------------- --------- -------------- ------------ --------
transport cost
---------------- --------- -------------- ------------ --------
per tonne
---------------- --------- -------------- ------------ --------
of chrome
---------------- --------- -------------- ------------ --------
concentrate -
---------------- --------- -------------- ------------ --------
CIF main ports
---------------- --------- -------------- ------------ --------
China basis US$/t 40 59 (32.2%)
---------------- --------- -------------- ------------ --------
The chrome concentrate destined for main ports in
China is shipped either in bulk from the Richards Bay Dry
Bulk Terminal or via containers from Johannesburg and
transported by road to Durban from where it is shipped.
The economies of scale and in-house expertise have
ensured that Tharisa's transport costs, a major cost to the
Group, remained competitive.
China remains the main market for chrome concentrates
and 381.9 kt of the metallurgical grade chrome concentrates
produced by the Tharisa Mine were sold on a CIF main
ports China basis. The majority was shipped in bulk with a
negligible quantity being shipped in containers.
Arxo Logistics has sufficient storage capacity at both the
Richards Bay Dry Bulk Terminal and the Durban container
port to manage the full production capacity of the Tharisa
Mine.
Negotiations over a planned public private partnership with
Transnet for an on-site railway siding at the Tharisa Mine
are progressing well.
MINERAL RESOURCE AND MINERAL RESERVE
The Mineral Resource and Mineral Reserve Statement
has been updated by Coffey Mining (SA) (Pty) Ltd dated
31 December 2015. The Mineral Resource and Mineral
Reserve Statement has been prepared in accordance
with the requirements of the South African Code for the
Reporting of Exploration Results, Mineral Resources and
Mineral Reserves, 2009.
The Mineral Resource is estimated at 829.0 Mt with a 4E
PGM grade of 1.15 g/t and a chrome grade of 20.4%. The
total Mineral Reserve is tabled below.
Tonnes 6E Cr(2)O(3)
----------------- --------------- ----------- ----------------
Mineral Reserve Mt g/t %
----------------- --------------- ----------- ----------------
Proved 41.4 1.45 17.8
----------------- --------------- ----------- ----------------
Probable 65.0 1.45 19.2
----------------- --------------- ----------- ----------------
Total 106.4 1.45 18.6
----------------- --------------- ----------- ----------------
Steady state production forecasts have been revised
from 144.0 kozpa to 147.4 kozpa of PGMs on a 6E basis
and from 1.5 Mt of chrome concentrates to 1.33 Mt of
chrome concentrates which includes 311.8 kt of specialty
chrome concentrates. With the improved optimisation
of the chrome processing spiral plant, the production of
higher value specialty chrome concentrates increases
from approximately 10.1% for the comparable period to
approximately 23.4% of chrome production at steady
state. This has resulted in the volumetric change of chrome
concentrate steady state production.
FINANCIAL OVERVIEW
Group revenue totalled US$86.0 million, a decrease
of 30.5% relative to the comparable period revenue of
US$123.7 million. This decrease in revenue was mainly
attributable to the reduction in the average PGM
contained metal basket price from US$945/oz to US$686/
oz - a decrease of 27.4% - and a weakening in the average
42% metallurgical grade chrome concentrate contract
price from US$156/t to US$106/t - a decrease of 32.1%.
The decrease in chrome commodity prices followed the
devaluation of the Renminbi relative to the US$ and the
slowdown in forecast global economic growth. During the
period of short-term chrome price volatility and the strong
downward trend in the price, the Group elected not to sell
at the reduced prices. This contributed to lower chrome
concentrate sales of 481.7 kt relative to the comparable
period sales of 520.5 kt - a decrease of 7.5%. Since the end
of the period under review, sales volumes have reverted
to previous levels with metallurgical chrome concentrate
prices for July 2016 delivery at US$150/t.
The PGM basket price has similarly recovered to
approximately US$715/oz.
Notwithstanding the reduction in revenue the gross
profit margin improved from 18.4% to 24.6% on increased
production volumes reducing the unit costs of production
for both PGMs and chrome concentrates and the increased
production and sales of higher value add specialty grade
chrome concentrates. Competitively priced freight costs
for bulk shipments of chrome concentrates also contributed
to the improved gross profit margins.
The segmental contribution to revenue and gross profit is
summarised in the following table (shared costs continue to
be allocated on an equal basis):
Six months ended
-------------------------- ---------------- ------------- --------
31 March 2016 PGM Chrome Total
-------------------------- ---------------- ------------- --------
US$'000 US$'000 US$'000
-------------------------- ---------------- ------------- --------
Revenue 35 904 50 093 85 997
-------------------------- ---------------- ------------- --------
Cost of sales 23 761 41 102 64 863
-------------------------- ---------------- ------------- --------
Cost of sales excluding
-------------------------- ---------------- ------------- --------
selling costs 23 663 24 712 48 375
-------------------------- ---------------- ------------- --------
Selling costs 98 16 390 16 488
-------------------------- ---------------- ------------- --------
Gross profit 12 143 8 991 21 134
-------------------------- ---------------- ------------- --------
Gross profit percentage 33.8% 17.9% 24.6%
-------------------------- ---------------- ------------- --------
Sales volumes 59.1 koz 481.7
kt
-------------------------- ---------------- ------------- --------
All in cost of sales per
-------------------------- ---------------- ------------- --------
unit* US$402/oz US$85/t
-------------------------- ---------------- ------------- --------
Total all in cost per
-------------------------- ---------------- ------------- --------
unit** US$492/oz US$102/t
-------------------------- ---------------- ------------- --------
* Including non-cash flow items
** Including non-cash flow items excluding financing and
capital expenditure
Six months ended
-------------------------- ------------------- ---------------- --------
31 March 2015 PGM Chrome Total
-------------------------- ------------------- ---------------- --------
US$'000 US$'000 US$'000
-------------------------- ------------------- ---------------- --------
Revenue 44 087 79 613 123 700
-------------------------- ------------------- ---------------- --------
Cost of sales 26 861 74 034 100 895
-------------------------- ------------------- ---------------- --------
Cost of sales excluding
-------------------------- ------------------- ---------------- --------
selling costs 26 766 44 715 71 481
-------------------------- ------------------- ---------------- --------
Selling costs 95 29 319 29 414
-------------------------- ------------------- ---------------- --------
Gross profit 17 226 5 579 22 805
-------------------------- ------------------- ---------------- --------
Gross profit percentage 39.1% 7.0% 18.4%
-------------------------- ------------------- ---------------- --------
Sales volumes 58.4 koz 520.5
kt
-------------------------- ------------------- ---------------- --------
All in cost of sales per
-------------------------- ------------------- ---------------- --------
unit* US$460/oz US$142/t
-------------------------- ------------------- ---------------- --------
Total all in cost per
-------------------------- ------------------- ---------------- --------
unit** US$552/oz US$152/t
-------------------------- ------------------- ---------------- --------
* Including non-cash flow items
** Including non-cash flow items excluding financing and
capital expenditure
The PGM cash cost of sales per ounce (excluding selling
costs) for the period was US$376 (2015: US$408) and
for chrome concentrates the cash cost of sales per tonne
(excluding selling costs) for the period was US$46 (2015:
US$75). The cash unit costs have been calculated after
crediting the deferred stripping element i.e. the deferred
stripping has been treated as a non-cash flow item.
There has been no non-recurring or exceptional income
sources during the interim period.
The major constituents of the cash cost of sales of PGMs
and chrome concentrates are set out in the following graphs.
PGM cash cost of sales: 31 March 2016
Mining 59%
------------- ----
Utilities 7%
------------- ----
Reagents 6%
------------- ----
Steel balls 3%
------------- ----
Labour 6%
------------- ----
Diesel 16%
------------- ----
Overheads 3%
------------- ----
Chrome cash cost of sales: 31 March 2016
Mining 49%
------------- ----
Utilities 6%
------------- ----
Steel balls 5%
------------- ----
Labour 12%
------------- ----
Diesel 13%
------------- ----
Overheads 15%
------------- ----
After accounting for administrative expenses of
US$10.7 million (2015: US$10.7 million) the Group achieved
an operating profit of US$10.6 million, a reduction of 12.4%
relative to the comparable period operating profit of
US$12.1 million.
While the Group's cost base is mainly in ZAR (other than
for selling expenses) and the weakening of the ZAR relative
to the US$ benefited the Group from a cost reduction
perspective, certain "first time" costs were incurred
with the inaugural vesting of the share scheme awards to
employees and consultants with a charge of US$1.0 million
included in administrative expenses. The Company also
listed (secondary listing) on the London Stock Exchange
and professional fees for the listing of the Company were
incurred. The Group undertook a review of its costs and the
benefits of this review and the actions taken are still to
be
reflected in the administrative costs as the upfront costs
of
these actions were incurred in this reporting period.
EBITDA amounted to US$14.7 million (2015: US$17.9 million).
Finance costs principally relate to the senior debt facility
secured by Tharisa Minerals for the construction of the
Voyager Plant.
The tax charge amounted to US$1.4 million, an effective
charge of 30.7%, due primarily to disallowable charges being
incurred within the Group activities. The tax rate should
revert to a rate below 28.0% in the near term.
Foreign currency translation differences for foreign
operations, arising where the Company has funded the
underlying subsidiaries with US$ denominated funding and
the reporting currency of the underlying subsidiary is not
in
US$, amounted to US$9.0 million (2015: US$13.9 million),
being directly related to foreign currency movements during
the period.
Basic and diluted earnings per share for the period remained
unchanged at US$0.01.
Interest-bearing debt as at 31 March 2016, totalled
US$51.8 million, resulting in a debt to total equity ratio
of
29.8%. Off-setting the debt service reserve account amount
in respect of the senior debt facility of US$9.8 million,
reduces the debt to equity ratio to 24.2%. The long-term
targeted debt to equity ratio is 15.0%.
The Group complied with all the senior debt facility
financial
covenants as at 31 March 2016 other than for the debt
service cover ratio. The lenders condoned the breach of
the debt service cover ratio which resulted, in part, from
the impact on production of the section 54 safety related
stoppages during Q1 FY2016, the fall in commodity prices
and reduced sales volumes of chrome concentrates.
The packing credit facility (chrome pre-shipment finance)
of US$12.5 million provided by the Group's bankers was
not renewed during the interim period, with the bankers
continuing to provide post shipment finance. The Group
continues to enter into appropriate chrome concentrate
pre-pay arrangements to part fund its working capital
requirements. As at 31 March 2016 outstanding deliveries
for approximately 80.8 kt of metallurgical and chemical
grade
chrome concentrates were still due and the outstanding
amount for the chrome pre-pay, which is included in
trade and other payables, as at that date amounted to
US$6.4 million.
The Group is de-risked from a capital spend perspective
with a focus on stay in business capital with additions to
property, plant and equipment for the period amounting to
US$6.4 million, including an amount of US$3.1 million
relating
to the capitalisation of deferred stripping. The
depreciation
charge amounted to US$4.6 million (2015: US$5.4 million).
During the interim period the Group generated net cash
from operations of US$18.2 million (2015: US$15.4 million).
Cash on hand amounted to US$11.1 million (2015:
US$26.7 million). In addition, the Group holds US$9.8
million
in a debt service reserve account.
With the demonstrated ability to mine and process at the
required levels to achieve steady state production and the
recovery in the commodity prices subsequent to the interim
period, the "emphasis of matter" paragraph contained in the
audit report for the financial year ended 30 September 2015
has been removed.
PRINCIPAL BUSINESS RISKS
Material risks to the Group are those that substantially
affect the Group's ability to create and sustain value in
the
short, medium and long term. Material risks determine
how the Group devises and implements its strategy since
each risk has the potential to impact the Group's ability to
achieve its strategic objectives. Each risk also carries with
it
challenges and opportunities. The Group's strategy takes
into account known risks, but risks may exist of which the
Group is currently unaware. An overview of the material
risks which could affect the Group's operational and
financial
performance was included in the Group's 2015 Annual
Report which is available on the Group's website. The
following risks have been identified which may impact the
Group over the next six months.
Regulatory compliance
In April 2016, the South African Government released a
draft reviewed Mining Charter for public comment. There
is no assurance that the Mining Charter will be adopted in
its draft form or revised again to inter alia, set new, higher
or
different Historically Disadvantaged South Africans (HDSA)
or Black Economic Empowerment ownership targets, or that
the definition of persons who constitute HDSAs will not
be changed or substituted. If there is any future increase
in
HDSA ownership targets or any change or substitution in
the definition of HDSAs, the Group may have to amend the
ownership structure of Tharisa Minerals in order to comply
with the new requirements.
The Group is required to comply with a range of Health
and Safety Laws and Regulations in connection with its
mining, processing and on mine logistics activities. Regular
inspections are conducted by the Department of Mineral
Resources to ensure compliance. Any perceived violation of
the Regulations could lead to a temporary shutdown of all or
a portion of the Group's mining operations.
Labour unrest in South Africa
Whilst labour relations are currently stable, the risk of
potential unrest remains particularly with the pending local
government elections scheduled for 3 August 2016 which
may contribute to heightened labour and community unrest
regionally.
In 2015, the Group concluded a collective agreement with
the National Union of Mineworkers, the majority trade
union at the Tharisa Mine, determining wage increases over
the next three years until June 2018.
Unscheduled breakdowns
The Group's performance is reliant on the consistent
production of PGM and chrome concentrates from the
Tharisa Mine. Any unscheduled breakdown leading to a
prolonged reduction in production may have a material
impact on the Group's financial performance and results of
operations.
Currency risk
The Group's reporting currency is US$. The Group's
operations are predominantly based in South Africa with a
ZAR cost base while the majority of the revenue stream is
in US$ exposing the Group to the volatility and movements
in the ZAR. Fluctuations in the US$ and ZAR may have a
significant impact on the performance of the Group.
Commodity prices
The Group's revenues, profitability and future rate of
growth
depends on the prevailing market prices of PGMs and
chrome. A sustained downward movement in the market
price for PGMs and/or chrome may negatively affect the
Group's profitability and cash flows.
Financing and liquidity
The activities of the Group exposes it to a variety of
financial
risks including market, commodity prices, credit, foreign
exchange and interest rate risks. The Group closely monitors
and manages these risks. Cash forecasts are regularly
updated and reviewed including sensitivity scenarios with
reference to the above risks.
BOARD APPOINTMENT
Tharisa welcomes Dr Carol Bell to the board as an
independent non-executive director with effect from
23 March 2016.
SUBSEQUENT MARKET CONDITIONS
Post the half-year results, both PGM and chrome concentrate
prices have recorded a recovery. By mid Q3 FY2016, the
PGM basket price was at approximately US$715/oz and
current chrome trading prices for July 2016 delivery were at
approximately US$150/t. At the same time, the ZAR to US$
exchange rate weakened to approximately ZAR15.0.
OUTLOOK
Tharisa's plans to reach steady state are materialising
and the Group continues towards achieving the targeted
recoveries required to maintain these production levels.
Tharisa expects continued strong operational performance
for the remainder of the year with a focus on improving
the ROM chrome grade and recoveries for both PGM and
chrome concentrates.
These interim results reinforce the Groups sustainable
competitive advantage of being a profitable co-producer of
PGM and chrome concentrates from a large scale, long life
open pit operation weathering commodity and exchange
rate volatility.
Tharisa would like to thank its team and directors for their
continued support in achieving these interim results.
Apart from the IFRS reviewed condensed consolidated
financial statements prepared for submission to the JSE,
the Group also needs to prepare reviewed condensed
consolidated financial statements for Cyprus regulatory
purposes which are in accordance with IFRS as adopted by
the EU. A number of new and revised IFRS standards and
interpretations have not yet been adopted by the EU while
the Group may elect to early adopt such interpretations
and standards in terms of IFRS. There are no numerical
differences in this regard.
STATEMENT BY THE MEMBERS OF THE
BOARD OF DIRECTORS AND THE
COMPANY OFFICIALS RESPONSIBLE FOR
THE DRAFTING OF THE CONDENSED
CONSOLIDATED INTERIM FINANCIAL
STATEMENTS ACCORDING TO THE CYPRUS
SECURITIES AND EXCHANGE COMMISSION
LEGISLATION
In accordance with sections 10(3)(c) and 10(7) of Law No.
190(I)/2007, as amended, providing for the transparency
requirements of issuers whose securities are admitted to
trading on a regulated market (the Transparency Law),
we, the members of the Board of Directors of Tharisa
plc, responsible for the preparation of the condensed
consolidated interim financial statements of Tharisa plc for
the period ended 31 March 2016, hereby declare that to the
best of our knowledge:
a) the condensed consolidated interim financial
statements for the period ended 31 March 2016:
- have been prepared in accordance with
International Accounting Standard 34: Interim
Financial Reporting and as stipulated for under
section 10(4) of the Transparency Law, and
- give a true and fair view of the assets and liabilities,
the financial position and profit or losses of
Tharisa plc and its undertakings, as included in
the condensed consolidated interim financial
statements as a whole; and
b) the adoption of a going-concern basis for the
preparation of the financial statements continues to
be appropriately based on the foregoing and having
reviewed the forecast financial position of the Group; and
c) the interim management report provides a fair review
of the information required by section 10(6) of the
Transparency Law.
Loucas Pouroulis Executive Chairman
------------------- ---------------------------------
Phoevos Pouroulis Chief Executive Officer
------------------- ---------------------------------
Michael Jones Chief Finance Officer
------------------- ---------------------------------
David Salter Lead Independent Non-executive
------------------- ---------------------------------
Director
------------------- ---------------------------------
Antonios Djakouris Independent Non-executive
------------------- ---------------------------------
Director
------------------- ---------------------------------
Omar Kamal Independent Non-executive
------------------- ---------------------------------
Director
------------------- ---------------------------------
Brian Cheng Non-Executive Director
------------------- ---------------------------------
Carol Bell Independent Non-executive
------------------- ---------------------------------
Director
------------------- ---------------------------------
Joanna Ka Ki Alternate Non-executive Director
Cheng
------------------- ---------------------------------
to Brian Cheng
------------------- ---------------------------------
Paphos
10 June 2016
SUMMARISED PRODUCTION DATA
Financial
--------------------- ------------------- --------- ------------ -------- --------- --------- -------------
Quarter Quarter Quarter Half Half year
year year
--------------------- ------------------- --------- ------------ -------- --------- --------- -------------
ended ended ended ended ended ended
--------------------- ------------------- --------- ------------ -------- --------- --------- -------------
31 March 31 December 31 31 March 31 March 30 September
March
--------------------- ------------------- --------- ------------ -------- --------- --------- -------------
2016 2015 2015 2016 2015 2015
--------------------- ------------------- --------- ------------ -------- --------- --------- -------------
Reef mined kt 1 234.2 1 124.4 1 042.1 2 358.6 1 948.0 4 183.2
--------------------- ------------------- --------- ------------ -------- --------- --------- -------------
Stripping m(3)
ratio
--------------------- ------------------- --------- ------------ -------- --------- --------- -------------
waste/m(3)
--------------------- ------------------- --------- ------------ -------- --------- --------- -------------
reef 7.1 6.4 9.8 6.8 10.0 10.7
----------------------------------------- --------- ------------ -------- --------- --------- -------------
Reef milled kt 1 199.6 997.4 1 167.1 2 197.0 2 198.7 4 400.4
--------------------- ------------------- --------- ------------ -------- --------- --------- -------------
PGM flotation kt
feed
--------------------- ------------------- --------- ------------ -------- --------- --------- -------------
tonnes 942.3 765.8 907.2 1 708.1 1 712.2 3 446.2
------------------------------------------ --------- ------------ -------- --------- --------- -------------
PGM rougher g/t
feed
--------------------- ------------------- --------- ------------ -------- --------- --------- -------------
grade 1.74 1.61 1.65 1.68 1.65 1.62
------------------------------------------ --------- ------------ -------- --------- --------- -------------
6E PGMs
produced koz 36.0 24.0 33.0 60.0 57.4 118.0
--------------------- ------------------- --------- ------------ -------- --------- --------- -------------
PGM recovery % 68.5 60.4 68.6 65.0 63.1 65.8
--------------------- ------------------- --------- ------------ -------- --------- --------- -------------
Average US$/oz
PGM
--------------------- ------------------- --------- ------------ -------- --------- --------- -------------
contained
metal
--------------------- ------------------- --------- ------------ -------- --------- --------- -------------
basket price 685 687 935 686 945 885
------------------------------------------ --------- ------------ -------- --------- --------- -------------
Average ZAR/oz
PGM
--------------------- ------------------- --------- ------------ -------- --------- --------- -------------
contained
metal
--------------------- ------------------- --------- ------------ -------- --------- --------- -------------
10
basket price 10 849 9 865 991 10 448 10 888 10 608
------------------------------------------ --------- ------------ -------- --------- --------- -------------
Cr(2)O(3)
ROM grade % 18.3 18.5 18.8 18.4 18.7 18.3
--------------------- ------------------- --------- ------------ -------- --------- --------- -------------
Chrome recovery % 63.9 61.5 57.5 62.8 56.7 58.0
--------------------- ------------------- --------- ------------ -------- --------- --------- -------------
Chrome yield % 27.7 27.3 26.2 27.5 25.6 25.5
--------------------- ------------------- --------- ------------ -------- --------- --------- -------------
Chrome concentrates kt
--------------------- ------------------- --------- ------------ -------- --------- --------- -------------
produced 332.3 272.1 305.5 604.4 563.3 1 122.2
------------------------------------------ --------- ------------ -------- --------- --------- -------------
Metallurgical
grade kt 259.9 238.7 283.6 498.6 515.9 1 009.4
--------------------- ------------------- --------- ------------ -------- --------- --------- -------------
Specialty
grades kt 72.4 33.4 21.9 105.8 47.4 112.8
--------------------- ------------------- --------- ------------ -------- --------- --------- -------------
Metallurgical US$/t
grade CIF
--------------------- ------------------- --------- ------------ -------- --------- --------- -------------
chrome concentrate China
--------------------- ------------------- --------- ------------ -------- --------- --------- -------------
contract
price 81 124 155 106 156 158
------------------------------------------ --------- ------------ -------- --------- --------- -------------
Metallurgical ZAR/t
grade CIF
--------------------- ------------------- --------- ------------ -------- --------- --------- -------------
chrome concentrate China
--------------------- ------------------- --------- ------------ -------- --------- --------- -------------
contract
price 1 262 1 777 1 742 1 562 1 793 1 894
------------------------------------------ --------- ------------ -------- --------- --------- -------------
Average ZAR:US$
exchange
--------------------- ------------------- --------- ------------ -------- --------- --------- -------------
rate 15.8 14.2 11.7 15.0 11.5 12.0
------------------------------------------ --------- ------------ -------- --------- --------- -------------
INDEPENT AUDITORS' REVIEW REPORT ON
INTERIM FINANCIAL STATEMENTS
TO THE SHAREHOLDERS OF THARISA PLC
We have reviewed the condensed consolidated financial
statements of Tharisa plc,on pages 16 to 20 contained in the
accompanying interim report, which comprise the condensed
consolidated statement of financial position as at 31 March
2016, and the condensed consolidated interim statements of
profit or loss and other comprehensive income, changes in
equity and cash flows for the six months then ended, and
selected explanatory notes.
DIRECTORS' RESPONSIBILITY FOR THE
INTERIM FINANCIAL STATEMENTS
The directors are responsible for the preparation and
presentation of these interim financial statements in
accordance with the International Accounting Standard,
(IAS) 34 Interim Financial Reporting, and for such internal
control as the directors determine is necessary to enable
the
preparation of interim financial statements that are free
from
material misstatement, whether due to fraud or error.
AUDITORS' RESPONSIBILITY
Our responsibility is to express a conclusion on these
interim
financial statements. We conducted our review in accordance
with International Standard on Review Engagements (ISRE)
2410, Review of Interim Financial Information Performed by
the
Independent Auditor of the Entity. ISRE 2410 requires us to
conclude whether anything has come to our attention that
causes us to believe that the interim financial statements
are
not prepared in all material respects in accordance with the
applicable financial reporting framework. This standard also
requires us to comply with relevant ethical requirements.
A review of interim financial statements in accordance with
ISRE
2410 is a limited assurance engagement. We perform
procedures,
primarily consisting of making inquiries of management and
others within the entity, as appropriate, and applying
analytical
procedures, and evaluate the evidence obtained.
The procedures performed in a review are substantially less
than and differ in nature from those performed in an audit
conducted in accordance with International Standards on
Auditing. Accordingly, we do not express an audit opinion on
these financial statements.
CONCLUSION
Based on our review, nothing has come to our attention
that causes us to believe that the accompanying condensed
consolidated interim financial statements of Tharisa plc for
the six months ended 31 March 2016 are not prepared,
in all material respects, in accordance with IAS 34, Interim
Financial Reporting.
Maria A. Karantoni FCA
Certified Public Accountant and Registered Auditor
for and on behalf of
KPMG Limited
Certified Public Accountants and Registered Auditors
14 Esperidon Street
1087 Nicosia
Cyprus
10 June 2016
Condensed consolidated statement of profit or loss and other
comprehensive income
for the six months ended 31 March 2016
Six months ended
------------------------------------------- ------ ------------------------------
31 March 31 March
2016 2015
------------------------------------------- ------ -------------- --------------
Reviewed Reviewed
------------------------------------------- ------ -------------- --------------
Notes US$'000 US$'000
------------------------------------------- ------ -------------- --------------
Revenue 4 85 997 123 700
------------------------------------------- ------ -------------- --------------
(100
Cost of sales 4 (64 863) 895)
------------------------------------------- ------ -------------- --------------
Gross profit 21 134 22 805
------------------------------------------- ------ -------------- --------------
Other income 182 27
------------------------------------------- ------ -------------- --------------
Administrative expenses 5 (10 709) (10 741)
------------------------------------------- ------ -------------- --------------
Results from operating activities 10 607 12 091
------------------------------------------- ------ -------------- --------------
Finance income 410 664
------------------------------------------- ------ -------------- --------------
Finance costs (5 738) (6 443)
------------------------------------------- ------ -------------- --------------
Changes in fair value of financial
assets at fair value through
------------------------------------------- ------ -------------- --------------
profit or loss 3 (24)
------------------------------------------- ------ -------------- --------------
Changes in fair value of financial
liabilities at fair value through
------------------------------------------- ------ -------------- --------------
profit or loss (813) 775
------------------------------------------- ------ -------------- --------------
Net finance costs (6 138) (5 028)
------------------------------------------- ------ -------------- --------------
Profit before tax 4 469 7 063
------------------------------------------- ------ -------------- --------------
Tax 6 (1 371) (2 193)
------------------------------------------- ------ -------------- --------------
Profit for the period 3 098 4 870
------------------------------------------- ------ -------------- --------------
Other comprehensive income
------------------------------------------- ------ -------------- --------------
Items that may be classified subsequently
to profit or loss
------------------------------------------- ------ -------------- --------------
Foreign currency translation differences
for foreign operations, net of tax (9 034) (13 905)
------------------------------------------- ------ -------------- --------------
Other comprehensive income, net of
tax (9 034) (13 905)
------------------------------------------- ------ -------------- --------------
Total comprehensive expense for the
period (5 936) (9 035)
------------------------------------------- ------ -------------- --------------
Profit for the period attributable
to
------------------------------------------- ------ -------------- --------------
Owners of the Company 2 900 3 361
------------------------------------------- ------ -------------- --------------
Non-controlling interests 198 1 509
------------------------------------------- ------ -------------- --------------
3 098 4 870
------------------------------------------- ------ -------------- --------------
Total comprehensive expense for the
period attributable to
------------------------------------------- ------ -------------- --------------
Owners of the Company (3 882) (7 104)
------------------------------------------- ------ -------------- --------------
Non-controlling interests (2 054) (1 931)
------------------------------------------- ------ -------------- --------------
(5 936) (9 035)
------------------------------------------- ------ -------------- --------------
Profit/(loss) per share
------------------------------------------- ------ -------------- --------------
Basic and diluted profit/(loss) per
share (US$) 7 1 1
------------------------------------------- ------ -------------- --------------
The notes on pages 21 to 31 are an integral part of these
financial statements.
Condensed consolidated statement of financial position
as at 31 March 2016
30 September
-------------------------------------- ------- ------------- -------------
31 March 2015
2016
-------------------------------------- ------- ------------- -------------
reviewed Audited
-------------------------------------- ------- ------------- -------------
Notes US$'000 US$'000
-------------------------------------- ------- ------------- -------------
Assets
-------------------------------------- ------- ------------- -------------
Property, plant and equipment 8 204 126 214 518
-------------------------------------- ------- ------------- -------------
Goodwill 843 919
-------------------------------------- ------- ------------- -------------
Other financial assets 10 2 282 1 636
-------------------------------------- ------- ------------- -------------
Long-term deposits 9 9 754 10 656
-------------------------------------- ------- ------------- -------------
Deferred tax assets 664 1 954
-------------------------------------- ------- ------------- -------------
Non-current assets 217 669 229 683
-------------------------------------- ------- ------------- -------------
Inventories 11 15 408 8 951
-------------------------------------- ------- ------------- -------------
Trade and other receivables 25 546 37 979
-------------------------------------- ------- ------------- -------------
Other financial assets 10 46 55
-------------------------------------- ------- ------------- -------------
Current taxation 203 144
-------------------------------------- ------- ------------- -------------
Cash and cash equivalents 11 119 24 265
-------------------------------------- ------- ------------- -------------
Current assets 52 322 71 394
-------------------------------------- ------- ------------- -------------
Total assets 269 991 301 077
-------------------------------------- ------- ------------- -------------
Equity
-------------------------------------- ------- ------------- -------------
Share capital 12 256 256
-------------------------------------- ------- ------------- -------------
Share premium 452 512 452 512
-------------------------------------- ------- ------------- -------------
Other reserve 47 245 47 245
-------------------------------------- ------- ------------- -------------
Foreign currency translation reserve (83 487) (76 705)
-------------------------------------- ------- ------------- -------------
Revenue reserve 12 (202 791) (206 566)
-------------------------------------- ------- ------------- -------------
Equity attributable to owners of
the company 213 735 216 742
-------------------------------------- ------- ------------- -------------
Non-controlling interests (39 848) (37 794)
-------------------------------------- ------- ------------- -------------
Total equity 173 887 178 948
-------------------------------------- ------- ------------- -------------
Liabilities
-------------------------------------- ------- ------------- -------------
Provisions 13 3 633 4 088
-------------------------------------- ------- ------------- -------------
Borrowings 14 27 765 36 329
-------------------------------------- ------- ------------- -------------
Trade and other payables 16 778 -
-------------------------------------- ------- ------------- -------------
Deferred tax liabilities 168 13
-------------------------------------- ------- ------------- -------------
Non-current liabilities 32 344 40 430
-------------------------------------- ------- ------------- -------------
Borrowings 14 18 554 33 692
-------------------------------------- ------- ------------- -------------
Other financial liabilities 15 534 388
-------------------------------------- ------- ------------- -------------
Current taxation 91 98
-------------------------------------- ------- ------------- -------------
Trade and other payables 44 581 47 521
-------------------------------------- ------- ------------- -------------
Current liabilities 63 760 81 699
-------------------------------------- ------- ------------- -------------
Total liabilities 96 104 122 129
-------------------------------------- ------- ------------- -------------
Total equity and liabilities 269 991 301 077
-------------------------------------- ------- ------------- -------------
The condensed consolidated interim financial statements were
authorised for issue by the board of directors on 10 June 2016.
Phoevos Pouroulis Michael Jones
------------------ -------------------
Director Director
------------------ -------------------
The notes on page 21 to 31 are an integral part of these
financial statements.
Condensed consolidated statement of changes in equity
for the six months ended 31 March 2016
ATTRIBUTABLE TO OWNERS OF THE COMPANY
---------------- ------------------------------------------------------------------- ---------------- -------------
Foreign
currency
---------------- -------- -------- -------- -------------- --------------------- ---------------- -------------
Share Share Other translation Revenue Non-controlling
---------------- -------- -------- -------- -------------- ---------- --------- ---------------- -------------
capital premium reserve reserve reserve Total interests Total equity
---------------- -------- -------- -------- -------------- ---------- --------- ---------------- -------------
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
---------------- -------- -------- -------- -------------- ---------- --------- ---------------- -------------
Balance at 1
October 2015 256 452 512 47 245 (76 705) (206 566) 216 742 (37 794) 178 948
---------------- -------- -------- -------- -------------- ---------- --------- ---------------- -------------
Total
comprehensive
income for the
period
---------------- -------- -------- -------- -------------- ---------- --------- ---------------- -------------
Profit for the
period - - - - 2 900 2 900 198 3 098
---------------- -------- -------- -------- -------------- ---------- --------- ---------------- -------------
Other
comprehensive
income
---------------- -------- -------- -------- -------------- ---------- --------- ---------------- -------------
Foreign
currency
translation
differences - - - (6 782) - (6 782) (2 252) (9 034)
---------------- -------- -------- -------- -------------- ---------- --------- ---------------- -------------
Total
comprehensive
income for the
period - - - (6 782) 2 900 (3 882) (2 054) (5 936)
---------------- -------- -------- -------- -------------- ---------- --------- ---------------- -------------
Transactions
with owners of
the Company
---------------- -------- -------- -------- -------------- ---------- --------- ---------------- -------------
Contributions
by and
distributions
to owners
---------------- -------- -------- -------- -------------- ---------- --------- ---------------- -------------
Equity-settled
share based
payments - - - - 875 875 - 875
---------------- -------- -------- -------- -------------- ---------- --------- ---------------- -------------
Contributions
by owners of
the Company - - - - 875 875 - 875
---------------- -------- -------- -------- -------------- ---------- --------- ---------------- -------------
Total
transactions
with owners of
the Company - - - - 875 875 - 875
---------------- -------- -------- -------- -------------- ---------- --------- ---------------- -------------
Balance at 31
March 2016
(Reviewed) 256 452 512 47 245 (83 487) (202 791) 213 735 (39 848) 173 887
---------------- -------- -------- -------- -------------- ---------- --------- ---------------- -------------
Balance at 1
October 2014 255 452 363 47 245 (47 361) (216 596) 235 906 (26 052) 209 854
---------------- -------- -------- -------- -------------- ---------- --------- ---------------- -------------
Total
comprehensive
income for the
period
---------------- -------- -------- -------- -------------- ---------- --------- ---------------- -------------
Net profit for
the period - - - - 3 361 3 361 1 509 4 870
---------------- -------- -------- -------- -------------- ---------- --------- ---------------- -------------
Other
comprehensive
income
---------------- -------- -------- -------- -------------- ---------- --------- ---------------- -------------
Foreign
currency
translation
differences - - - (10 465) - (10 465) (3 440) (13 905)
---------------- -------- -------- -------- -------------- ---------- --------- ---------------- -------------
Total
comprehensive
income for the
period - - - (10 465) 3 361 (7 104) (1 931) (9 035)
---------------- -------- -------- -------- -------------- ---------- --------- ---------------- -------------
Transactions
with owners of
the Company
---------------- -------- -------- -------- -------------- ---------- --------- ---------------- -------------
Equity settled
share based
payments - - - - 100 100 - 100
---------------- -------- -------- -------- -------------- ---------- --------- ---------------- -------------
Contributions
by owners of
the Company - - - - 100 100 - 100
---------------- -------- -------- -------- -------------- ---------- --------- ---------------- -------------
Total
transactions
with owners of
the Company - - - - 100 100 - 100
---------------- -------- -------- -------- -------------- ---------- --------- ---------------- -------------
Balance at 31
March 2015
(Reviewed) 255 452 363 47 245 (57 826) (213 135) 228 902 (27 983) 200 919
---------------- -------- -------- -------- -------------- ---------- --------- ---------------- -------------
The notes on pages 21 to 31 are an integral part of these
financial statements.
Condensed consolidated statement of cash flows
for the six months ended 31 March 2016
Six months ended
-------------------------------------- ------ ---------------------------
31 March 31 March
2016 2015
-------------------------------------- ------ ------------- ------------
Reviewed Reviewed
-------------------------------------- ------ ------------- ------------
Notes US$'000 US$'000
-------------------------------------- ------ ------------- ------------
Cash flows from operating activities
-------------------------------------- ------ ------------- ------------
Profit for the period 3 098 4 870
-------------------------------------- ------ ------------- ------------
Adjustments for
-------------------------------------- ------ ------------- ------------
Depreciation of property, plant
and equipment 4 599 5 421
-------------------------------------- ------ ------------- ------------
Loss on disposal of property, 67 -
plant and equipment
-------------------------------------- ------ ------------- ------------
Impairment losses on property,
plant and equipment - 3
-------------------------------------- ------ ------------- ------------
Impairment losses on goodwill 25 33
-------------------------------------- ------ ------------- ------------
Impairment losses on inventory 183 250
-------------------------------------- ------ ------------- ------------
Changes in fair value of financial
liabilities at fair value through
profit
-------------------------------------- ------ ------------- ------------
or loss 813 -
-------------------------------------- ------ ------------- ------------
Interest income (410) (450)
-------------------------------------- ------ ------------- ------------
Changes in fair value of financial
assets at fair value through
profit or
-------------------------------------- ------ ------------- ------------
loss (3) (727)
-------------------------------------- ------ ------------- ------------
Interest expense 5 172 6 392
-------------------------------------- ------ ------------- ------------
Tax 1 371 2 193
-------------------------------------- ------ ------------- ------------
Equity-settled share based payments 1 049 202
-------------------------------------- ------ ------------- ------------
15 964 18 187
-------------------------------------- ------ ------------- ------------
Changes in
-------------------------------------- ------ ------------- ------------
Inventories (6 845) 3 683
-------------------------------------- ------ ------------- ------------
Trade and other receivables 12 433 (12 754)
-------------------------------------- ------ ------------- ------------
Trade and other payables (2 946) 7 005
-------------------------------------- ------ ------------- ------------
Provisions (250) (175)
-------------------------------------- ------ ------------- ------------
Cash from operations 18 356 15 946
-------------------------------------- ------ ------------- ------------
Income tax paid (126) (529)
-------------------------------------- ------ ------------- ------------
Net cash flows from operating
activities 18 230 15 417
-------------------------------------- ------ ------------- ------------
Cash flows from investing activities
-------------------------------------- ------ ------------- ------------
Interest received 384 371
-------------------------------------- ------ ------------- ------------
Additions to property, plant
and equipment 8 (6 375) (9 113)
-------------------------------------- ------ ------------- ------------
Proceeds from disposal of property, 107 -
plant and equipment
-------------------------------------- ------ ------------- ------------
(Additions)/refunds of other
financial assets (744) 2 917
-------------------------------------- ------ ------------- ------------
Net cash flows used in investing
activities (6 628) (5 825)
-------------------------------------- ------ ------------- ------------
Cash flows from financing activities
-------------------------------------- ------ ------------- ------------
Refund of long term deposits 575 824
-------------------------------------- ------ ------------- ------------
Changes in non current trade 769 -
and other payables
-------------------------------------- ------ ------------- ------------
(Repayments of)/proceeds from
bank credit and other facility
borrowings (15 490) 11 289
-------------------------------------- ------ ------------- ------------
Net proceeds from obligations
under new loan 1 698 759
-------------------------------------- ------ ------------- ------------
Repayment of secured bank borrowings
and loan to third party (9 694) (14 072)
-------------------------------------- ------ ------------- ------------
Interest paid (1 507) (579)
-------------------------------------- ------ ------------- ------------
Net cash flows used in financing
activities (23 649) (1 779)
-------------------------------------- ------ ------------- ------------
Net (decrease)/increase in cash
and cash equivalents (12 047) 7 813
-------------------------------------- ------ ------------- ------------
Cash and cash equivalents at
the beginning of the period 24 265 19 629
-------------------------------------- ------ ------------- ------------
Effect of exchange rate fluctuations
on cash held (1 099) (709)
-------------------------------------- ------ ------------- ------------
Cash and cash equivalents at
the end of the period 11 119 26 733
-------------------------------------- ------ ------------- ------------
The notes on pages 21 to 31j are an integral part of these
financial statements.
Notes to the condensed consolidated interim financial
statements
for the six months ended 31 March 2016
1. REPORTING ENTITY
Tharisa plc (the Company) is a company domiciled in Cyprus.
These condensed consolidated interim financial statements
of the Company as at and for the six months ended 31 March 2016
comprise the Company and its subsidiaries (together
referred to as the Group). The Group is primarily involved in
platinum group metals (PGM) and chrome mining,
processing, trading and the associated logistics.
2. BASIS OF PREPARATION
(a) Statement of compliance
These condensed consolidated interim financial statements have
been prepared in accordance with International
Financial Reporting Standards (IFRS), International Accounting
Standard, IAS 34 Interim Financial Reporting, the
Listing Requirements of the JSE Limited and the Cyprus Companies
Law, Cap. 113. Selected explanatory notes are
included to explain events and transactions that are significant
to an understanding of the changes in financial position
and performance of the Group since the last annual consolidated
financial statements as at and for the year ended
30 September 2015. These condensed consolidated interim
financial statements do not include all the information
required for full annual consolidated financial statements,
prepared in accordance with IFRS.
These condensed consolidated interim financial statements were
approved by the Board of Directors on 10 June 2016.
(b) Functional and presentation currency
The condensed consolidated interim financial statements are
presented in United States Dollars (US$) which is the
Company's functional currency and amounts are rounded to the
nearest thousand.
(c) Going concern basis
The Group reported a profit before tax for the six months ended
31 March 2016 of US$4 469 thousand (2015:
US$7 063 thousand). However, the Group had a net current
liability position as at that date of US$11 438 thousand
(2015: US$10 305 thousand). During this period commodity prices
and in particular the metallurgical grade chrome
concentrate price reflected a marked decline following a
devaluation of the Renminbi, the currency of the Group's
main chrome concentrate customers, and a slowdown in the global
economic growth projections. Subsequent to
the reporting period, the chrome concentrate commodity prices
have recovered to levels prevailing at the financial
year ended 30 September 2015 and the order book remains full.
The decrease in the profit before tax was mainly
attributable to commodity prices notwithstanding the improved
production levels with mining achieving the required
4.8 Mt ROM on an annualised basis for the quarter ended 31 March
2016 and with the processing facilities operating at
the design name plate capacity of 400 ktpm on an annualised
basis.
With the demonstrated ability to mine and process at the
required levels to achieve steady state production and the
recovery in the commodity prices, the financial statements have
been prepared on the going concern basis. Should
the commodity prices, in Rand terms, come under renewed downward
pressure the Group would require additional
working capital funding and the Group may be required to enter
into further commodity pre pay arrangements,
arrange additional working capital loan facilities or undertake
an issue of shares for cash to raise any shortfall in working
capital that may arise in such circumstances.
(d) New and revised International Financial Reporting Standards
and Interpretations
As from 1 October 2015, the Group adopted all changes to
International Financial Reporting Standards (IFRSs), which
are relevant to its operations. This adoption did not have a
material effect on the accounting policies of the Group.
The following Standards, Amendments to Standards and
Interpretations have been issued but are not yet effective for
annual periods beginning on 1 October 2015. The Board of
Directors is currently evaluating the impact of these on
the Group.
Standards and Interpretations
- IFRS 9 "Financial Instruments" (effective the latest as from
the commencement date of its first annual period
beginning on or after 1 January 2018).
- IFRS 10, IFRS 12 and IAS 28 (Amendments) "Investment Entities:
Applying the Consolidation Exception" (effective
for annual periods beginning on or after 1 January 2016).
- IAS 1 (Amendments) "Disclosure Initiative" (effective for
annual periods beginning on or after 1 January 2016).
- IFRS 11 (Amendments) "Accounting for Acquisitions of Interests
in Joint Operations" (effective for annual periods
beginning on or after 1 January 2016).
- IFRS 14 "Regulatory Deferral Accounts" (effective the latest
as from the commencement date of its first annual
period beginning on or after 1 January 2016).
- IFRS 15 "Revenue from contracts with customers" (effective for
annual periods beginning on or after 1 January 2018).
- IAS 16 and IAS 41 (Amendments) "Bearer Plants" (effective for
annual periods beginning on or after 1 January 2016).
- IAS 27 (Amendments) "Equity method in separate financial
statements" (effective for annual periods beginning on
or after 1 January 2016).
- Annual Improvements to IFRSs 2012 2014 Cycle (effective the
latest as from the commencement date of its first
annual period beginning on or after 1 January 2016).
- IAS 16 and IAS 38 (Amendments) "Clarification of acceptable
methods of depreciation and amortisation"
(effective for annual periods beginning on or after 1 January
2016).
- IAS 7 (Amendments) "Disclosure Initiative" (effective for
annual periods beginning on or after 1 January 2017).
- IAS 12 (Amendments) "Recognition of Deferred Tax Assets for
Unrealised Losses" (effective for annual periods
beginning on or after 1 January 2017).
- IFRS 16 "Leases" (effective for annual periods beginning on or
after 1 January 2019).
3. SIGNIFICANT ACCOUNTING POLICIES
The accounting policies applied by the Group in these condensed
consolidated interim financial statements are the
same as those applied by the Group in its audited consolidated
financial statements as at and for the year ended
30 September 2015.
4. OPERATING Segments
The Group has two reportable segments, the PGM segment and the
chrome segment. Information regarding the
results of each reportable segment is included below.
Performance is measured based on segment revenue, cost of
sales and gross profit, as included in the internal management
reports that are reviewed by the Group's management.
Segment revenue, cost of sales and gross profit, are used to
measure performance as management believes that such
information is the most relevant in evaluating the results of
each segment.
PGM Chrome Total
----------------------------------------------- ------------- -------- --------
Six months ended 31 march 2016 (reviewed) US$'000 US$'000 US$'000
----------------------------------------------- ------------- -------- --------
Revenue 35 904 50 093 85 997
----------------------------------------------- ------------- -------- --------
Cost of sales
----------------------------------------------- ------------- -------- --------
Cost of sales excluding selling costs 23 663 24 712 48 375
----------------------------------------------- ------------- -------- --------
Selling costs 98 16 390 16 488
----------------------------------------------- ------------- -------- --------
23 761 41 102 64 863
----------------------------------------------- ------------- -------- --------
Gross profit 12 143 8 991 21 134
----------------------------------------------- ------------- -------- --------
The overhead costs relating to the manufacturing of the PGM and
the chrome concentrates are allocated to the
relevant products based on the relative sales value per product.
The allocated percentage for chrome concentrates
and PGM concentrate accounted for the financial periods under
review is 50% for each segment.
PGM Chrome Total
----------------------------------------------- ---------- -------- --------
Six months ended 31 march 2015 (reviewed) US$'000 US$'000 US$'000
----------------------------------------------- ---------- -------- --------
Revenue 44 087 79 613 123 700
----------------------------------------------- ---------- -------- --------
Cost of sales
----------------------------------------------- ---------- -------- --------
Cost of sales excluding selling costs 26 766 44 715 71 481
----------------------------------------------- ---------- -------- --------
Selling costs 95 29 319 29 414
----------------------------------------------- ---------- -------- --------
26 861 74 034 100 895
----------------------------------------------- ---------- -------- --------
Gross profit 17 226 5 579 22 805
----------------------------------------------- ---------- -------- --------
Geographical information
The following table sets out information about the geographical
location of the Group's revenue from
external customers. The geographical location analysis of
revenue from external customers is based on the country
of establishment of each customer.
Six months ended
----------------------------------------- -----------------------------------------
31 March 31 March
2016 2015
----------------------------------------- -------------------------- -------------
Reviewed Reviewed
----------------------------------------- -------------------------- -------------
US$'000 US$'000
----------------------------------------- -------------------------- -------------
(i) Revenue from external customers
----------------------------------------- -------------------------- -------------
China 9 673 49 464
----------------------------------------- -------------------------- -------------
South Africa 46 410 49 744
----------------------------------------- -------------------------- -------------
Singapore 4 540 736
----------------------------------------- -------------------------- -------------
Hong Kong 22 605 17 817
----------------------------------------- -------------------------- -------------
Other countries 2 769 5 939
----------------------------------------- -------------------------- -------------
85 997 123 700
----------------------------------------- -------------------------- -------------
Six months ended
---- ------------------------------------ ------------------------------
31 March 31 March
2016 2015
---- ------------------------------------ -------------- --------------
Reviewed Reviewed
---- ------------------------------------ -------------- --------------
US$'000 US$'000
---- ------------------------------------ -------------- --------------
5. AdministratiVe exPenses
---- ------------------------------------ -------------- --------------
Directors and staff costs
---- ------------------------------------ -------------- --------------
Non-executive directors 245 245
----------------------------------------- -------------- --------------
Executive directors 561 713
----------------------------------------- -------------- --------------
Other key management 417 510
----------------------------------------- -------------- --------------
Group employees 3 798 4 633
----------------------------------------- -------------- --------------
5 021 6 101
----------------------------------------- -------------- --------------
Audit 169 279
----------------------------------------- -------------- --------------
Consulting 1 122 832
----------------------------------------- -------------- --------------
Corporate social investment 66 177
----------------------------------------- -------------- --------------
Depreciation 157 127
----------------------------------------- -------------- --------------
Discount facility and related fees 205 251
----------------------------------------- -------------- --------------
Equity settled share based expense 1 049 -
---- ------------------------------------ -------------- --------------
Fees for the professional services
of the listing 328 73
----------------------------------------- -------------- --------------
Health and safety 101 87
----------------------------------------- -------------- --------------
Insurance 335 694
----------------------------------------- -------------- --------------
Legal and professional 133 249
----------------------------------------- -------------- --------------
Rent and utilities 370 408
----------------------------------------- -------------- --------------
Security 411 302
----------------------------------------- -------------- --------------
Telecommunications and IT related
costs 278 261
----------------------------------------- -------------- --------------
Training 254 143
----------------------------------------- -------------- --------------
Travelling and accommodation 165 248
----------------------------------------- -------------- --------------
Sundry expenses 545 509
----------------------------------------- -------------- --------------
10 709 10 741
----------------------------------------- -------------- --------------
6. Tax
Tax is recognised based on management's best estimate of the
weighted average annual income tax rate expected for
the full financial year applied to the pre tax income of the
interim period.
The Group's consolidated effective tax rate for the six months
ended 31 March 2016 and 2015 was 31.0% and 31.0%
respectively.
Six months ended
---- -------------------------------------- ------------------------------
31 March 31 March
2016 2015
---- -------------------------------------- ------------- ---------------
Reviewed Reviewed
---- -------------------------------------- ------------- ---------------
7. EARNINGs PER SHARE
---- -------------------------------------- ------------- ---------------
(i) Basic and diluted earnings per
share
---- -------------------------------------- ------------- ---------------
The calculation of basic and diluted
earnings per share has been based
---- -------------------------------------- ------------- ---------------
on the following profit attributable
to the ordinary shareholders of
---- -------------------------------------- ------------- ---------------
the Company and the weighted average
number of ordinary shares
---- -------------------------------------- ------------- ---------------
outstanding.
---- -------------------------------------- ------------- ---------------
Profit for the period attributable
to ordinary shareholders (US$'000) 2 900 3 361
------------------------------------------- ------------- ---------------
Weighted average number of ordinary
shares at 31 March ('000) 255 892 254 781
------------------------------------------- ------------- ---------------
Basic and diluted earnings per share
(US$ cents) 1 1
------------------------------------------- ------------- ---------------
At 31 March 2016 and 31 March 2015, LTIP and SARS awards were
excluded from the diluted weighted average
number of ordinary shares calculation because their effect would
have been anti dilutive. The average market value
of the Company's shares for the purposes of calculating the
potential dilutive effect of SARS was based on quoted
market prices for the period during which the options were
outstanding.
(ii) Headline and diluted headline earnings per share
The calculation of headline and diluted headline earnings per
share has been based on the following headline earnings
attributable to the ordinary shareholders and the weighted
average number of ordinary shares outstanding.
Six months ended
--------------------------------------------------- --------------------------------
31 March 31 March
2016 2015
--------------------------------------------------- --------------- ---------------
Reviewed Reviewed
--------------------------------------------------- --------------- ---------------
Headline earnings for the period attributable
to the ordinary shareholders
--------------------------------------------------- --------------- ---------------
(note 7 (iii)) ('000) 2 925 3 396
--------------------------------------------------- --------------- ---------------
Weighted average number of ordinary
shares at 31 March (note 7 (i))
--------------------------------------------------- --------------- ---------------
('000) 255 892 254 781
--------------------------------------------------- --------------- ---------------
Headline and diluted headline earnings
per share (US$ cents) 1 1
--------------------------------------------------- --------------- ---------------
(iii) Reconciliation of profit/(loss) to headline earnings
Six months ended
-------------------------------------------------- --------------------------------
31 March 31 March
2016 2015
-------------------------------------------------- ---------------- --------------
Reviewed Reviewed
-------------------------------------------------- ---------------- --------------
US$'000 US$'000
-------------------------------------------------- ---------------- --------------
Net Net
-------------------------------------------------- ---------------- --------------
Profit attributable to ordinary shareholders 2 900 3 361
-------------------------------------------------- ---------------- --------------
Adjustments:
-------------------------------------------------- ---------------- --------------
Impairment losses on goodwill 25 33
-------------------------------------------------- ---------------- --------------
Impairment losses on property, plant
and equipment - 3
-------------------------------------------------- ---------------- --------------
Tax effect of impairment losses on
property, plant and equipment - (1)
-------------------------------------------------- ---------------- --------------
Headline earnings 2 925 3 396
-------------------------------------------------- ---------------- --------------
8. PROPERTY, PLANT AND EQUIPMENT
(a) Acquisitions and disposals
During the six months ended 31 March 2016 and 2015 the Group
acquired assets with a cost, excluding capitalised
borrowing costs, of US$6 375 thousand and US$9 113 thousand
respectively.
During the six months ended 31 March 2016, disposal of property,
plant and equipment resulted in a loss on disposal
of US$67 thousand (2015: US$Nil) being recognised in profit or
loss.
(b) Capital commitments
At 31 March 2016 and 30 September 2015, the Group's capital
commitments for contracts to purchase property, plant
and equipment amounted to US$2 387 thousand and US$1 431
thousand respectively.
(c) Securities
At 31 March 2016 and 30 September 2015, an amount of US$185 093
thousand and US$196 432 thousand of the
carrying amount of the Group's tangible property, plant and
equipment was pledged as security against secured bank
borrowing and third party borrowing (see note 14).
30 September
---- -------------------- ---------------- -------------
31 March 2015
2016
---- -------------------- ---------------- -------------
Reviewed Audited
---- -------------------- ---------------- -------------
US$'000 US$'000
---- -------------------- ---------------- -------------
9. LONG-TERM DEPOSITS
---- -------------------- ---------------- -------------
Long-term deposits 9 754 10 656
------------------------- ---------------- -------------
30 September
----- -------------------------------- ------------ ---------------- -------------
31 March 2015
2016
----- -------------------------------- ------------ ---------------- -------------
Fair Reviewed Audited
value
----- -------------------------------- ------------ ---------------- -------------
hierarchy US$'000 US$'000
----- -------------------------------- ------------ ---------------- -------------
10. OTHER FINANCIAL ASSETS
----- -------------------------------- ------------ ---------------- -------------
Non-current assets
----- -------------------------------- ------------ ---------------- -------------
Investments in cash funds Level
and income funds (note 10(a)) 2 2 279 1 632
-------------------------------- ------------------ ---------------- -------------
Interest rate caps (note Level
10(b)) 2 3 4
-------------------------------- ------------------ ---------------- -------------
2 282 1 636
--------------------------------------------------- ---------------- -------------
Current assets
----- -------------------------------- ------------ ---------------- -------------
Investments at fair value
through profit or loss
----- -------------------------------- ------------ ---------------- -------------
Level
(note 10(c)) 1 46 55
-------------------------------- ------------------ ---------------- -------------
46 55
--------------------------------------------------- ---------------- -------------
(a) The investments in cash funds and income funds are unsecured
and held at fair value through profit or loss
(designated).
During the year ended 30 September 2014, the investment managed
by a collective investment entity namely
Stanlib Collective Investments was ceded to Lombard Insurance
Group ("Lombard") against the guarantee issued
by Lombard to the Department of Mineral Resources of South
Africa ("DMR") for the rehabilitation provision.
During the year ended 30 September 2015, a portion of the
investment was withdrawn and the remaining balance
of the investment as at 31 March 2016 and 30 September 2015
totalling US$932 thousand and US$960 thousand
respectively is ceded to Lombard against the guarantee issued by
Lombard on behalf of Arxo Logistics Proprietary
Limited to Transnet Freight Rail, a division of Transnet SOC
Limited to the value of ZAR12 000 thousand.
Investment in Money Market and Current Accounts totalling US$1
347 thousand (2015: US$672 thousand) is
managed by Guardrisk Insurance Company Limited ("Guardrisk")
against the guarantee issued by Guardrisk
to the DMR for the rehabilitation provision. The guarantee
issued by Guardrisk has a fixed cover period from
1 December 2014 to 30 November 2017.
The underlying investments are in money market and other funds
and the fair value has been determined by
reference to their quoted prices.
(b) Interest rate caps were obtained from a consortium of
financial institutions, against the floating 3 month
Johannesburg Interbank Agreed Rate (JIBAR) on 25% of the secured
bank borrowing. The interest rate caps
have a strike rate of 7.5% and terminate on 31 March 2017. The
balance is held at fair value through profit or loss
(held for trading). Fair values are based on quoted market
prices at the end of the reporting period without any
deduction for transaction costs.
(c) Investments at fair value through profit or loss are valued
based on quoted market prices at the end of the
reporting period without any deduction for transaction
costs.
30 September
----- ----------------------- ------------------- ---------------
31 March 2015
2016
----- ----------------------- ------------------- ---------------
Reviewed Audited
----- ----------------------- ------------------- ---------------
US$'000 US$'000
----- ----------------------- ------------------- ---------------
11. INVENTORIES
----- ----------------------- ------------------- ---------------
Finished products 8 586 4 283
----------------------------- ------------------- ---------------
Ore stockpile 3 341 1 257
----------------------------- ------------------- ---------------
Work in progress - 195
----------------------------- ------------------- ---------------
Consumables 3 481 3 216
----------------------------- ------------------- ---------------
Total carrying amount 15 408 8 951
----------------------------- ------------------- ---------------
During the six months ended 31 March 2016 and 31 March 2015, the
Group wrote down its inventories by
US$183 thousand and US$250 thousand respectively. The write down
is included in cost of sales in the condensed
consolidated statement of profit or loss and other comprehensive
income.
Inventories are subject to a general notarial bond in favour of
the lenders of the secured bank borrowings.
12. ORDINARY SHARE CAPITAL AND REVENUE RESERVE
The Company did not issue any ordinary share capital and did not
declare or pay any dividends during the six months
ended 31 March 2016 and 31 March 2015.
The revenue reserve includes the accumulated retained profit and
losses of the Group. The revenue reserve is
distributable for dividend purposes.
13. PROVISIONS
The Group has a legal obligation to rehabilitate the site where
the Group's mine is located, once the mining operations
cease which would be when the current mine life of the project
expires.
The provision for future rehabilitation at 31 March 2016 and 30
September 2015 amounted to US$3 633 thousand
and US$4 088 thousand respectively. During the six months ended
31 March 2016 and 31 March 2015, the provision
for future rehabilitation recognised/(derecognised) to
inventories was US$(205) thousand and US$677 thousand
respectively and to mining assets and infrastructure US$(187)
thousand and US$134 thousand respectively. The
amounts recognised in profit or loss for the same periods
amounted to US$162 thousand and US$182 thousand
respectively.
An insurance company provided a guarantee to the DMR to satisfy
the requirements of the Mineral and Petroleum
Resources Development Act with respect to environmental
rehabilitation and the Group has pledged as collateral its
investments in interest bearing debt instruments to the
insurance company to support this guarantee.
The interest rate used for estimating future costs is the long
term risk free rate as indicated by the RI86 government
bond of South Africa, which was 9.10% and 8.45% as at 31 March
2016 and 30 September 2015 respectively. The net
present value of the current rehabilitation estimate is based on
the average of the long term inflation target range of
the South African Reserve Bank of 4.50% as at 31 March 2016 and
30 September 2015.
The Group expects that the timing of the outflows relating to
the provision for rehabilitation is uncertain at this stage
but it estimates that it will probably take place at the end of
the life of the mine and infrastructure.
31 March 30 September
2016 2015
----- --------------------------------- --------------------- -------------------
Reviewed Audited
----- --------------------------------- --------------------- -------------------
US$'000 US$'000
----- --------------------------------- --------------------- -------------------
14. BORROWINGS
----- --------------------------------- --------------------- -------------------
Non-current
----- --------------------------------- --------------------- -------------------
Secured bank borrowing 27 214 36 329
--------------------------------------- --------------------- -------------------
Other borrowings - obligations 551 -
under new loans
----- --------------------------------- --------------------- -------------------
27 765 36 329
--------------------------------------- --------------------- -------------------
Current
----- --------------------------------- --------------------- -------------------
Secured bank borrowing 13 595 14 346
--------------------------------------- --------------------- -------------------
Other borrowings - bank credit
and other facility 1 808 17 298
--------------------------------------- --------------------- -------------------
Other borrowings - obligations
under new loans 1 369 164
--------------------------------------- --------------------- -------------------
Other borrowings - loan payable
to related party 1 782 1 884
--------------------------------------- --------------------- -------------------
18 554 33 692
--------------------------------------- --------------------- -------------------
There have been no changes in the terms, securities and
financial covenants of the above borrowing facilities during
the six months ended 31 March 2016, compared to those disclosed
in the Group's consolidated financial statements
as at and for the year ended 30 September 2015 other than the
following:
(a) Insurance premium finance provided to Tharisa Minerals
Proprietary Limited, a subsidiary of the Group, for an
amount of ZAR13 383 thousand repayable in twelve monthly
instalments commencing 1 December 2015. The
finance is guaranteed by Tharisa plc for an amount of ZAR14 000
thousand and bears interest at a rate of 8.72%
p.a.
(b) Finance provided to purchase equipment by Tharisa Minerals
Proprietary Limited, a subsidiary of the Group, for
an amount of ZAR20 770 thousand repayable in twenty four monthly
instalments commencing 29 February 2016.
The finance bears interest at prime +3% and the equipment will
remain the property of the company providing
the finance until the full purchase price has been paid.
(c) During the period under review, the Group's US$12 500
thousand bank credit facility was not extended and the
charge over bank deposits totalling US$2 500 thousand was
released.
(d) The senior debt providers condoned the breach of the debt
service cover ratio as at 31 March 2016.
30 September
----- ----------------------------- ------------ -------------- -------------
31 March 2015
2016
----- ----------------------------- ------------ -------------- -------------
Fair Reviewed Audited
value
----- ----------------------------- ------------ -------------- -------------
hierarchy US$'000 US$'000
----- ----------------------------- ------------ -------------- -------------
15. OTHER FINANCIAL LIABILITIES
----- ----------------------------- ------------ -------------- -------------
Level
Discount facility 2 534 388
----------------------------- ------------------ -------------- -------------
Discount facility relates to fair value adjustments on the
limited recourse disclosed receivables discounting facility
("discount facility") with ABSA, Nedbank and HSBC in terms of
which 98% of the sales of platinum, palladium and
gold (included in PGM) are discounted at JIBAR (3 month) + 200
basis points. The discount facility is for an amount of
ZAR300 000 thousand. The balance is held at fair value through
profit or loss (designated).
16. TRADE AND OTHER PAYABLES
Non-current trade and other payables represent a trade payable
that has been discounted and is repayable in twelve
monthly instalments commencing on 30 October 2017. The balance
is measured at amortised cost.
17. FAIR VALUES
The Board of Directors considers that the fair values of
significant financial assets and liabilities approximate their
carrying values at each reporting date.
Six months ended
----- --------------------------------------- ------------------------------
31 March 31 March
2016 2015
----- --------------------------------------- -------------- --------------
Reviewed Reviewed
----- --------------------------------------- -------------- --------------
US$'000 US$'000
----- --------------------------------------- -------------- --------------
18. RELATED PARTY TRANSACTIONS
----- --------------------------------------- -------------- --------------
Significant transactions carried
at arm's length with related parties
during
----- --------------------------------------- -------------- --------------
the period were as follows:
----- --------------------------------------- -------------- --------------
Interest expense
----- --------------------------------------- -------------- --------------
Langa Trust 103 125
--------------------------------------------- -------------- --------------
Arti Trust 112 157
--------------------------------------------- -------------- --------------
Ditodi Trust 11 12
--------------------------------------------- -------------- --------------
Makhaye Trust 11 12
--------------------------------------------- -------------- --------------
The Phax Trust 23 24
--------------------------------------------- -------------- --------------
The Rowad Trust 11 12
--------------------------------------------- -------------- --------------
Moira June Jacquet-Briner 11 12
--------------------------------------------- -------------- --------------
282 354
--------------------------------------------- -------------- --------------
Interest expense is calculated at prime +2% per annum and
payable quarterly.
Compensation to key management of the Company for the period
ended 31 March 2016 and 2015 are set out in the
tables below:
Salary Other Post Share
--------------------------------------- -------- ----------- ----------- --------- --------
and short-term employment based
--------------------------------------- -------- ----------- ----------- --------- --------
fees benefits benefits payments Total
--------------------------------------- -------- ----------- ----------- --------- --------
US$'000 US$'000 US$'000 US$'000 US$'000
--------------------------------------- -------- ----------- ----------- --------- --------
2016 compensation to key
management
--------------------------------------- -------- ----------- ----------- --------- --------
(Reviewed)
--------------------------------------- -------- ----------- ----------- --------- --------
Non-executive directors'
remuneration 245 - - - 245
--------------------------------------- -------- ----------- ----------- --------- --------
Executive directors' remuneration 518 4 39 - 561
--------------------------------------- -------- ----------- ----------- --------- --------
Other key management remuneration 343 11 63 - 417
--------------------------------------- -------- ----------- ----------- --------- --------
Total 1 106 15 102 - 1 223
--------------------------------------- -------- ----------- ----------- --------- --------
2015 compensation to key
management
--------------------------------------- -------- ----------- ----------- --------- --------
(reviewed)
--------------------------------------- -------- ----------- ----------- --------- --------
Non-executive directors'
remuneration 245 - - - 245
--------------------------------------- -------- ----------- ----------- --------- --------
Executive directors' remuneration 638 21 31 23 713
--------------------------------------- -------- ----------- ----------- --------- --------
Other key management remuneration 401 50 43 16 510
--------------------------------------- -------- ----------- ----------- --------- --------
Total 1 284 71 74 39 1 468
--------------------------------------- -------- ----------- ----------- --------- --------
19. CONTINGENT LIABILITIES
During the year ended 30 September 2015, the Company received a
"letter before action" from a firm of solicitors
representing a shareholder which asserts intended claims
against, inter alia, the Company for damages purporting
to arise in the context of the listing of the Company on the JSE
and the compulsory conversion of the convertible
redeemable preference shares held by that shareholder in the
Company into ordinary shares as provided for in the
terms of the convertible redeemable preference shares. The
matter is subject to the contractual arbitration proceedings
agreed between the parties. The shareholder has as yet not
invoked the arbitration proceedings.
In accordance with paragraph 92 of IAS 37 Provisions, contingent
liabilities and contingent assets no further information
is disclosed in relation to the subject matter on the grounds
that it may prejudice the position of the Company in a
dispute with other parties.
During the six months ended 31 March 2016, Tharisa Minerals
Proprietary Limited terminated the services of a mining
contractor based on non-performance and instructed its attorney
to institute proceedings to recover damages arising
from the non-performance. The contractor has, as a consequence
of the termination of the contract, instituted legal
proceedings against Tharisa Minerals Proprietary Limited
claiming unlawful dispossession of the mine or alternatively
those parts of the mine which it was working at the time of
termination. The Board of Directors of Tharisa Minerals
Proprietary Limited has taken legal advice and, based on the
advice received, is of the view that the mining contractor's
case has no merit and Tharisa Minerals Proprietary Limited will
defend itself against any action taken against it.
The following reclassifications have been made to the
comparative figures:
Six months ended
----- -------------------------------------- ------------------------------
31 March 31 March
2016 2015
----- -------------------------------------- -------------- --------------
Reviewed Reviewed
----- -------------------------------------- -------------- --------------
US$'000 US$'000
----- -------------------------------------- -------------- --------------
20. COMPARATIVE FIGURES
----- -------------------------------------- -------------- --------------
consolidated statement of profit or
loss and other comprehensive
----- -------------------------------------- -------------- --------------
income
----- -------------------------------------- -------------- --------------
Finance income - (751)
-------------------------------------- -------------------- --------------
Changes in fair value of financial
assets at fair value through profit
or loss - (24)
-------------------------------------- -------------------- --------------
Changes in fair value of financial
liabilities at fair value through
profit
----- -------------------------------------- -------------- --------------
or loss - 775
-------------------------------------- -------------------- --------------
21. MINE RESOURCE AND RESERVE STATEMENT
The Group owns and operates the Tharisa Mine, a co-producing,
open pit PGM and chrome mine located in
the Bushveld Complex of South Africa. The proven and probable
open pit and underground mine reserve as at
31 December 2015 certified by independent experts amounted to
106.4 million tonnes. This reserve as at 31 March
2016, due to normal mining operations, has been reduced by
approximately 1.2 million tonnes. The total mineral
resource similarly decreased as a result of depletion during the
period.
22. SUBSEQUENT EVENTS
On 8 June 2016, the Company listed on the main board of the
London Stock Exchange under the ticker THS.
The Board of Directors are not aware of any material events
after the reporting period which have a bearing on the
understanding of the condensed consolidated interim financial
statements.
LEGAL DISCLAIMER
Some of the information in these materials may contain
projections or forward-looking statements regarding future
events,
the future financial performance of the Group, its intentions,
beliefs or current expectations and those of its officers,
directors and employees concerning, among other things, the
Group's results of operations, financial condition, liquidity,
prospects, growth, strategies and business. You can identify
forward looking statements by terms such as "expect",
"believe", "anticipate", "estimate", "intend", "will", "could",
"may" or "might" or the negative of such terms or other similar
expressions. These statements are only predictions and actual
results may differ materially. Unless otherwise required by
applicable law, regulation or accounting standard, the Group
does not intend to update these statements to reflect events
and circumstances occurring after the date hereof or to reflect
the occurrence of unanticipated events. Many factors could
cause the actual results to differ materially from those
contained in projections or forward-looking statements of the
Group,
including, among others, general economic conditions, the
competitive environment, risks associated with operating in
South Africa and market change in the industries the Group
operates in, as well as many other risks specifically related
to
the Group and its operations.
www.tharisa.com
Click on, or paste the following link into your web browser, to
view the associated PDF document.
http://www.rns-pdf.londonstockexchange.com/rns/9377A_-2016-6-12.pdf
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR UUVSRNWANAAR
(END) Dow Jones Newswires
June 13, 2016 03:00 ET (07:00 GMT)
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