Why would anyone list a platinum company on the JSE today?

When Tharisa Minerals announced its listing on the JSE, the question that immediately sprang to most minds was: why on earth would anyone list a platinum company on the JSE in April 2014? It's not exactly a fantastic environment for the sector right now, with crippling strikes and horrible labour relations making the platinum industry's future look bleak. However, Tharisa is not Implats. It mines an open pit in Rustenberg, not a shaft, so it doesn't employ as many low-level workers, relying instead on mechanisation and a small corps of skilled workers to extract chrome and platinum group metals. That means that it's much less exposed to labour troubles than its peers. And as for why it listed now, of all times, well, as Tharisa CEO Phoevos Pouroulis explains, the company was under an obligation to make its IPO within a certain timeframe, so it had little choice. – FD

GUGULETHU MFUPHI:  Joining us now is Phoevos Pouroulis.  He is the Chief Executive Officer of Tharisa.  To discuss the Company's new listing on the JSE.  Thank you so much for your time today.  As we were discussing, off air that you managed to blow the Kudu Horn quite well, but the decision to list a platinum company right now, at this time, particularly on the JSE; why?

PHOEVOS POUROULIS:  Yes, thank you.  Thank you for having me here this morning, to spend some time with you.  Yes, so timing is a question we've had fairly regularly during this process.  We have a contractual obligation to a number of our shareholders to fulfil an IPO and we've met that obligation.  We are delighted to list on the Johannesburg Stock Exchange.  We've considered other Exchanges, historically the Hong Kong Stock Exchange, we've looked at London and with the relaxation of the laws allowing foreign entities into Inward List, and it opened up the JSE for us, a Market with which we are familiar, so we're very happy.

ALEC HOGG:  Tell us about the timing.

PHOEVOS POUROULIS:  Yes, so as I said, we have an obligation to IPO within a certain timeframe and we meet that, and that was our primary objective.  Obviously, raising the capital was important for our optimisation initiatives, which further enhanced our project, which I'm very happy to take you through.  It's the large scale, open-pit mine on the Western limb of the Bushveld complex.  It is the first time that the middle-group reef horizons have been mined on a co-production basis, producing PGM concentrates and chrome concentrates.  Large-scale resource, 835 million tons, open-pit for twenty-three years, mechanised, labour force skilled, so a lot of competitive advantages and long term sustainability.  So, we are very proud of what we've achieved at the project.

ALEC HOGG:  Just that time again, and I don't want to harp on it too much, but how much time did you have?  We were talking earlier about perhaps this is not such a great time to be listing any platinum prospect, so you said, you had a certain period.  Was this kind of a deadline?

PHOEVOS POUROULIS:  Pretty much.

ALEC HOGG:  Okay, so you had to do it?

PHOEVOS POUROULIS:  Yes, we did, yes.

ALEC HOGG:  So if you had…if you were able to rewrite the rules, I guess you would have waited?

PHOEVOS POUROULIS:  Perhaps, but again, we believe in the fundamentals of the business.  It's a sound project.

ALEC HOGG:  But when you've got a business and you list it, you sell it; you're selling shares.  You would want to do it at the best, possible time.

PHOEVOS POUROULIS:  Sure, absolutely, accepted.

ALEC HOGG:  But I guess, in another respect, because we're often critical of new Listings by saying, "The guys are mining the Market."  What you're saying to us, and particularly your family, who's had a very interesting experience here, first of all Left Co. then you had Eland's Platinum as well, which the family did okay out of it.

PHOEVOS POUROULIS:  Correct.

ALEC HOGG:  Have you got a big chunk here too?

PHOEVOS POUROULIS:  Yes, we're the major shareholders of Tharisa and we see this as a platform for future growth.  We're an operating asset, so I know you are going to ask me, "Are you going to sell it?"  No, we see it as a…

ALEC HOGG:  You've got a record of doing that.

PHOEVOS POUROULIS:  Sure.  No, but we're in production.  We're producing, we sell, and we have a mine to customer platform, where we deliver our product to, end users in China.  So, we've really built a solid foundation here at Tharisa, and it's not a new company.  We've been working since 2006, when the first Prospecting Rights were granted.

GUGULETHU MFUPHI:  You mentioned that you've managed to move to a mechanisation kind of formula at your mine.  How did you get there?

PHOEVOS POUROULIS:  We started off like that, by the virtue of being open-pit it's a mechanised mine, so we have that advantage.

GUGULETHU MFUPHI:  So you're not fazed by the labour issues in the country?

PHOEVOS POUROULIS:  Yes, of course.  We watch it very carefully.  We're in, sort of the heart of the troubled area and we monitor it and obviously, what's going on is very unfortunate in the industry and we hope there's a resolution that comes to the forefront soon.  In terms of our labour force, we are unionised but, fortunately, we've had no disruptions to our branch.

ALEC HOGG:  To your knowledge.

PHOEVOS POUROULIS:  We're within UMS.

ALEC HOGG:  And I guess, given that it's mechanised your staff would be highly trained, rather than having to go underground and pick and shovel.

PHOEVOS POUROULIS:  Correct, yes.

ALEC HOGG:  Is it a bit like Platreef, what they're talking about up in the North, obviously you're in the Western line?

PHOEVOS POUROULIS:  We're on the Western line.  I think we like to compare ourselves more to Mogalakwena, sort of Anglo Platinum's flagship project.  We're in the lowest cost quarter for PGM production and chrome production.  We run our business as a co-producer so we don't pass any credits, from one commodity to the other, so we're very strongly positioned, in terms of our cost base and we see that as a sustainable advantage, with the long-life, open-pit and mechanised mining.

ALEC HOGG: What else is the family doing, your brother, Adonis, what's he doing?

PHOEVOS POUROULIS:  Well, you know, he's still the Chairman of Petra Diamonds, so he's involved in other businesses in Africa, very active in the resources and mining.

ALEC HOGG:  And your dad, Lukas?

PHOEVOS POUROULIS:  He's the Executive Chairman of Tharisa.  It's his vision that got us to where we are today.  He understood that you could extract from the MG Reefs, co-production of PGMs and chrome concentrate, so he's very instrumental in the strategy and the vision and the growth of our business.  He's 75 years old and he's still very active.  You saw him.

ALEC HOGG:  He's looking good, yes, I saw him this morning.  Lukas took me down [inaudible: 05:02] Mine years and years ago, and he doesn't look like he's changed much, he hasn't aged much, so still as feisty as ever I guess.

PHOEVOS POUROULIS:  Feisty and active, yes.

ALEC HOGG:  And then into the future.  This is clearly a highly mechanised operation.  Do you think that this is the way that mining in South Africa might go?

PHOEVOS POUROULIS:  Look, I think there has been a lot of talk about mechanising mining.  It depends on your ore body, at the end of the day, whether it's amenable to mechanisation and how far you can take it.  You know, depending again where you are, at what depth, but I think it is something to be considered, yes.

GUGULETHU MFUPHI:  But the big platinum mines are currently going through turmoil, would you be keen on picking up any of their assets?

PHOEVOS POUROULIS:  Look, in terms of our growth strategy we've clearly stated we would look for opportunities that are similar in scale and attributes as Tharisa, which limits the options to open cast.  We're not considering going underground, in terms of future growth.

ALEC HOGG:  Outcrops, in other words?

PHOEVOS POUROULIS:  Yes, outcrop, yes.

ALEC HOGG:  Have you got, clearly we know how the Bushveld [inaudible: 06:03] complex works.  It's almost like this big circle or big saucer.  Are there other parts that or other outcrops that you would perhaps pick up?

PHOEVOS POUROULIS:  Potentially, there are opportunities to extend the strike length.  We have some 5.6 kilometres strike length in the open-pit.  So there is opportunity to potentially work in some form, or a joint relationship with some of our neighbours.

ALEC HOGG:  And foreign investors, clearly you would have spoken to them.  Are they excited about this alternative to deep-level mining?

PHOEVOS POUROULIS:  Yes, definitely.  It ticked all the boxes for them.  It's a low risk, low capital, in-production mechanised mine, so yes, I think they see the positive attributes of the business and, importantly, it's not short lived.  It's not a two-year open-pit.  It's 23-years of open-pit.

ALEC HOGG:  Just before we go, how has the Market reacted this morning?

PHOEVOS POUROULIS:  Look, the shares have come off.  I think there were some investors that needed to sell at Listing, so we expected it to come off a little bit.  Again, its early days, we have for a long time, we're committed to the business, as a family, and we see great things in the future.