Directors'
report

The Board of Directors of Tharisa plc ('the Company') presents to the members its report together with the condensed consolidated financial statements of the Company and its subsidiaries (together with the Company, 'the Group') for the year ended 30 September 2018.

The Company is a Cypriot incorporated public company with a primary listing on the main board of the Johannesburg Stock Exchange and a secondary standard listing on the main board of the London Stock Exchange.

Principal activity

The principal activity of the Company is that of an investment holding company. Tharisa maintains a primary listing on the Johannesburg Stock Exchange under the general mining sector and a secondary, standard listing of its depositary interests on the London Stock Exchange. The Company has controlling interests in platinum group metals ('PGMs') and chrome mining, processing operations and associated sales and logistics operations. The Group holds a 74% shareholding in Tharisa Minerals Proprietary Limited ('Tharisa Minerals'). Tharisa Minerals owns and operates the Tharisa Mine, an open pit PGM and chrome mine located in the Bushveld Complex of South Africa.

Financial results

The results of the Group are disclosed in the condensed consolidated statement of profit or loss and other comprehensive income of this report.

Dividends

It is the Group's policy to pay a minimum of 15% of its consolidated net profit after tax as a dividend.

A dividend of US$ 5 cents per share, totalling US$13.0 million was proposed by the Board on 30 November 2017, approved by shareholders on 10 January 2018 and paid on 14 February 2018.

The following dividends were declared in respect of the year ended 30 September 2018:

  • An inaugural interim dividend of US$ 2 cents per share was declared by the Board on 15 May 2018 and paid on 20 June 2018.
  • A final ordinary dividend of US$ 2 cents per share was proposed by the Board on 26 November 2018, and is subject to shareholder approval at the AGM.

The total dividend for FY2018 is therefore US$ 4 cents per share, equating to 20.5% of its consolidated net profit after tax (2017: US$ 5 cents per share).

Share capital and treasury shares

The authorised share capital of the Company comprises 10 000 million ordinary shares of US$0.001 each and 1 051 convertible redeemable preference shares of US$1 each.

On 29 June 2018, the Company issued 4 000 000 shares in treasury shares. Of the 265 000 000 shares in issue at 30 June 2018, 4 759 161 shares were held in treasury to satisfy the Company's obligations upon vesting of the conditional awards on 30 June 2018 and to make provision for the potential requirement to allot shares to participants exercising vested appreciation rights and 260 240 839 had voting rights.

During the financial year, the Company transferred 889 703 ordinary shares from its treasury shares account to satisfy the vesting of the conditional awards and exercise of appreciation rights by the participants of the Share Award Plan. Following these transactions, 260 902 429 shares had voting rights and 4 097 571 were held in treasury at 30 September 2018. At 30 September 2018, the issued and fully paid ordinary share comprised 265 000 000 ordinary shares.

Main risks

The main financial risks faced by the Group are disclosed in notes 3 and 35 of the consolidated annual financial statements which are available on the Company's website, www.tharisa.com.

Future developments

The Group introduced its Vision 2020 projects. These projects are targeting an increase in Tharisa Minerals' production to 200.0 kozpa of PGMs and 2.0 Mt of chrome concentrates by the end of 2020 on an annualised basis.

The optimisation projects and additional processing plants, together with improved mining grade, are planned to add 40 kozpa of PGMs and 500 ktpa of chrome concentrates to the Tharisa Minerals Mine's annual production guidance for FY2019 of 160 kozpa of PGMs and 1.5 Mt of chrome concentrates.

Upgrade of the crusher circuit at the Genesis Plant

The additional crusher circuit at the Genesis Plant was commissioned during October 2018. The US$7.5 million project aims to increase the Genesis Plant throughput by 15% or about 180 ktpa, targeting an increase in the higher value specialty grade chrome concentrates by adding approximately 24 ktpa of chemical grade chrome concentrate and approximately 18 ktpa of foundry grade chrome concentrate and approximately 19 ktpa of metallurgical grade chrome concentrate.

PGM optimisation at the Voyager Plant

The addition of flotation capacity and the installation of high-energy mechanisms at the Voyager Plant is aimed at improving PGM recoveries and increasing PGM production by an estimated 14 kozpa. The project is being implemented in a staged approach. The first phase of the project, the increase in high grade flotation capacity, has been commissioned. The second phase of the project will be implemented during the 2019 financial year.

Vulcan Fine Chrome Recovery Plant

The construction of the Vulcan Plant will facilitate additional recovery of fine chrome from tailings streams. This proprietary process has been developed by Arxo Metals and a demonstration scale plant has been commissioned at Tharisa Minerals and through systematic operation has proven the concept and process flow. The feasibility study based on the operation of the demonstration scale plant has been concluded.

Apollo PGM and Chrome Plant

A decision has been taken to suspend the Apollo Plant project. This is in light of the additional testwork and studies that indicated the potential for an additional PGM recovery circuit following the Vulcan Plant, which would yield a better investment return.

Exploration projects

Our exploration focus is on the Great Dyke in Zimbabwe, which, just like our existing operations in the Bushveld Complex in South Africa, represents a unique, resource rich geological formation. We believe that being an early mover in this territory positions the Group strategically for current transformation and reforms that are taking place in Zimbabwe. The Group's approach in developing these exciting projects will be staged and measured, with the necessary protections and approvals in place before the Group commits capital.

Karo Mining Holdings Limited

In June 2018, the Group acquired a 26.8% shareholding in Karo Mining Holdings Limited at a low-cost entry point of US$4.5 million. Karo Mining Holdings Limited has been awarded a Special Grant over an area covering 23 903 ha on the Great Dyke of Zimbabwe. In terms of the Investment Project Framework Agreement with the Government of Zimbabwe, the plan is to establish a vertically integrated PGM mining complex. Based on historic testwork, this area is purported to contain some 96 Moz of PGMs at an average grade of 3.2 g/t (3PGE + Au).

Salene Chrome Zimbabwe (Private) Limited

The Group was granted a call option to acquire a 90% shareholding in Salene Chrome Zimbabwe (Private) Limited (Salene Chrome), exercisable on completion of the exploration programme. Salene Chrome was awarded three Special Grants covering an area of approximately 9 500 ha on the eastern side of the Great Dyke in Zimbabwe. The Special Grants entitle Salene Chrome to mine the minerals thereon, including illuvial chrome, which are at surface chrome fines generated from seams as a result of weathering. Salene Chrome has also been awarded three additional Prospecting Special Grants on the western side of the Great Dyke. Tharisa has agreed to undertake and fund the initial exploration programme of Salene Chrome in an amount not exceeding US$3.2 million.

Branches

The Group did not operate any branches during the financial year ended 30 September 2018.

Members of the Board of Directors

The members of the Board as at 30 September 2018 and at the date of this report are:

  • 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 (independent non-executive director)
  • Carol Bell (independent non-executive director)
  • Joanna Ka Ki Cheng (non-executive director)
  • Roger Owen Davey (independent non-executive director)
  • Zhong Liang Hong (non-executive director)*

* Appointed on 1 April 2018

Biographical details of the members of the Board appear in the Board of Directors section of the Annual Report, which is available at www.tharisa.com.

There has been no significant change in the allocation of responsibilities and the composition of the Board between 30 September 2018 and the date of this report.

Joint Company Secretaries

Lysandros Lysandrides and Sanet Findlay serve as the Joint Company Secretaries. The Board formally assessed and considered the performance and qualifications of the Company Secretaries and is satisfied that they are competent, suitably qualified and experienced. They are not directors of the Company, nor are they related or connected to any of the directors and the Board is satisfied that they maintain an arm's length relationship with the Board. Their contact details are as follows:

Lysandros Lysandrides
26 Vyronos Avenue
1096, Nicosia
Cyprus

Sanet Findlay
2nd Floor, The Crossing
372 Main Road
Bryanston, 2191
South Africa

Events after the reporting period

Events after the reporting period are disclosed in note 39 of the consolidated annual financial statements, which are available on the Company's website.

Independent auditor

Ernst & Young Cyprus Limited, with Stavros Pantzaris being the designated registered auditor, was appointed as the independent external auditor of the Company and of the Group on 10 January 2018. Ernst & Young Cyprus Limited have expressed their willingness to continue in office and their re-appointment will be proposed at the AGM.

On behalf of the Board

Phoevos Pouroulis
Michael Jones

Cyprus

26 November 2018