BY DAVID MCKAY
Tharisa is to issue a US$50 million three-year bond on the Falls Stock Exchange as part of some US$440 million in project and working capital costs required for its first phase Karo Platinum project in Zimbabwe’s Selous area.
In an update today, Johannesburg-listed Tharisa, which also produces chrome, said project required for Karo’s first ore to mill increased to US$391m.
This was partly because the project had been expanded to 194,000 ounces annually in platinum group metals (PGMs) compared to a previous production estimate of 150,000 oz/year.
Inflation on steel and transportation also played a role in the capital cost lift as well as the inclusion of a US$45 million contingency.
Tharisa previously estimated a capital cost of US$250 million for Karo Platinum which is an orebody situated on Zimbabwe’s famed platinum-rich Great Dyke geological formation.
Bernard Pryor, head of Tharisa’s Karo Platinum project, said a book-build on the proposed bond had started “a few weeks ago”.
It aimed to capitalise on an estimated US$1.8 billion to US$2 billion in stranded assets in Zimbabwe.
The bond would be launched in November.
“We’ve got a lot of interest on the bond,” said Pyror.
The balance of total capital required for Karo Platinum would be sourced from US$260 million in project finance and US$130 billion raised against the company’s existing assets.
There was no plan to put any equity on the table, although Pouroulis said the company had “Plan B and Cs” that might include royalty streams on Karo and existing Tharisa production.
There would be no change to Tharisa’s undertaking on dividend payments, he said.
Once built, in about two years from the start of construction, Karo Platinum would make Tharisa a near-400,000 oz/year PGM producer.
Pouroulis said it represented the making of the company with combined PGM production for 17 years ahead of anticipated sustained deficits for the metals.
According to Tharisa assumptions of an average PGM 6E price of US$2,140/oz and cast cost of US$1,096 per PGM oz, Karo would generate a return on capital invested of 30.1% and an internal rate of return of 26.1%.
“We have a tier one project that is robust with world class economics,” Pouroulis said. -miningmx