Tharisa wins mining royalty tax dispute, favorable impact expected

Tharisa Minerals, a subsidiary of Tharisa plc, has received a favorable judgment from the South African Tax Court regarding its Mining Royalty assessments for 2015 and 2017. The Court set aside SARS's assessments and ordered a redetermination of the methodology used to calculate gross sales and earnings before interest and tax (EBIT), specifically incorporating Tharisa Minerals' grade recovery curve. This ruling applies to 2015 and all subsequent years of assessment, though SARS retains the right to appeal.

The dispute centered on the calculation of gross sales and EBIT values for platinum group metals (PGMs), not chrome concentrate. SARS had previously increased the gross sales value of PGM sales by adjusting the average PGM grade on a linear basis, which Tharisa Minerals successfully contested. As of 30 September 2024, Tharisa Minerals had provisioned $56.8m for the disputed Mining Royalty.

Tharisa Minerals is now recalculating its Mining Royalty liability, as well as the impact on cost of sales and income tax, applying the judgment's principles retrospectively from 2015. While a materially favorable impact on earnings per share is anticipated, the detailed recalculation is ongoing. A further announcement with earnings guidance will follow the completion of this process.