Tharisa PLC (LSE:THS, JSE:THA) said it expects its platinum group metals (PGM) output to double on completion of Phase 1 of the Karo project in Zimbabwe, after exercising its farm-in option and acquiring a controlling interest of Karo Mining Holdings for US$27mln.
The London- and Johannesburg-listed company will settle the acquisition with the issue of 13.69mln new shares to The Leto Settlement, a major shareholder in Tharisa.
Tharisa’s stake in Karo will increase to 66.3% from 26.8%, with Leto holding the remaining 33.7%.
With an initial 20 year life of mine (LOM) and mining lease valid for the LOM, the Karo platinum project has a post tax net present value of US$770.4mln at spot PGM prices, the company said, based on initial probable reserves of 35.5mln tonnes at 2.31 grammes per tone, with the ‘prill split’ metal ratios of 45% platinum, 42% palladium, 4% rhodium and 9% gold, with “material” base metal credits.
The Zimbabwe government has a 15% holding in Karo Platinum, an indirect subsidiary of Karo Holdings.
Theresa said the mining lease area for the Karo project covers an area of 23,903 hectares and is located within the Great Dyke in the Mashonaland West District, approximately 80km southwest of Harare.
Running 550km from north to south, the Great Dyke is a PGM bearing geological feature that is second to the Bushveld Complex of South Africa in terms of its PGM resource base, the company said, with Karo situated within a designated Special Economic Zone that is supported by good road and power infrastructure.
Tharisa said the all-share acquisition was at a discount to the valuation derived by applying the agreed valuation metrics based on the economic milestones achieved.
Phoevos Pouroulis, chief executive of Tharisa, said: “The development of a strategically significant tier one, high-grade, high-return, low-cost PGM resource is a natural evolution for Tharisa as it fulfils its strategy of becoming an integrated diversified developer of new metal assets.”
He added: “The long-life Karo Project, when added to the more than 60-year LOM of the Tharisa PGM and chrome operations in South Africa, sets the foundation for Tharisa’s growth, particularly in the downstream value-enhancing beneficiation sector.”
“As always, we will follow the highest ESG standards as we produce the metals needed to support the rapid growth of the hydrogen economy that help reduce global dependency on fossil fuels and continue to play a vital role in reducing carbon and NOx emissions.
“With the challenges and uncertainty to the supply chain of these vital precious metals, a new short dated source of primarily platinum and palladium metals is a significant risk mitigant for global users and provides security and certainty of supply.”