Peel Hunt has set a 190p target for Tharisa (THS ), following a third quarter operational update which showed platinum group metals production up at the company’s main mine in South Africa.
Looking ahead, the broker is forecasting profits of US$217 million for the full year to September 2027, US$180 million in 2027, and US$204.5 million in 2028.
“The June quarter saw better-than-expected chrome concentrate output of 394,000 vs our 375,000 estimate, driven by better-than-expected grades,” the broker wrote.
“PGM output was in line at 39,600 ounces, despite lower-than expected grades, due to a large step-up in plant recoveries. Underground works are progressing at pace, with ore now being mined as the declines ramp down following the reef horizons. Tharisa’s growth projects look to be making progress under the radar, offering an opportunity as the Tharisa mine site shows a step forward in output. We do not believe the growth is priced into the shares and reiterate our 190p target price and buy recommendation.”
The broker noted that the June quarter saw a rapid recovery in ore mining rates, up 42% on the quarter, as the storm season ended.
“While mining rates were not quite at our expectations, 1.24 million tonnes vs our 1.3 million tonnes, the improvement in chrome grades was significant, stepping up from 16.9% in March to 17.7% in June. This improvement in grade, plus the ongoing purchase of some third-party ore sustaining mill throughput, drove the beat in chrome output.”
It was more of a mixed picture on the PGM side.
“While chrome grades were well ahead of our expectations, PGM grades did not pick-up as much as we expected, likely a hangover from the storms preventing pit access in the prior quarter,” Peel Hunt said.
“There was also a bonus in the available, if lower-grade, ore for the plant, as PGM recoveries jumped from 77.5% to 83.8%, due to an advantageous mix of fresh vs oxidised ore. That recovery rate is the best seen since FY19 and the fifth-best quarterly recovery rate since the Voyager plant started up in FY14. As the underground works open-up a rising volume of ore, we expect these sorts of recovery rates to become more common as fresh ore feed increasingly dominates the plant.”
The broker also noted that underground development work was now in ore.
“Management were at pains to detail that the decline into the reef would reach ore very quickly. Photos show the tunnelling is now in ore, meaning the works are already generating first, albeit limited, revenues. Over at Karo, infrastructure works on the water dam and power-line link continue, and waste stripping of the pits has also started.”
View from Vox
Peel Hunt sees the longer-term EBITDA from Tharisa stabilising at over US$400 million. It further argues that this sort of income is not reflected at all in the 1.9 times enterprise value to EBITDA ratio for 2026. On that basis, the shares look attractive. But it’s the long-term track record of successful operations, and the upside from going underground and in Zimbabwe which really adds the spice.