Good morning, welcome to the Tharisa plc Investor Presentation. Throughout this recorded presentation, investors will be in a listen-only mode. Questions are encouraged and can be submitted at any time via the Q&A tab situated on the right-hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to CEO Phoevos Pouroulis. Good morning, sir.
Good morning, everyone, welcome to this half year 2024 interim results, held virtually. We will get straight into it. We ask the question, why mining, why now, why Tharisa? I think we all acknowledge that if it's not mined, it's grown. If it's not grown, it's mined. These minerals that we mine are critical to the clean energy transition. There's a recognition that to achieve our decarbonization strategies, we need to extract these critical minerals in a sustainable and responsible manner. Mining is not an option, but the way in which we do it is. I think that's part of our culture and our ethos. If we look at why now, we can clearly see that the demand for these minerals and metals will more than double by 2060 to meet these targets for climate change.
There are limited and finite resources. Over and above that, there's been a lack of investment in existing operations and expansion capital, new operations. We know firsthand that it takes approximately 12 years to develop a mine from discovery into first production. The lead times are long, the decisions are strategic, and the capital needs to be patient and to withstand the short-term volatility and be able to see through the cycles, so as to bring these metals into production as demand is growing. As Tharisa, we are mine builders and operators. We understand the journey of exploration through to development and into production. Importantly, the assets that we have under our portfolio are multi-generational and strategic. While we do witness the volatility in commodity prices, we still have faith in the underlying demand and fundamentals of the commodities that we mine.
I think one of the characteristics of our business is that we use technology and innovation to unlock value, and this is one of our key values in our business, but also has been a huge enabler for us to unlock value. To that end, our co-product business model actually delivers into physical demand. We supply key strategic stakeholders that are material players within the global economy. Both our group's PGMs and chrome are designated as critical minerals and have high economic importance and value. PGMs historically have done a wonderful job of cleaning tailpipe emissions from catalysts and now into electrolyzers and fuel cells. We see a great future in terms of the hydrogen economy. Let's not forget the hybrid drivetrain, which is becoming more of the go-to solution as BEV penetration starts to wane. Chrome is essential in terms of making stainless steel stainless.
Importantly, both of these commodities that we mine are 95% recyclable. When we look at the period under review, not much has changed actually over the last 18 months when we look at the headwinds, and the adversity that we face. Operating in Southern Africa and in particular in South Africa, electricity and transport constraints are a daily challenge. Pleased to note that our teams navigate this exceptionally well and the interruption is limited, as can be seen from our results. There are global geopolitical complexities. I think the world is in its most volatile state it's been in since, most probably World War II and lots of uncertainty. This coupled with inflation and high interest rate environment makes it challenging with a volatile commodity pricing environment.
Particularly in South Africa, we have a high level of crime and corruption, which does impact the normal flow and normal course of business. We spend a lot of time protecting our assets and our business due to those two factors amongst the others. There is the impact of climate change. We've seen adverse weather patterns which does impact operations, whether it be logistics, freight, bottlenecks in the pipeline. We have fiscal and regulatory uncertainty, and this is not an African phenomenon. We've seen policy changes globally that do impact trade flows, whether it be duties imposed or restrictions on imports or exports. I think key is actually the availability to develop mining projects. This is limited and it is difficult to attract this long, patient capital that's required to develop projects.
On the flip side, the tailwinds in terms of our business, really the co-product business model has been again proven and tested and is resilient. This really supported by a very strong buoyant chrome market underpinned by a very strong stainless steel growth and demand in China and Indonesia. What's interesting to us is that these baskets of goods have been counter-cyclical for the most part, and the one has balanced the other out. We've seen that with a 40% drop in our PGM basket price, and a 16-odd % increase in our chrome price as the spot price is trading well above the six-month period, which Michael will touch on later. In terms of the macro fundamentals, we've seen a strong momentum behind hybrid drivetrains. I mentioned that earlier. As we see rollback on BEV expansion, especially from European automakers.
We've seen big tariffs imposed on Chinese imports into the U.S., and this really bodes well for a market share that was historically lost to electric vehicles, which has now been clawed back in terms of these hybrid vehicles, which are electric drivetrains that have diesel or petrol generators or engines to either charge or drive the drivetrain. This is really starting to gain momentum. Coupled with this, we see some green shoots and investment in the hydrogen economy. As mentioned, the stainless steel outlook is extremely positive in China and trending at almost excess capacity and consumption. This is supported by primary supply constraints, particularly in South Africa. We do have logistics constraints. With the pressures of the PGM industry, we see potentially UG2 mine production being curtailed, and this has a direct impact on the chrome by-product that is produced.
All of this really, this sort of weaker PGM environment has seen capital investments suspended and new projects deferred in terms of future growth. We do benefit from a weaker South African rand as an offset to inflationary pressure. All in all, I think we prove the resilience of our business model. I think a milestone that we celebrated earlier, 6 weeks ago or so, was us being listed on the JSE for 10 years. While it's something that, I suppose happens in the normal course, it gave us an opportunity to reflect on the journey, and we're extremely pleased with the progress and the maturity of our business and how we've developed into a sustainable, profitable business over the last decade. If I just touch on the vital numbers. Revenue, almost $370 million, up 10.1% year-over- from the comparable period the half last year.
This really on the back of those strong chrome prices and increased volume of chrome production. This generating almost flat EBITDA of $79.6 million, slightly down 2%, generating an NPAT of $38.8 million. This down some 29% from the prior period, and Michael will unpack this later. I think pleasingly is net cash from operating activities at $86.2 million. This with a very big capital expenditure profile of $114.1 million, which includes our investment in Karo Platinum of some $63.1 million. We ended the period with cash and cash equivalents of $198.5 million, and we generated earnings per share of $0.128. We're very pleased to have announced earlier this year our share repurchase program of some US $5 million, which is equivalent to a $0.017 per share reinvestment in our business.
This, with our interim dividend declaration of $0.015, generates a combined net profit after tax distribution of some 24.5%. Again, managing that capital discipline, returning value to shareholders, and taking on board the commentary and advice from our stakeholders in terms of supporting the value of our underlying share. In terms of the commodities, we've just come out of Platinum Week in London. For the first time in a while, we're seeing some positivity around the deficits, particularly around platinum, rhodium, ruthenium, and iridium. Palladium is a bit of a mixed story with potential oversupply in years to come. Depending on the battery electric vehicle uptake and the uptake of hybrid vehicles, we may see a more balanced environment.
Nonetheless, all analysts showing and declaring deficits in all of the major and minor metals for this year and going into the future, potentially expanding deficits for platinum. I think what's important is auto sales, internal combustion engine sales are looking positive and are increasing. This supported by increasing emission standards of Tier 4 and Euro 7, which as we know from history, means that there are more loadings in terms of the auto catalytic converters. Another point of interest is that hybrid solutions require more loading than conventional internal combustion engines, mainly because of the cold starting and stopping of those engines. We look to the future for multi-decade PGM demand for the hydrogen economy. While we're seeing momentum behind it still hasn't gained the traction that we believe it will. Certainly does provide a zero emissions solution to a decarbonization strategy.
These metals are critical, they are unique, and they're essential and have multi-applications across a wide range of industries. We spent a lot of time talking about development and new applications. PGMs are here to stay and demand will be brought out of these new applications. You can see our PGM basket price dropped considerably over the last three quarters. We're starting to see some improvements. If we compare our basket price today over $1,400, just shy of $100 above our six-month average. Moving on to chrome. Chrome is really unsubstitutable in its application in making stainless steel stainless. As most of you are aware, China, the largest stainless steel producer, has no chrome resources of their own. They are mostly dependent, or 80% dependent on South Africa for its chrome requirements. To this end, our mine, Tharisa, supplies 10% of China and Indonesia's chrome demand.
The Indonesian fabrication is Chinese-owned, so it is housed within the same grouping. A real key critical supplier into this growing stainless steel market. What's important to note is that we monitor port inventories in China and really look at the balance of supply and demand. To this end, we see current levels at around 2.3 million-2.4 million tons, being only five weeks supply into the domestic ferrochrome and stainless steel market in China. These are relatively tight levels if you consider any disruption to logistics and/or supply chain issues. We see a very balanced market and potentially a market growing into deficits. Today, the current spot price is well over $300, sitting around $315 per ton. That's well up on the average of $288 per ton, for the first six months.
Really this is driven by a number of factors. One, the heat pumps that are being installed, which are energy and more carbon friendly than conventional heat storage and cooling systems, as well as rebar, stainless steel rebar, rust-proof rebar. These are big green shoots of demand and industrial demand that are supporting a very strong stainless steel market driven by China, but also we're seeing India starting to consume larger amounts of stainless steel. On the whole, for the next decade, we still see very strong chrome demand. With South Africa hosting 80% of the world's resources, I think we're perfectly located to take advantage of this increase in demand. Just touching on our strategy before I hand over to Michael. Our ethos and our purpose statement is really to enrich lives through innovating the resources company of the future. How do we do that?
We look at the six pillars of expanding and optimizing our existing businesses on a sustainable basis, using innovation to unlock value, looking at diversification, whether it be application of our product geographic or a broader commodity mix, and ultimately becoming an investment of choice in our sector. Leading into the ultimate objective of enriching lives for all stakeholders. When we look at our geographic footprint, you can see we've grown. We are situated in multi jurisdictions. Our primary assets being multi-generational mineral assets enabled by technology and innovation in South Africa, in the southwestern part of the Bushveld Igneous Complex and on the Great Dyke in Zimbabwe. We have this pit to port strategy, which enables us to be front facing with our customers, particularly in our chrome product deliveries.
We also have spent a lot of time on technology and beneficiation, and we will unpack that later on. When we look at our key asset, which is the Tharisa Mine and Tharisa Minerals, we look at unlocking value through flexibility. Very pleased to report that our safety record is an industry-leading record at 0.05 incidents per 200,000 man-hours worked. We still strive to achieve a zero-harm environment. In the six-month period under review, we mined 2.1 million tons, slightly down 0.8% from the prior period. But importantly, we milled at nameplate capacity at 2.8 million tons, slightly up from the prior period. Our PGM production was down 7.7%, mainly due to the blend and the type of the ore that we mixed and processed being more oxidized, and that resulted in us producing 71.1 thousand ounces.
I think pleasingly and a focus area in light of the buoyant chrome market is our almost 10% increase in chrome production at 865.6 thousand tons and a real focus there on our chrome production. We are importantly accelerating our underground studies in the West Pit, and really this is what we see as an expansion or sustainable investments in our business and to ensure the multi-generational access to these key reef horizons that we do mine. We will be sharing more news on that front as we progress. Moving north now to the Great Dyke. Again, this is a key strategic asset, long-term perspective and view that we take, looking through this current cycle and current lower pricing environment and investing into the future. Again, a pleasing lost time injury frequency rate of 0.11 over 200,000 man-hours worked.
As you are aware, we have slowed down the construction and we have matched it to smaller funding packages, but it continues steadily. And in parallel with that, we are conducting value engineering and running parallel processes to unlock more value through optimization and taking that culture and ethos from the Tharisa Mine that iteratively over a decade we have invested and improved in processing technology to capture more value from every cube that we mine. When you look at the current impact of the market and the fiscal regime provisions that we are finalizing, these are both having an impact on the delivery of the timeline. Once we have certainty in terms of those fiscal provisions as well as more positive market conditions and funding concluded, we are then in a position to accelerate and continue to develop the project to first ore and mill.
We have spent $110.5 million to date on the project, and that is since inception. And as you are aware, Tharisa has committed $70 million of its final equity contribution, and the balance of the funding will come from third parties and be ring-fenced to the project. Touching on our innovation and our culture and ethos of innovation, we have multiple initiatives. We have our beneficiation site where we produce PGM alloys on a commercial basis. And we have then coupled that with a unique patented PGM refining process, which we will be commercializing later on this year. This is unique and novel and is very cost-effective by comparison and gives us opportunity ultimately to refine our own metal and market our own PGMs, which currently we supply through concentrate agreements to existing refiners in South Africa.
We have our development center, which is a laboratory which is run in conjunction with the university, where we do lab scale and desktop test work before we move them into the beneficiation sites. Either the pyrometallurgical site or the Renewable Energy Center, which is really focused on storage solutions and utilizing renewable energies and technologies that we have identified and developed. One of which is Redox One, a wholly owned subsidiary, which was officially launched at the Africa Energy Indaba in 2024. To remind the audience, this is a long-duration energy storage system, using redox flow technology, which is an iron-chromium solution, which is produced from the concentrates that we mine and gives us a very strong cost advantage.
This is a grid-scale megawatt-to-gigawatt storage solution and really looks to storing renewable energy or peak shaving of energy solutions, so managing peak and non-peak energy flows and storing that energy. We are busy commercializing that with our demonstration units being installed and running on our own electrolytes. Again, a patented process. We see huge potential and huge value for shareholders in this wholly owned subsidiary and a very accelerated timeline to delivery with demonstration scale units being deployed early next year across the globe and really proving the viability and scalability of this technology. With that, we talk about our strategy of mine to megawatt and utilizing the technologies and the minerals that we have to look at the circularity and the circular economy creating that decarbonization from the metals that we mine.
We've touched on this and the various applications of those minerals and metals, and we see this as a key focus area in terms of our ultimate objective of having an underlying access to critical resources and then unlocking value through the technologies and the products that we mine. Without further ado, I'd like to hand over to Michael to touch on the important part of the interim results, the financial update.
Thank you, Phoevos, good morning, and thanks for joining us this morning for our interim results presentation. I think if we look at this last six months, our financial results have really been characterized by the financial resilience of Tharisa through its co-product business model. As a co-product producer of both platinum group metals and chrome concentrates and benefiting from our large open-pit mine, we have generated net cash from operations of $86.2 million. This has allowed us to continue investing throughout the cycle, and particularly in the technology and downstream beneficiation investment, which is progressing well towards commercialization. We continue to maintain our capital discipline, with a share repurchase program of $5 million in place. In addition to that, we have declared interim dividend of $0.015 per share. If we start looking at our overall revenue, again, it's a multi-commodity revenue stream.
Our revenue for the six months, $369.1 million, up 10.1% year-on-year. We look at our revenue on an FCA basis, which is effectively ex-mine-gate, chrome, the single largest contributor at 63.2% of our revenue. That's on the back of metallurgical grade chrome sales of 801.8 thousand tons and an average metallurgical grade price of $208 per ton. We look at the composition of that in more detail, metallurgical grades, approximately 84% of overall production. Specialty grades, which are the higher value add foundry and chemical grade products, are comprising some 16%. Notwithstanding the PGM environment that we have been trading in in terms of its pricing, PGMs are still a significant contributor to our overall revenue at 26%.
Giving some of the numbers behind that, the PGM sales was 70.6 thousand ounces. The average PGM basket price was $1,344 per ounce. That's down just over 39% on the comparable period. The major constituent components of our PGM revenue, platinum at just over 38%. Rhodium is still a significant contributor. While less than 10% of our overall prill split is contributing just under 32% to our PGM revenue. The next table really depicts what's happened over the last six months quite clearly in terms of looking at the EBITDA waterfall. We start off with our half-year 2023 EBITDA. Can quite clearly see the impact of the reduced PGM volumes and reduced PGM prices on the EBITDA.
This has, however, been more than offset by increases in the chrome volume production, as well as the increase of some 17% odd in the chrome prices. We have continued throughout this period to purchase third-party run-of-mine ore. This is a strategic decision to ensure that we maintain optimal throughput through the mills. The other item perhaps which to touch on is the selling expenses. This had, again, a negative impact on our overall EBITDA. The background to that is, in fact, that on a per unit basis, there was a reduction of some 1.4% per ton sold associated with the chrome sales and is based on the increase in the volumes, resulting in overall EBITDA of $79.6 million. I'd like to spend a little time just analyzing our unit costs. There are some significant moves in the costs. Our cubes mined up 19.2% at 8.7 million cubes.
The cost per cube mined, a reduction of some 2.8% at $10.60 per cube. That's really as we absorb the higher fixed cost components against the increased production volumes and notwithstanding some of the inflationary pressures, particularly for example, on the explosive side. Reef tons mined, comparable to the prior period at 2.1 million tons for the six-month period. The cost per reef ton mined increasing by 17% to $44.10 per ton. We look at some of the reasons for the increase in the cost per ton mined, as I mentioned earlier, inflationary pressures on items like the explosives, longer haul distances to the waste rock dump. We recently appointed a mining contractor to remove additional waste, and that cost is included in that cost per reef ton mined.
The inferred stripping included in that cost, which is capitalized for future years' benefits, $31.5 million. In the prior period it was $8.7 million, therefore an increase in the overall cost per reef ton mined. Tonnes milled, very comparable to the prior period at 2.8 million tonnes. On-mine cash cost per tonne milled increasing by 17.8% to $56.80 per tonne. Again, in addition to the other factors mentioned, the strategic ore purchases have been included in the calculation of the cost per tonne milled. One looks at the graph on the right, which analyzes out the on-mine cash costs, you can see the impact of the ore purchases at some 25% of our overall costs. Very pleasing chrome mined and logistics and freight costs down marginally at 1.4% to $81.30 a tonne.
The Tharisa Mine does operate in a weaker currency environment with its revenues denominated in dollars and its cost base largely rand-driven. We benefited from a weakening of the ZAR of some 6.3%, averaging 18.8 ZAR to the dollar. We do account as a co-product producer, now that we produce both platinum group metals and chrome concentrates. However, if we were to turn around and say, let's analyze it on a by-product basis, you'll see the all-in cost per platinum ounce sold increasing to $754.60 per ounce. Let's put that in context. That is the all-in sustaining cost. It's after our capital spend, and I'll touch on that later, of $114 million. It's after the additional stripping and the run-of-mine ore purchases. It is after all those capital costs. We then move on just to gross profits.
Gross profit for the period we recorded $81.4 million, still a very pleasing 22.1% gross profit margin, notwithstanding the PGM environment which we're operating or the inflationary pressures that the business face. We continue to invest in the future of the company. We spent $114.1 million on capital spend in the six-month period. Including this $114 million is $63.1 million that was spent on Karo Platinum and the development of that particular project and $31.5 million on deferred stripping. Looking forward to the year as a whole, our budgeted capital spend is $79.1 million, excluding Karo Platinum and excluding the deferred stripping. Touching on Karo Platinum itself, we look at the plans for the coming six months, the budgeted spend is $38 million and we are on track in terms of our budgetary spend for that project.
The Karo Platinum total capital project cost, just to remind parties, is $391 million, we also provision an extra 10% because of the extended project development schedule. Our balance sheet remains strong. We have $198.5 million in cash and cash equivalents, again, notwithstanding the environment which we're operating in, strong cash flow generation with cash flows from operations of $86.2 million and net cash of $86.3 million. I'd like to just draw your attention to the graph on the top right. We have really broken down our free cash flow to give some context to how we're funding our operations. The net cash from operations, $86.2 million. Our investment in sustaining CapEx in our existing operations, some $51 million. Free cash flow from our sustaining operations, a positive $35.2 million for the six months period.
We invested heavily in Karo Platinum, $63.1 million over this period, which gives us a negative free cash flow for the year of $27.9 million. Now, if we take that in context, it is a world-class asset which we are busy developing. It has significant capital costs, and it will be funded from third-party debt, going forward, in addition to our $70 million equity contribution that is still due for that particular project. Total debt, $112.3 million. Short-term portion, just under $50 million. At the end of our last financial year, we drew down on an $80 million term loan facility to Tharisa Minerals level. We had agreed to an accelerated debt repayment profile, so at the end of this financial year, some 40% of that term loan would in fact have been repaid, and therefore further strengthening our balance sheet and debt capacity.
Some 90% of our debt is U.S. dollar-denominated, the rest is ZAR-denominated. As I mentioned, our balance sheet is extremely robust and healthy, so I will touch on some of the ratios. The current ratio of two to one. Net debt to EBITDA, because of the net cash position, -1.1 times. Net debt to equity, -11%. So a very strong balance sheet. We still have undrawn facilities of $80.6 million in trade finance facilities that we have not accessed in excess of $20 million. We are committed to giving returns to shareholders. Our policy is to distribute at least 15% of consolidated net profit after tax on an annual basis. Typically, at the half-year point, we do the calculation and apply a factor of about 40% for the full year to take into account potential changes over the next six months.
It is very pleasing that we are distributing a dividend of $0.015 per share. In addition to this, we have the share repurchase program of $5 million. If you did that on a per share basis, that is equivalent to $0.017 per share. The program itself has not quite achieved what we expected over this period. We required just under 193,000 shares. The factors behind that really were we are in a closed period, and therefore, there was a limit on the ability to purchase or acquire shares, and also driven by the increase in the share price and the formulaic approach to what you are permitted to repurchase. Following the end of that closed period today, we expect to see much more active trading in that share repurchase program.
I think a very pleasing number on this chart is accumulative distributions to shareholders over the last nine years of which we have been paying out dividends. Please note we pay consistently every single year in terms of the cycles and through the cycles, and that figure amounts to $100.6 million. That gives a very brief overview of the financial results for the six months, and I would like to hand back to Phoevos. Thank you.
Thanks, Michael. When we look at our guidance for the full year, we still remain on track to achieve our stated guidance of 145,000-155,000 PGM ounces. This will require a slight improvement in the second half, which is in process and in plan. In terms of chrome concentrates, we maintain our guidance of 1.7 million-1.8 million tons, and on track to achieve those volumes. When we look at the value proposition in our investment case, firstly, we have to recognize the co-production of these critical metals being PGM and chrome concentrates, and the sustainable demand and supply of these commodities being challenged in some respects, but with multi-generational shallower assets that we're able to supply into the future.
When Karo comes online, we will double our PGM output, and be one of the top 5-6 producers of PGMs in Southern Africa, which certainly will give us a good market presence and market share. I think the fact that we're mechanized mines, we have multi-pit tabular ore bodies, gives us operational flexibility, and we've seen this over time where we're able to shift and move from one area to another, or adapt our strip ratios and mining methodologies to suit the environment and adapt accordingly.
I think key to any strategy is the diversification and beneficiation towards the energy transition, and I think we've proven that through the innovative approaches that we've taken, whether it be Redox One, providing a critical solution that the planet needs to store vast renewable energy that is being generated in unpredictable periods of time, subject to nature, be it irradiation or wind, so that that can be stored on a grid scale basis. I think that really presents a huge opportunity to the future. As well as our downstream opportunities in both chrome and PGMs, which we've touched on lightly. I think also our integrated marketing and sales and logistics platform provide the ability for us to deliver access and engage with end users, and it's something that we believe is scalable over time as we grow our business.
Where I end in a sort of non-sequential manner on capital discipline, and I think this is really important, because we are owners of this business, and we respect the fact that we need to invest in our existing businesses. We need to provide growth as well as return value to shareholders. I think we've proven over the last decade that we have done that responsibly and in a measured fashion. When we summarize this, we see Tharisa as an end-to-end critical metals and energy solution provider, innovating the resources company of the future. That's really what drives us. When we look back and reflect, we've been in operations for 15 years. We've been cash generative for 10 years, been profitable for nine years.
We've returned just over $100 million to shareholders in that nine-year period, and we've invested approximately $601 million in our business. With that, I'd like to thank you all for your attention and hand over now to the moderator for the Q&A session. Thank you.
Phoevos, Michael, thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions just by using the Q&A tab situated on the top right-hand corner of your screen. While the company takes a few moments to review those questions submitted today, I'd like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A can be accessed via your investor dashboard. As you can see, we have received a number of questions throughout today's presentation, Ilja, if I could ask you to please read out the questions and give responses where appropriate to do so, and I'll pick up from you at the end.
Certainly. The first question is addressed the macro questions and Phoevos addressed to you our outlook on commodity prices and demand trends for the second half of 2024. Let me highlight another question here around, can you take us through the chrome market where stock levels are above ground and where the stainless steel cycle is and why prices remain stronger for longer? I know you addressed it briefly initially, but maybe some more detail on the outlook for both those commodities.
Sure. Thanks, Ilja. I think let's touch on the PGMs first. We've seen a nice move in platinum prices, some 14% over the last four weeks, trading above the $1,000 mark. We see continued support for pricing of platinum, rhodium, iridium, ruthenium at the current levels. Palladium has been on a downward trajectory and traded below the $1,000 mark. We believe there is some upside potential for palladium in the short term. That's really in terms of the million ounce short position that's in the market that needs to be covered. I think we'll see support for palladium in the next six months. We see more stable PGM basket pricing with the potential for some appreciation in the next six months. Beyond that, we certainly are more optimistic, particularly around platinum going into the future.
Stainless steel is a very interesting demand driver for the consumption of ferrochrome and in turn chrome concentrates. What we've seen is that stainless steel production in China is at high levels. Demand is there, as I mentioned earlier, it's driven primarily by a number of sectors. You have the traditional late cycle domestic white goods as we refer to them, which really is a byproduct of urbanization and growth in China, whether it's your washing machines, your microwaves, air conditioners. What we've seen now as a boost to stainless steel production are heat pumps, which are energy efficient units and in many places being legislated to be installed. That's been a big driver of stainless steel. The other big driver, which is not very spoken about, is ferritic rebar, which is typically rebar was either galvanized or a carbon steel product.
Because of the rust resistance of rebar, we're starting to see it being utilized in major construction and development industries. India has moved quite dramatically towards stainless steel rebar. We're seeing demand that was not there historically. Secondly, we're starting to see stainless steel replacing other steels and other metals like aluminum in many respects, as well as galvanized steel. The outlook for the next decade is extremely positive in terms of these new markets that have been opened up, primarily because of China's dominance and capacity and growth and cost-effective production of, let's call it, the more ferritic stainless steels, which are higher chrome content, as well as the austenitic, which are the nickel-bearing stainless steels. If we look at port stocks, as mentioned, at around 2.3, 2.4 million tons and declining gradually. This is only a five-week supply into China.
These are chrome ore stocks we're talking about. There is a second inventory that is not publicly available, and that is ferrochrome stocks, which are extremely low in China. That bodes well for a very tight market and for prices above the $300 level. As mentioned, current spot price is $315. If I were to give an outlook for the next six months, I would see prices in the order of $300 per ton being maintained, really on the back of this demand, inventories, and supply side not being able to meet increased demand. I hope that answers the question, Cedric.
Yep. Following up on that, there's a question here with regards to, given the relatively weak PGM market, is there any appetite to look at discounted PGM acquisitions again for you, Phoevos?
Certainly, the big news is the BHP Anglo deal, which has really been the topic of discussion and that really occupied a lot of debate around Platinum Week. Yes, I do think there is an opportunity for consolidation in the PGM industry. We believe this will be a net positive because it will rationalize certain operations that are loss-making today and are potentially supported by bigger balance sheets, and potentially right-size the supply side of the equation to support higher prices for longer into the future. We don't rule out consolidation, and we think there will be more of this happening in the future.
Thank you. Just turning to Karo now, I think there's two questions. One relates more to where do we stand on raising the external debt required for Karo and what progress we've made there. In line with that, you're investing a quarter of revenues in Zimbabwe. How certain are you that investment will deliver satisfactory returns given Zim macro issues and potential major risks for the project? I think a Karo summary on where we stand, maybe.
Perhaps I can start on the funding side. Thank you for that question. If we have a look at the Karo funding, we continue to be progressing with a project finance funding. It is an ECIC-backed funding package in the order of $160 million. They are in the data room going through relevant data, the models, environmental and so forth. That is progressing well, albeit a little slower than we would've liked. One of the challenges there is ECIC is a government-backed organization, and they have a certain process they need to go through to get those approvals. Busy working through that. There's no issues to date raised on that. We're confident of closing that particular fundraising. That does leave a shortfall in the overall funding. We are exploring, and are actively exploring, a gold and/or base metal stream over some of the production going forward.
Again, we have approached a number of parties. We are awaiting term sheets from them. There are a good number of parties in the data room at the moment going through that particular process. We are confident there's been some good interest, notwithstanding jurisdiction, which limits some parties participating in Zimbabwe of getting a favorable outcome on that particular funding stream. There's another African DFI that has expressed interest in participating in a mezzanine level funding as well. I think it's progressing well, albeit a lot slower than I think we would've liked in terms of closing out that funding.
The second part of the question was how confident are we in the investment. I think just returning to our original strategic outlook, we believe that PGMs will be in demand for decades to come. When we look at the supply side challenges and constraints of deep level mining in South Africa, which is the major supplier of platinum, iridium, ruthenium, which are the three metals that are identified for the PEM electrolyzer and the green hydrogen economy. We see through the current volatility and into future demand, where we believe supply will be constrained. Bearing in mind these minor metals are not sitting in above ground stocks that can be recycled. To access them, you need to mine the platinum-bearing reefs to get to the minor metals. We have conviction in the underlying demand fundamentals.
Timing appear not to be ideal, hence us slowing down but not stopping the project, and ultimately giving us some flexibility of when to accelerate or potentially to slow down further. But it is a contrarian view and we are investing out of the cycle. We've seen mining companies buy at the peak and sell at the bottom. Which is not the best return, in our opinion, of capital. Yes, while it is contrarian and it is counter-cyclical and counter-intuitive, we do have conviction that when markets turn and when there's a realization that supply is under huge pressure, we should be in a position to deliver into a much more buoyant and stable demand for these underlying PGM, these critical metals. Yes, we do take a long-term strategic view, and look through a quarter or six months outlook.
Thank you. Michael, a 2-stage question regarding share buybacks and dividends. Why is it appealing for you to buy back shares despite the low share liquidity? I think on the back of that, there's a follow-up question here saying that the dividend cut is obviously disappointing. Are we to understand that going forward, any share buyback sums will be deducted from funds available for dividends and counted towards the minimum 15% NPAT?
Okay. Thank you for those questions. In terms of the share repurchase program, while there would appear to be limited share liquidity, the minute the share price starts moving, there is that share liquidity that is available in the market. We have seen active trade and improvements in the trade in both the London Stock Exchange and the Johannesburg Stock Exchange. I think the management or the executive firmly believe that the share is significantly undervalued at these prices, and therefore, a repurchase of the shares will be value accretive to all shareholders, both those receiving the payment of the consideration and those benefiting through the purchase of those shares and holding those shares for future treasury. I think that should address the share liquidity issue, and we'll continue to trade. I think we'd like to see a more active share repurchase program.
As I mentioned before, coming out of the closed period, I would expect that the restrictions or constraints that were applied would open up the market a little bit more. In terms of the dividend policy itself, our dividend policy is to distribute at least 15% of consolidated net profit after tax. That dividend policy is the policy that we are maintaining unless we tell the market otherwise. We will not be offsetting the share repurchase program against those dividend payments. It is not perceived as one. There are two separate corporate actions that we would undertake.
Just to remind everyone, you did mention it before, this is an interim dividend, and it's not historically a full calculation on the interim NPAT, and it's historically made whole at the year-end.
Correct. Thank you.
Yeah.
Thank you. Phoevos, something for you, maybe a bit closer to home. In December, we spoke at length about the export opportunities for our chrome via Mozambique. Can you update the market on how that's going? There's some comments here around whether there's some problems that we are experiencing there. With elections next week, some of our competitors have had some community unhappiness around our complexes and how are our community relations going, and do we see them as a risk where we are?
Pleased to report that our commodities have been flowing consistently and regularly through the multi-port strategy that we have, which is Richards Bay, Durban and Maputo. Approximately 35% of our exports are channeled through Maputo. In fact, it's an exceptionally well-run and efficient port, and the border system has improved immensely through an automated system. Pleased with the current operations and the ability for us to move our product, bearing in mind that 80%-85% of our product is moved by road and about the balance is by rail. We're looking to increase the rail component, through discussions with Transnet and so forth. In terms of the elections, yes, there's been a lot of activism, a lot of lobbying and sort of the usual activities around our host communities, municipalities over the last six months, I would say.
We have managed, navigated, engaged with these parties and as I've mentioned earlier, been very clear that we're protecting our business and our assets and our people, most importantly, against these, call them fringe activists, and extremists. Pleased to say we haven't had any disruption to our operations, and/or material threats to that end. I think it really speaks both that our community liaisons and teams have been doing over the last decade in building that trust relationship. Bearing in mind that our host communities are beneficiaries of this mine. There is a community trust, which is a shareholder in Tharisa Plc. They benefit from these dividends and from funds as well as the corporate social initiatives that we undertake.
These are continuous regular engagements, talking to our philosophy and ethos of upliftment, of education, development, skills programs, for our community as well as health awareness campaigns and so forth. We have a lifelong commitment to our doorstep communities and we employ approximately 30%-35% of our labor force. There's a real vested interest, in a semi-skilled, skilled workforce, for stability. At this stage, no issues.
Thank you. Back to the actual mining process. Two-pronged question for you, Phoevos. Can you talk about the vision that we have of 2 million tons of chrome and 200,000 ounces of PGMs, what the timeline would be, and the Vulcan recoveries, do you still see them increasing the chrome recoveries on an overall basis to the status?
Yes. We lost you there, but I got the questions. In terms of the chrome recoveries, we are seeing improvements in the Vulcan process and are forecasting a continued improvement to the 72% level going into the end of this financial year, then increasing that to get closer to the 2 million tons. In terms of the chrome, I'd like to say that by the end of next calendar year, I think on a run rate level, we should be achieving near to that level, which would be circa 500,000 tons a quarter. The plans and processes are in place for that. In terms of the PGMs, I think it's clear to see that we've prioritized chrome over the PGM recoveries, and that was a conscious decision, obviously, to improve our production, but also to capture the extra margin in our chrome.
We had the question yesterday from one of the analysts, is it one or the other, or can you achieve both? If we recall historically, when we processed 100% of our own mined material, we did achieve above 80% recovery of PGMs. Really the big determining factor there is the unweathered ore, or fresh ore as we call it, unoxidized ore that is processed, as well as the consistency of that ore. Those two factors allow us, in the current configuration, to process and recover above 80% PGMs. Depending on the ore mix, PGMs, I assume, or on guide, really, I should say, to follow six months after us achieving the chrome recoveries. The reason why I say that is because the blend ratios will stabilize going into calendar year 2026.
Thank you. Two-pronged question for you, Michael. The one relates to chrome sales, then can you comment on chrome sales during H1 FY 2024, which were higher than production, and how do we think about sales going forward? While you answer that, I will pull up the capital slide because we do have a question here around capital expenditure that's more than doubled the significant spending on Karo. I know we talk about it in the slide. I'll pull it up and maybe you can take the question through with the slide up.
Thank you. I think if we look at the question on the chrome sales, we will always sell into our production. What we produce, we will sell, in terms of the overall market and looking at the size of the chrome resources. It's not in our nature to stock chrome as such. It is sold as produced. If it has been high, I'll just check that number now, than the previous period, that is simply a timing issue of stocks that were in transit and were in production over the prior period that would then have been moved in the current period. Going forward, I would very much expect that as we produce and increase our production, we will see an increase in the actual sales volumes. I trust that answers that particular question. The question for CapEx just earlier?
The question for CapEx is the CapEx was obviously higher than what we had shown for the year, and that relates to obviously some of the CapEx spent on Karo, but also some of the deferred stripping. Maybe take the listeners through the various stages of CapEx and how much we will be spending for the second half of the year, just to clarify the situation.
Okay. Thank you. Correct, there's always a timing mismatch between the first six months, second six months in terms of either sustaining projects under construction or the purchase of large pieces of yellow fleet and kits. It's not an equal allocation of spend between the first and second half of the year. If you look at the year as a whole, the intention to spend $79.1 million, that is our budget, excluding Karo Platinum and excluding the deferred stripping. Karo Platinum, we'd be adding on approximately $38 million for that. That is in terms of the current planned spend and the commitments and package that we have in place for the rest of this financial year.
We have a contractor whose sole purpose at the moment is moving additional waste, and that will expose the reefs towards the end of the next financial year, and therefore expect to see a continuation of the deferred stripping at the current rate. For the second six months of this year, I would expect the deferred stripping to amount to approximately the same as the current spend of some $30 million for the second six months. We get the benefit of that at the end of the next financial year when we access those reef horizons and then maintain our throughput and production, and in effect, we also start reducing our reliance on our purchase of third-party run-of-mine ores as well as we access those reefs.
Thank you. There's no more questions here. It's just a comment here, somebody agreeing with our capital allocation policy, talking about cutting back the dividend to buy shares while they are undervalued is completely logical and wise. Some support for our capital allocation program. As we spoke, and the dividend, while it is in real terms lower than last year, it is a 15% net profit after tax on an annual basis that we do do that. With that in mind, there is no further questions here. Phoevos, if you would like to end off and then we'll end the session.
Yeah. Thank you, Ilja. Thank you, everyone, for attending. It's been a pleasing set of results over the past six months. The team have shown agility and adaptability in the rather adverse conditions in South Africa. Lots of moving parts, lots of challenges, and I really want to commend them for a stable set of results. I think looking forward, which is important and then something that we always focus on, is we're seeing improvements on all fronts, in terms of costs, in terms of output and efficiencies. Looking into the next year ahead, we should start seeing our margins improving, profitability increasing, and hopefully supported by a more buoyant PGM basket price. With that, I'd like to thank you all for your time and wish you well today.
Thank you, Michael. Thanks for updating investors today. Can I please ask investors not to close the session, as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This will only take a few moments to complete and I'm sure will be greatly valued by the company. On behalf of the management team of Tharisa PLC, we'd like to thank you for attending today's presentation and good morning to you all.