Berenberg lowers target price on Tharisa

Berenberg noted that Tharisa's production report showed it producing 30,700 ounces of platinum group metals and 413,000 tonnes of chrome concentrates from its mine in South Africa - compared to forecasts of 41,500 and 428,000, respectively. This also takes full-year volumes to 145,000 ounces for PGMs and 1.58m tonnes for chrome concentrates.

The German bank said the weakness in PGMs appears to have been driven by a mixture of lower throughput and recoveries, which came in at 62.7%, down versus Q3's 69% and below its 75% estimate, and also looked to have been a function of ore mix from blending its own material and third-party feed.

Reef mined for Q4 was 1.2m tonnes, softer than its 1.4m tonnes estimate, while reef milled of 1.3m tonnes, a "little lighter" than its 1.35m tonne estimate.

Berenberg, which stood by its 'buy' rating on the stock, highlighted that due to weak PGM prices, Tharisa had elected to push out the timeframe for the commissioning of its Karo PGM project in Zimbabwe by 12 months to June 2025, with scope to accelerate this if market conditions become "more favourable".

"Given weak prices and the need to secure funding for the project, this is not a major surprise. We think that due to higher costs and weak prices, conventional PGM miners in South Africa are coming under margin pressure, and there is scope for some supply to come out of the market and ultimately drive a better pricing environment when Karo comes online – but we conservatively have not included this in our estimates," said Berenberg.

Reporting by Iain Gilbert at Sharecast.com