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PAPHOS, CYPRUS - Tharisa plc announced Monday that its wholly-owned subsidiary, Tharisa Minerals, has received a favorable judgment from the Tax Court of South Africa in a dispute with the South African Revenue Service (SARS) regarding mining royalty calculations.
The court set aside SARS’s assessments for the 2015 and 2017 tax years and directed the revenue authority to recalculate Tharisa Minerals’ gross sales and earnings before interest and tax (EBIT) using a methodology that accounts for the company’s grade recovery curve for platinum group metals (PGMs).
The dispute centered on how SARS calculated gross sales values for PGMs, with the tax authority using a linear adjustment method to increase values to the minimum specified condition of 150 parts per million. Tharisa Minerals contested both this methodology and SARS’ determination of incremental costs required to process the concentrate to the specified standard.
The judgment applies to the 2015 tax year and all subsequent years, though SARS retains the right to appeal. A redacted version of the ruling was published on the tax authority’s website around October 3.
As of September 30, 2024, Tharisa Minerals had set aside a provision of $56.8 million for the disputed mining royalty. The company is now recalculating its royalty liability and the impact on cost of sales and income tax by applying the judgment’s principles retrospectively from 2015 to present.
Tharisa expects the recalculation to have a materially favorable impact on earnings per share, though detailed calculations are still in progress. The company plans to release earnings guidance once these calculations are complete.
Michael Jones, Chief Financial Officer of Tharisa, stated that the judgment "provides certainty for the life of mine in determining Mining Royalties" and confirms that "royalties should not be levied on notional or artificial income."
The announcement was based on a press release statement from Tharisa plc, which is listed on the Johannesburg Stock Exchange (JSE:THA) and the London Stock Exchange (LSE:THS).
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