Following a multibillion-dollar deal between Karo Mining and the Zimbabwe government in March, Tharisa has acquired a portion of Karo Mining in order to build a bigger portfolio within Zimbabwe.
The deal will provide the miner with access to a highly prospective area spanning around 23,903 hectares in the Great Dyke region of Zimbabwe, which contains a potential platinum-group metals (PGMs) resource of about 96 million ounces, Tharisa announced on Wednesday (June 13).
COO Michelle Taylor stated, “[t]he acquisition presents an attractive opportunity to expand Tharisa’s PGM mining interests into Zimbabwe. It provides Tharisa with a low-cost, low-risk entry into a new geography and to access development projects that will offer the group the chance to replicate the success achieved at Tharisa Minerals.”
“[The deal is a] low-cost entry at more than an 80-percent discount to an independent fair and reasonable valuation,” added CEO Phoevos Pouroulis.
Pouroulis also noted that the acquisition “ticks all of the metrics” for the company to continue its strategy of becoming a leading global natural resources company.
Tharisa CFO Michael Jones pointed out that the acquisition will have a mine life of approximately nine years as an open-pit operation, with the additional option to go underground afterwards.
He further noted that Great Dyke PGMs projects are low cost, open pittable and have significant palladium and base metals content.
“We really do believe that this is a unique opportunity with a world class asset that we believe we are investing in, and it meets all of our criteria,” Jones stated.
As part of the deal, Tharisa has agreed to provide up to US$8 million in funding to Karo Mining as a repayable debt facility. It will be used to undertake initial geological exploration and sampling work, which the company believes will further enhance its investment.
Tharisa will also be responsible for managing and overseeing exploration and a subsequent bankable feasibility study.
Through its shareholding in Karo Holdings, Tharisa has the option to be involved in additional downstream projects through discounted farm-in arrangements at a later stage.
According to the Tharisa press release, “[t]he planned integrated mining and refining complex will encompass platinum mining, precious metals and base metals refining and the establishment of a 300 megawatt solar power plant.
The release also states, “[i]t is intended that Karo Holdings will apply for national project status and for the projects to be contained within a special economic zone.”
The deal between Tharisa and Karo Mining became possible after the latter reached a US$4.2-billion agreement with the Zimbabwe government to establish a PGMs mine, concentrators, smelters, a base metals and precious metals refinery and power-generation capacity for those operations.
As of 1:25 p.m. EST on Wednesday, Tharisa was trading at ZAC 1,800.
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Securities Disclosure: I, Nicole Rashotte, hold no direct investment interest in any company mentioned in this article