Tharisa acquired entry options in two projects in Zimbabwe
In a bid to diversify its asset base and revenue stream from its PGM and chrome asset in South Africa, JSE-listed Tharisa has done so by acquiring low-risk entry options in two projects – Salene Chrome and Karo Platinum – both of which are located the within the mineral-rich Great Dyke in Zimbabwe.
The Great Dyke in Zimbabwe is a geological feature of great significance as it hosts the world’s second largest deposits of PGMs and chrome, outside of South Africa’s Bushveld Complex.
In a bid to unlock the southern African country’s resource potential, the Zimbabwean government has taken a number of active measures to prove that the country is in fact open for business.
Since this declaration was made by Zimbabwe’s President Emmerson Mnangagwa, his sentiments have been echoed and actioned byMinister of Finance Professor Mthluli Ncube and Minister of Mines and Mining Development Winston Chitando by welcoming foreign investment into the country, and in return, providing security of tenure.
The country’s leaders have worked to repeal the country’s land reform and indiginisation laws, which have forced international investors out of the mineral-rich country for many years by instead adopting interventions to simplify the process of doing business and creating a pro-business environment in Zimbabwe.
Most recently, the President signed into law the Zimbabwe Investment Development Agency (ZIDA) Bill, which consolidates previous agencies and simplifies the process of registering a new business, and whose role it is to act as a ‘one-stop shop’ by facilitating entry and implementation of investment projects as well as coordinate investment programmes and strategies.
While still too early to tell, these policy reforms should do as intended in the longer term, which is to revive the country’s largest economic driver – the mining industry.
Tharisa enters the Zimbabwean fold
Tharisa’s entry into Zimbabwe stems from a long-standing company vision to acquire additional PGM assets as a means to diversify its risk. Having searched globally for opportunities, the Great Dyke presented the right opportunity for the company at the right time, according to Tharisa Minerals’ head of investor relations and communications, Ilja Graulich.
Zimbabwe’s tumultuous past and political uncertainty, which made entering the country near impossible until recently, saw the company make a calculated move across the border in 2018 when it acquired interests in Salene Chrome, which offers small, near-term revenue, and Karo Platinum, which provides longer-term value upside for Tharisa.
Headed by Tharisa Zimbabwe country manager Josephat Zimba, both projects are held within a roughly 50 000 ha land package, located 70 km west of Harare in the Mashonaland West District of Zimbabwe – to the north of Zimplats’ mining operations and south of the Zimplats Selous Metallurgical Complex on the eastern side of the Great Dyke.
The area of land had been released by Zimplats in 2018 in support of the governments’ efforts to enable participation by other investors in the country’s platinum mining industry.
One of the largest factors in driving Tharisa’s entry into Zimbabwe was the declaration of a significant portion of Tharisa’s land package as a special economic zone, which entitles Karo Holdings and its subsidiaries (including Karo Platinum and Karo Power as well as Salene Chrome) as well as suppliers and contractors to several fiscal incentives.
These incentives include reduced taxes, duty free importation of raw materials and equipment as well as exchange control rulings amongst others.
Production imminent at Salene
With a 90% shareholding in Salene Chrome, the relatively small-scale chrome mining operation is located on the eastern portion of Tharisa’s land package in Zimbabwe.
While the chrome outcrops on both sides of the Dyke, mining is focused on the eastern side of the Dyke, where a modest drilling and trenching campaign was undertaken in order to determine the extent of the mineralisation.
“Having completed exploration, a mining contractor has been mobilised to site and will commence mining the two chrome seams within the current quarter, which will be mined along strike, backfilling as it goes,” explains Graulich.
Salene Chrome will initially produce 5 000 tpm, or 60 000 tpa of lumpy chrome, with the potential to increase production to between 10 000 and 15 000 tpm (which equates to about 10% of Tharisa’s existing chrome production from South Africa).
There is also potential to build a chrome recovery plant, which would be used to improve lumpy chrome grades from 40-41% to about 48% including the fines.
Graulich points out that while a relatively small, yet scalable low risk and low cost open pit chrome operation, Salene Chrome serves as a catalyst in testing Zimbabwe as an investment destination for a larger project, such as Karo Platinum.
Karo Platinum development on track
It is Tharisa’s objective, through its 26.8% interest (with an option to increase its interest) in Karo Mining Holdings, to establish a full spectrum of PGM opportunities in Zimbabwe, which includes PGM mining, concentrating, smelting and refining, as well as power generation.
In achieving this vision, Tharisa has completed Phase 1 of its exploration programme, which entailed 32.4 km of drilling to the south-west, west and east boundaries of the licence area to average depths of between 50 and 150 m, targeting areas of outcrop of the reef to identify open pittable resources.
With a 96 Moz 4E resource (platinum, palladium, rhodium and gold) grading at 3.2g/t declared by Zimpats in 2017, Tharisa (as part of its US$4 million capital commitment to Karo Platinum) is under way with a prefeasibility study, which is expected to be released in mid-2020.
The prefeasibility study will investigate the viability of establishing initially one of four open pit mining operations that will transition to underground operations, mining approximately 14.4 Mtpa of ROM ore when all four pits are considered.
In terms of beneficiation, the run of mine ore will then be delivered to Karo Refining, which will build, own and operate PGM concentrators, smelters, as well as a base metal and PGM refinery. The vision for Karo Refining, is to have capacity to treat up to 2 Mozpa of PGMs, providing 0.6 Moz for toll-refining capacity for other surrounding PGM producers.
At steady-state, the platinum mining complex is expected to produce 1.4 Mozpa of refined PGMs.
Upon completion of the prefeasibility study for portal one, the company expects to move straight into a bankable feasibility, which is expected to take between six and eight months, at which point it will also apply for National Project Status.
Tharisa will then take an investment decision on how to progress with the development of the PGM asset.