Karo Holdings revises timeline for its Chegutu platinum project

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By James Muonwa l Mashonaland West Correspondent

KARO Mining Holdings has pushed forward the commissioning of its platinum mining operation in Chegutu by over a year owing to volatile market conditions that do not guarantee a return on investment.

The Cypriot miner, Tharisa PLC which is Karo’s parent company, has announced delays in starting operations at the platinum mining project by over a year, owing to depressed international mineral prices.

In July 2018, Karo Mining Holdings officially launched the Karo platinum project in Chegutu, and the firm expected to spend US$8 million on geological exploration to confirm and delineate the ore body before progressing to the bankable feasibility study.

Tharisa holds a 75% stake in Karo Mining Holdings, a firm operating in Zimbabwe, which covers an area of 23 903 hectares located within the Great Dyke in Mashonaland West province.

The project is an open-pit platinum group metals (PGMs) asset currently under construction at a cost of US$391 million with an expected annual output of 194 000 ounces.

Tharisa’s Chief Executive Officer, Phoevos Pouroulis revealed the commissioning delay as a result of weakening prices in a statement issued this Tuesday.

“Given the current PGM basket price weakness and uncertain global economic outlook, we have taken the measured decision to extend the Karo Platinum timeline out to commissioning by June 2025, with the opportunity to accelerate the timeline as markets become more favourable,” he said.

“The Karo platinum project has progressed well, and the revised timeline is aligned to funding availability and provides flexibility to navigate volatile market conditions.

“Our growth strategy remains firmly intact, with continuous optimisation at the Tharisa Mine, investment in downstream beneficiation and our commitment to the development of the multi-generational Tier 1 Karo Platinum project.”

Tharisa’s announcement follows closely the Chamber of Mines of Zimbabwe (CoMZ)’s warning last week that globally, international mineral prices were softening.

The low mineral prices are a result of slower-than-expected growth in China’s economy and increasing geopolitical tensions that are affecting major commodity markets.

In the first eight months of the year, Zimbabwe exported platinum unwrought or in powder form worth US$88,66 million providing a significant portion of foreign currency to the country.

“The divergence in commodity prices could not have been more visible than the past quarter which saw us touching 52-week highs in the chrome market based on solid fundamentals, but these fundamentals were distinctly lacking in the PGM market, which saw prices drop more rapidly and lower than the market anticipated, resulting in broad-based challenges for the PGM market on the supply side,” Pouroulis said.

“While current markets are volatile and unpredictable, we believe in the medium-term outlook for PGMs underpinned by a supply side constrained economy, supported by a robust chrome market driven by stable demand.

“At Tharisa, our co-product model showed its resilience once again, supported by a strong recovery in chrome production in the second half of the year and benefiting from a 26% increase in price.”

Pouroulis said earlier operational mining challenges and resulting ore mix from the firm’s own ore and purchased ore had a negative impact on PGM recovery and thus production.

However, he added that this was supported by a strong focus and recovery in chrome in the second half of the year.

“The waste contractor is now firmly in place, and we see a recovery in waste mining volumes for FY2024 (financial year), however, we remain cautious on our production outlook as evidenced by our guidance for the coming year,” Pouroulis said.

The margins remained strong due to its mechanised low-cost operations, with a continued disciplined capital allocation strategy, ensuring investment in existing businesses, providing sustainable growth and return to shareholders.

Last week, the CoMZ reported that over the past 12 months, the mining industry had witnessed softening of prices for most key minerals and the most affected were rhodium down 74%, lithium (-69%), palladium (-41%), diamond (-60%) and nickel (-8%).

Karo considers the Chegutu project to be situated in a highly prospective area, which is estimated to contain some 96 million ounces of platinum-group metals (PGMs) at a projected resource grade of 3.2 g/t on a platinum, palladium, rhodium and gold, or 4E, basis.

The conceptual designs are based on the operation of four open pit mining operations, the first of which was expected to begin operating in 2020.

Karo Refining will include the concentration, smelting and refining to produce PGMs, and will include a base metal and precious metal refinery.

At a steady state, the platinum mining complex is expected to produce 1.4 million ounces of refined PGMs a year. The refinery will be capable of treating up to two million ounces of PGMs a year, providing an additional 600 000 oz for toll refining to be used by other PGM producers in the country, encouraging other producers to beneficiate raw materials before export.

The integrated mining and refining complex includes the establishment of a 300 MW solar power plant, which will feed power into the country’s electricity grid.

The project could generate up to 15 000 direct jobs and 75 000 indirect jobs across the value chain.