Tharisa Plc says its acquisition of a 90% stake in Salene Chrome Zimbabwe will help diversify its revenue streams from its single resource asset in South Africa.
Revenue in the half year to March 31, 2018 was up 13.8% to $199.2m, while headline earnings per share were down 37.5% to US 10 cents.
The miner, however, still managed to pay its maiden dividend of US 2 cents, which is 18.3% of its net profit after tax of $28.4m.
The 9 500ha special grant that Tharisa got through Salene Chrome will allow it to venture into a large-scale, low-cost project in a highly prospective area, with premium product potential.
The Salene Chrome asset is a located in a mineral-rich geography and is cash-generative, said Tharisa, in a presentation released on Monday.
The new mine is located along Zimbabwe’s Great Dyke region, which is known to contain alluvial chrome concentrations of up to 30% Cr2O3.
According to Tharisa, the mine has premium product potential as it allows for production of 48%-50% chrome concentrate higher than the 40-42% chrome concentrate that it mines at its South African operations.
The Zimbabwean asset, which “adds further diversity to Tharisa’s basket of chrome products, commands a premium of up to US$70/t”.
Tharisa said the Zimbabwean asset also has higher chrome content, in addition to having high chrome to iron ratio of 2:1.
Alluvial chrome is found at the surface, Tharisa added, with chrome fines generated from seams as a result of weathering.
The miner is now working on starting a trenching programme over special grant areas covering an area of approximately 9 500 hectares (95 km2) on the eastern side of the Great Dyke in Zimbabwe.
The trenching will help determine the extent of the mineralisation, as well as sampling, to determine the in situ grade of the chrome content.
Tharisa said it had made good progress on regulatory approvals, including National Project Status applications and Environmental Impact Assessment reports and approvals, following which the planned exploration programmes would commence.
At least $3.2m has already been budgeted for a geological exploration and sampling programme.
This will lead to a pilot plant to treat alluvial chrome deposits. The pilot plant will help optimise the plant design to maximise recoverability, form the basis for preparing the required process flow, and quantify the capital estimates in relation to a production scale plant.
Arxo Resources Limited, the wholly owned trading subsidiary of Tharisa, will be the sole off-taker/marketing agent for the chrome concentrates produced at Salene Chrome, leveraging Arxo’s existing capabilities.
In addition to Salene Chrome, Tharisa recently announced its investment in Karo Holdings, which gives it access to an area covering 23 903 hectares on the Great Dyke of Zimbabwe.
The land, which was given away by Zimplats, contains low cost, open pittable platinum group metals.