Tharisa on a tear

Platinum group metal (PGM) miner Tharisa’s (THS) operating profit more than tripled to $88m (£66m) for the 12 months to 30 September as sales went up and costs went down. Platinum Group of Metals (PGM), including palladium and rhodium, traded at record prices this year because of demand in the automotive industry. Tharisa’s profit growth was driven by its basket price – effectively an average selling price for its PGM products – which jumped 58 per cent on last year to $1,704 per ounce (oz). 

On top of the palladium price strength, rhodium’s heady price rise took it to just over half of Tharisa’s PGM revenue from 29 per cent last year. Averaging around $8,300/oz in the company’s financial year, the metal is now over $16,000/oz, driven by new vehicle emissions standards in China.

The company’s other product, chrome, had been a drag on first-half earnings, but this was more than covered by PGM strength. Chief executive Phoevos Pouroulis said he expected stainless steel demand to push up chrome prices in the coming year. Investors will be hoping this is right – Tharisa has restarted work on the Vulcan plant, which will increase chrome concentrate production by a quarter from 2022.  

The company has brought back its payout after not handing out an half-year dividend to investors because of Covid-19 uncertainty. This payout level – barring any magical new source of palladium and rhodium appearing – will likely not be short-lived. Buy. 

Last IC view: Buy, 59p, 22 May 2020