Nice write up. Went through the numbers and I just wanted to ask you a clarification. EBITDA for FY24 is USD 177 mio, and FY23 is USD136 mio, this makes your valuation more attractive or am I getting numbers wrong?
Second, I see just like you (or close) that they realized 1089$/oz in FY 2024 (I refer to $1065 for FY24 in your table). However they say that basket price is 1405$/oz according to the slide you posted. Is it correct to just slap $1400/oz on 140koz for 2025(low)? Quite a jump from FY2024. If the realized basket price is lower than reported in the slides shouldn't we decrease the figure when forecasting? Using again the breakdown they provide in the slide to calculate current spot basket price I get 1386 ... I'm quite confused wheter this is a good price basket. For your reference:
Hi Matteo, the answer to Q1 is that I've used the EBIT numbers and called them EBITDA by mistake. I've updated the article. So the difference between your numbers and mine is the Depreciation and Amortisation.
Judging by the Q1 RNS we now know the Average basket was $1370/oz at 30/09/24 and $1381/oz at 31/12/24.
I believe your question is whether $1405 as an average 2025 low price is low enough.
Platinum is 10% up YTD, Palladium 15% up YTD (i.e. since 31/12/24 and the $1381) so the quick answer is yes I think $1405 is proving to be a pretty reasonable low mark. Already we can see a basket well in excess of $1405.
But to give you some comfort, when I plug in a $1386 basket for FY25 and a lower Chrome price of $230/tonne (today's price) we are still looking at £52.2m PAT and a P/E of 3.4 (at today's £180m market cap)
If I use a $1600 basket and $300/tonne then that jumps to £80m and a P/E of 2.2X!
For either scenario or an even worse one there's a vast margin of safety from what I can see, unless the wheels properly fall off THS in the months ahead.
A little surprised Tharisa was chosen over Jubilee. Certainly on a 12 to 24 month view. On the PGM side Jubilee can quickly at least double their PGM production from their large stockpile and existing 3rd party agreement with Northern. Admittedly they will only get about 60% of the margin, but will have no CAPEX issue to achieve it. In addition they should start to see significant copper operational progress in Zambia once the power issue is resolved after the drought. It is likely they will also produce far more chrome concentrate in the next 12 months, but probably at a smaller margin as they do not own their own chrome mines. On top of that their share price has been trashed by what appears to be forced institutional selling, which once finished should also provide a significant upside catalyst.
Nice write up. Went through the numbers and I just wanted to ask you a clarification. EBITDA for FY24 is USD 177 mio, and FY23 is USD136 mio, this makes your valuation more attractive or am I getting numbers wrong?
Second, I see just like you (or close) that they realized 1089$/oz in FY 2024 (I refer to $1065 for FY24 in your table). However they say that basket price is 1405$/oz according to the slide you posted. Is it correct to just slap $1400/oz on 140koz for 2025(low)? Quite a jump from FY2024. If the realized basket price is lower than reported in the slides shouldn't we decrease the figure when forecasting? Using again the breakdown they provide in the slide to calculate current spot basket price I get 1386 ... I'm quite confused wheter this is a good price basket. For your reference:
Platinum (Pt) 56.20% 936
Palladium (Pd) 16.10% 967
Rhodium (Rh) 9.50% 4575
Gold (Au) 0.20% 2945.83
Ruthenium 13.60% 470
Iridium (Ir) 4.40% 4550
Total 100.00% Basket Price: 1386.35566
Hi Matteo, the answer to Q1 is that I've used the EBIT numbers and called them EBITDA by mistake. I've updated the article. So the difference between your numbers and mine is the Depreciation and Amortisation.
I'll answer Q2 separately.
Hi again Matteo
Judging by the Q1 RNS we now know the Average basket was $1370/oz at 30/09/24 and $1381/oz at 31/12/24.
I believe your question is whether $1405 as an average 2025 low price is low enough.
Platinum is 10% up YTD, Palladium 15% up YTD (i.e. since 31/12/24 and the $1381) so the quick answer is yes I think $1405 is proving to be a pretty reasonable low mark. Already we can see a basket well in excess of $1405.
But to give you some comfort, when I plug in a $1386 basket for FY25 and a lower Chrome price of $230/tonne (today's price) we are still looking at £52.2m PAT and a P/E of 3.4 (at today's £180m market cap)
If I use a $1600 basket and $300/tonne then that jumps to £80m and a P/E of 2.2X!
For either scenario or an even worse one there's a vast margin of safety from what I can see, unless the wheels properly fall off THS in the months ahead.
OB
Thanks, agree. Nice article, keep up the good work!
A little surprised Tharisa was chosen over Jubilee. Certainly on a 12 to 24 month view. On the PGM side Jubilee can quickly at least double their PGM production from their large stockpile and existing 3rd party agreement with Northern. Admittedly they will only get about 60% of the margin, but will have no CAPEX issue to achieve it. In addition they should start to see significant copper operational progress in Zambia once the power issue is resolved after the drought. It is likely they will also produce far more chrome concentrate in the next 12 months, but probably at a smaller margin as they do not own their own chrome mines. On top of that their share price has been trashed by what appears to be forced institutional selling, which once finished should also provide a significant upside catalyst.
Beautiful capex cycle play