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REG - Sylvania Platinum - 1st Quarter Results

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RNS Number : 6970E  Sylvania Platinum Limited  31 October 2022

 

 

 
 

 

 

 

 

 
_____________________________________________________________________________________________________________________________

 

31 October 2022

 

 

Sylvania Platinum Limited

 ("Sylvania", the "Company" or the "Group")

 

 

First Quarter Report to 30 September 2022

 
 
Sylvania (AIM: SLP), the platinum group metals ("PGM") producer and developer with assets in South Africa, announces its results for the quarter ended 30 September 2022 ("Q1" or the "quarter"). Unless otherwise stated, the consolidated financial information contained in this report is presented in United States Dollars ("USD" or "$").

 

Highlights

 * Sylvania Dump Operations ("SDO") produced 19,194 4E PGM ounces in Q1 (Q4
FY2022: 18,837 ounces);

 * SDO recorded $42.9 million net revenue for the quarter (Q4 FY2022: $34.9
million);

 * Group EBITDA of $26.4 million (Q4 FY2022: $16.8 million), with the benefit of
increased production and the higher basket price realised in the quarter;

 * Group cash balance of $138.6 million (Q4 FY2022: $121.3 million);

 * Zero Lost-time Injury ("LTI") across all SDO;

 * Improved performance at the Lesedi operation with the MF2 plant fully
commissioned and optimisation of the fine grinding MF2 unit and flotation
circuit underway;

 * An updated Mineral Resource Estimate ("MRE") and Scoping Study on the
Volspruit North Body was produced and based on these reports the Company has
taken the decision to progress to a Pre-Feasibility Study ("PFS") during the
year; and

 * An MRE is complete for the La Pucella study area and a concept-level mining
study, using the Mineral Resource, will be completed later in Q2 to provide
the Preliminary Economic Assessment ("PEA") for the project area.

 

Outlook

 * Tweefontein MF2 is scheduled to commence commissioning in Q2 FY2023 and is
expected to start contributing to additional ounces from Q3 FY2023;

 * The Lannex MF2 project is under construction and scheduled for commissioning
towards the end of Q4 FY2023;

 * ROM PGM feed grade from the host mine at Mooinooi is being managed to ensure a
consistent grade is maintained, with focus on continued improvement of
recoveries through stability and blending opportunities;

 * Focus remains on operational cost controls, which have been managed well
during the quarter, and reagent optimisation continues at all SDO to explore
improved efficiencies; and

 * The Group maintains strong cash reserves to allow funding of capital expansion
and process optimisation projects, upgrading the Group's exploration and
evaluation assets and to return value to shareholders.

 

Commenting on the Q1 results, Sylvania's CEO, Jaco Prinsloo said:

 

"I am pleased to report that the first quarter of the FY2023 year has yielded
strong results in line with our expectations with 19,194 4E PGM ounces
achieved by the SDO, which is our best quarterly production since the
COVID-lockdowns in early 2020. This increase in production ounces and the 2%
higher PGM basket price recorded in the quarter, resulted in stronger
profits.

 

"Higher global cost inflation remains an area of focus, however, the
optimisation of reagents to explore improved efficiencies at all SDO is
ongoing. In the quarter, it was encouraging to see performance improve at the
Lesedi operation following the commissioning of the MF2 plant. At Mooinooi,
the management team continue to work diligently with the host mine to explore
blending opportunities as a means of stabilising recoveries and improving the
feed grade and this has already yielded positive results during recent
quarters.

 

"The Company remains in a strong cash position allowing it to fund carefully
selected growth opportunities and return value to shareholders.

 

"Post quarter end the Company released results of its extensive optimisation
studies at the Northern Limb Mineral Assets including detailed Mineral
Resource Estimates and a Scoping Study.  All results demonstrate attractive
projects with significant upside potential across our entire Northern Limb
asset portfolio.  While the Company continues to focus on delivering value
and growing its existing cash generating dump reprocessing operations, the
optimisation of value from the exploration assets remains one of the important
pillars of Sylvania Platinum's growth strategy and a future value driver."

 

 

 USD                             Unit   Unaudited                                    Unit   ZAR
 Q4 FY2022  Q1 FY2023  % Change         % Change                                            Q1 FY2023             Q4 FY2022
                                        Production
 647,249    691,953    7%        T      Plant Feed                                   T      7%         691,953    647,249
 2.04       1.89       -7%       g/t    Feed Head Grade                              g/t    -7%        1.89       2.04
 331,578    349,384    5%        T      PGM Plant Feed Tons                          T      5%         349,384    331,578
 3.30       3.15       -5%       g/t    PGM Plant Feed Grade                         g/t    -5%        3.15       3.30
 53.49%     54.26%     1%        %      PGM Plant Recovery                           %      1%         54.26%     53.49%
 18,837     19,194     2%        Oz     Total 4E PGMs                                Oz     2%         19,194     18,837
 23,751     24,067     1%        Oz     Total 6E PGMs                                Oz     1%         24,067     23,751

 2,589      2,650      2%        $/oz   4E Gross basket price(1)                     R/oz   12%        45,161     40,361

                                        Financials(2)
  34,397    36,905     7%        $'000  Revenue (4E)                                 R'000  17%        628,830     536,161
  3,232     3,382      5%        $'000  Revenue (by-products including base metals)  R'000  14%        57,626      50,381
  -2,683    2,634      198%      $'000  Sales adjustments                            R'000  207%       44,879      -41,825
  34,946    42,921     23%       $'000  Net revenue                                  R'000  34%        731,335     544,717

  12,175    11,789     -3%       $'000  Direct operating costs                       R'000  6%         200,876     189,782
 3,600      4,032      12%       $'000  Indirect operating costs                     R'000  22%        68,703     56,107
  758       690        -9%       $'000  General and administrative costs             R'000  -1%        11,756      11,816
  16,787    26,423     57%       $'000  Group EBITDA(4)                              R'000  72%        450,242     261,678
  499       830        66%       $'000  Net Interest                                 R'000  82%        14,147      7,781
 13,817     18,621     35%       $'000  Net profit(4)                                R'000  47%        317,303    215,384

 4,350      2,554      -41%      $'000  Capital Expenditure                          R'000  -36%       43,520     67,810

 121,268    138,629    14%       $'000  Cash Balance                                 R'000  26%        2,509,178  1,985,958

                                 R/$    Ave R/$ rate                                 R/$    9%         17.04      15.59
                                 R/$    Spot R/$ rate                                R/$    11%        18.10      16.38

                                        Unit Cost/Efficiencies
 646        614        -5%       $/oz   SDO Cash Cost Per 4E PGM oz(3)               R/oz   4%         10,465      10,075
 513        490        -4%       $/oz   SDO Cash Cost Per 6E PGM oz(3)               R/oz   4%         8,347       7,990
 794        737        -7%       $/oz   Group Cash Cost Per 4E PGM oz(3)             R/oz   1%         12,563      12,390
 630        588        -7%       $/oz   Group Cash Cost Per 6E PGM oz(3)             R/oz   2%         10,019      9,826
 911        873        -4%       $/oz   All-in sustaining cost (4E)                  R/oz   5%         14,876      14,205
 1,108      987        -11%      $/oz   All-in cost (4E)                             R/oz   -3%        16,823      17,269

 

The Sylvania cash generating subsidiaries are incorporated in South Africa
with the functional currency of these operations being ZAR.  Revenues from
the sale of PGMs are incurred in USD and then converted into ZAR.  The
Group's reporting currency is USD as the parent company is incorporated in
Bermuda.  Corporate and general and administration costs are incurred in USD,
GBP and ZAR.

 1. The gross basket price in the table is the September 2022 gross 4E basket used
for revenue recognition of ounces delivered in Q1 FY2023, before
penalties/smelting costs and applying the contractual payability.

 2. Revenue (6E) for Q1, before adjustments is $40.1 million (6E prill split is Pt
53%, Pd 18%, Rh 9%, Au 0%, Ru 16%, Ir 4%).  Revenue excludes profit/loss on
foreign exchange.

 3. The cash costs include direct operating costs and exclude indirect cost for
example royalty tax and EDEP payments.

 4. The net profit and Group EBITDA excludes the profit on the sale of Grasvally
Chrome Mine (≈$2.1 million) previously held as an asset held for sale.

 

A. OPERATIONAL OVERVIEW

 

Health, safety and environment

The Company is pleased to report that no significant occupational health or
environmental incidents occurred during the quarter and that all plants were
LTI-free for the period. The Doornbosch operation remains at 10 years
LTI-free, Lesedi and Lannex have exceeded two-years LTI-free, and Mooinooi and
Tweefontein have each exceeded one-year LTI-free. In addition, the combined
Eastern operations have achieved six months all-injury free at the end of
September, which is a truly commendable achievement.

 

Operational performance

The SDO delivered 19,194 4E PGM ounces for the quarter, a 2% increase
quarter-on-quarter. The overall SDO PGM recovery has increased by 1.4%, which
together with a 5% increase in throughput, resulted in the increased ounces.
ROM feed from the host mine at Mooinooi has increased by 18%, while feed
grades have increased and stabilised resulting in improved performance for the
period. The Lesedi MF2 plant has been fully commissioned with optimisation of
the fine grinding and flotation circuit resulting in improved performance,
which, together with improved feed stability and flotation performance at
Mooinooi, has contributed towards the overall improved recovery performance.
Focus has remained on increasing runtime and improving operational stability
and has also contributed to improved efficiencies at all sites.

 

SDO operating cash costs per 4E PGM ounce increased 4% in rand terms and
decreased 5% in dollar terms quarter-on-quarter to ZAR10,465/ounce and
$614/ounce (Q4 FY2022: ZAR10,075/ounce and $646/ounce) respectively.  The
higher ounce production had a positive influence on unit costs while reagent
price increases, transport costs and fuel price increases continued to impact
on operating costs. The average ZAR:USD exchange rate depreciated by 9% during
the quarter.

 

The Group incurred capital expenditure of ZAR43.5 million ($2.6 million), in
line with planned capital project schedules.

 

Operational focus areas

The development of a new formal planned maintenance system has been
successfully implemented at Millsell and anticipated to be rolled out to
selected priority operations during FY2023. This is expected to improve plant
availabilities and runtime, resulting in improved process stability and
increased efficiencies.

 

Focus and communication with the host mine on the preferred source of ROM and
associated grades remains a priority for the Mooinooi operation and is
producing positive results. The declining feed grades of the surface sources
are being managed to ensure a consistent grade is maintained, with focus on
improving recoveries through stability and blending opportunities.

 

Significant focus continues to be placed on the operational aspects of the SDO
tailings facilities by the operations teams, the engineer on record, relevant
expert advisers, and associated service providers.

 

Operational opportunities

Continuous focus on improving availabilities, runtime and associated stability
has resulted in improved performance and further improvements are expected.
Reagent optimisation continues at all SDO to explore improved efficiencies.

 

Tweefontein MF2 is scheduled for commissioning in Q2 and is expected to
contribute to additional ounces reaching stability during early Q3. The Lannex
MF2 project is under construction and scheduled for commissioning towards the
end of Q4 FY2023.

 

Focus remains on the control of operational costs, which have been well
controlled during the period.

 

Impact of COVID-19 and South African Government imposed lockdown regulations

The Company reported one active case of COVID-19 during the quarter with a
total of 143 infections reported since the start of the pandemic.  While all
regulations have been lifted, Sylvania continues to encourage responsible
behaviour amongst employees and will continue to monitor the situation and to
implement measures for both the corporate office and operations to limit
interaction and exposure where possible.

 

B. FINANCIAL OVERVIEW

 

Financial performance

Revenue (4E) for the quarter increased by 7% to $36.9 million (Q4 FY2022:
$34.4 million) mainly on account of the increased ounces but also due to the
2% increase in the basket price recorded in September and applied to calculate
revenue for ounces produced and delivered in the quarter but only invoiced in
Q2 as well as the impact of the average USD to ZAR exchange rate changes. The
average 4E gross basket price for the quarter was $2,650/ounce against
$2,589/ounce in Q4 FY2022.  Net revenue for the quarter, which includes base
metals and by-products, and the quarter-on-quarter sales adjustment increased
23% to $42.9 million (Q4 FY2022: $34.9 million). Net revenue also includes
attributable revenue received for ounces produced from material processed from
a third-party on a trial basis.

 

Group cash costs per 4E PGM ounce during Q1 increased by 1% in rand terms from
ZAR12,390/ounce to ZAR12,563/ounce and decreased 7% in dollar terms from
$794/ounce in the previous quarter to $737/ounce as a result of the stronger
dollar.

 

General and administrative costs decreased 9% quarter-on-quarter from $0.76
million to $0.69 million. These costs are incurred in USD, GBP and ZAR and are
impacted by the exchange rate fluctuations over the reporting period.

 

Group EBITDA increased 57% from $16.8 million to $26.4 million and net profit
increased from $13.8 million to $18.6 million, primarily as a result of the 2%
increase in both ounces produced and the basket price received.

 

The Group cash balance increased 14% from $121.3 million to $138.6 million
during the quarter. Cash generated from operations before working capital
movements was $26.4 million with net changes in working capital amounting to
$6.0 million, which is mainly due to the change in trade debtors and trade
creditors. The increase in basket price and higher ounce production during Q1
resulted in a higher trade debtors balance quarter-on-quarter. Trade debtors
arise from the concentrate delivered in the quarter but only paid for in the
following quarter as per the concentrate off-take agreements.

 

Provisional payments for both royalty tax and income tax are payable in
December 2022 in line with the South African tax authority timelines, at an
anticipated rate of 7% for royalty tax on applicable ounces, and a rate of 27%
for income tax. A cash dividend for FY2022 of 8 pence per Ordinary Share was
declared and is payable on 2 December 2022 to all shareholders on the register
at the close of business on 28 October 2022.

 

The Group spent $2.6 million on capital for the quarter mainly on the Project
Echo MF2 modules at both Tweefontein and Lannex.

 

The impact of exchange rate fluctuations on cash held at the end of Q1 was a
$3.3 million loss due to the spot ZAR to USD exchange rate depreciating by
11%.

 

C. MINERAL ASSET DEVELOPMENT

 

Volspruit Project

Post quarter end, the Company released an update to its Volspruit project,
including an updated MRE and Scoping Study which focused solely on the
Volspruit North Body, with the Volspruit South Body still to be completed
during FY2023.  The Scoping Study was produced on conservative assumptions
and does not yet include a JORC compliant rhodium ("Rh") resource, although it
does illustrate the project's promising potential based on conservative
assumptions, particularly when considering the inclusion of potential Rh
revenue and additional material from the South Body which could be treated
through already capitalised infrastructure in the future.  The Company has
accordingly taken the decision to progress to a PFS during the year on the
entire Volspruit asset.

 

Far Northern Limb Projects

The MRE using new geological interpretation and covering an estimated 12% of
the deposit strike length, is complete for the La Pucella target area. A
concept-level mining study, using the reported JORC compliant Mineral
Resource, will be completed later in Q2 to provide the PEA for the La Pucella
target area. Future studies are aimed at applying the new geological
interpretation along the strike length to increase the Mineral Resource volume
and improve analytical confidence to include Rh and base metals in the MRE
that are currently at inferred level. The Exploration Results previously
reported on the Hacra Project will be subject to a MRE and is anticipated to
provide a maiden Mineral Resource early in the 2023 calendar year.

D. CORPORATE ACTIVITIES

 

Exercise of vested bonus shares and buyback

During the period, the Company announced that a total of 1,755,000 Ordinary
Shares in the capital of the Company had been exercised by employees and PDMRs
of the Company, following the vesting of deferred share awards granted under
the Sylvania Platinum Limited Deferred Share Award Scheme. Of the 1,755,000
shares that were exercised, 465,000 related to PDMRs.

 

The Company agreed to repurchase 702,300 Ordinary Shares at the vesting price
of 96.5 pence in order to satisfy the tax liabilities of the employees and
PDMRs and a further 382,700 Ordinary Shares were repurchased at the 30-day
VWAP of 90.91 pence at the request of certain employees and PDMRs under the
terms of the Deferred Share Award Rules.

 

Following the above transaction, the Company's issued share capital amounted
to 280,155,657 Ordinary Shares of which a total of 13,354,869 Ordinary Shares
are held in Treasury. Therefore, the total number of Ordinary Shares with
voting rights in Sylvania is 266,800,788 Ordinary Shares.

 

 

CONTACT DETAILS

 

 For further information, please contact:
 Jaco Prinsloo CEO                                  +27 11 673 1171

 Lewanne Carminati CFO

 Nominated Adviser and Broker
 Liberum Capital Limited                            +44 (0) 20 3100 2000
 Richard Crawley / Scott Mathieson / Kane Collings

 Communications
 BlytheRay                                          +44 (0) 20 7138 3205
 Tim Blythe / Megan Ray / Rachael Brooks            sylvania@BlytheRay.com (mailto:sylvania@BlytheRay.com)

 

CORPORATE INFORMATION

 

 Registered and postal address:  Sylvania Platinum Limited
                                 Clarendon House
                                 2 Church Street
                                 Hamilton HM 11
                                 Bermuda

 SA Operations postal address:   PO Box 976
                                 Florida Hills, 1716
                                 South Africa

 

Sylvania Website: www.sylvaniaplatinum.com (http://www.sylvaniaplatinum.com)

 

 

About Sylvania Platinum Limited

 

 

Sylvania Platinum is a lower-cost producer of platinum group metals (PGM)
(platinum, palladium and rhodium) with operations located in South Africa. The
Sylvania Dump Operations (SDO) comprises six chrome beneficiation and PGM
processing plants focusing on the retreatment of PGM-rich chrome tailings
materials from mines in the Bushveld Igneous Complex. The SDO is the largest
PGM producer from chrome tailings re-treatment in the industry. The Group also
holds mining rights for PGM projects in the Northern Limb of the Bushveld
Complex.

 

 

For more information visit https://www.sylvaniaplatinum.com/
(https://www.sylvaniaplatinum.com/)

 

 

ANNEXURE

 

 GLOSSARY OF TERMS FY2023
 The following definitions apply throughout the period:
 4E PGMs                    4E PGM ounces include the precious metal elements Platinum, Palladium, Rhodium
                            and Gold
 6E PGMs                    6E ounces include the 4E elements plus additional Iridium and Ruthenium
 AGM                        Annual General Meeting
 AIM                        Alternative Investment Market of the London Stock Exchange
 All-in sustaining cost     Production costs plus all costs relating to sustaining current production
                            and sustaining capital expenditure.
 All-in cost                All-in sustaining cost plus non-sustaining and expansion capital expenditure
 Current risings            Fresh chrome tails from current operating host mines processing operations
 DMRE                       Department of Mineral Resources and Energy
 EBITDA                     Earnings before interest, tax, depreciation and amortisation
 EIA                        Environmental Impact Assessment
 EIR                        Effective interest rate
 EMPR                       Environmental Management Programme Report
 ESG                        Environment, Social and Governance
 GBP                        Pounds Sterling
 IFRIC                      International Financial Reporting Interpretation Committee
 IFRS                       International Financial Reporting Standards
 JORC                       Australian Joint Ore Reserves Committee
 LSE                        London Stock Exchange
 LTI                        Lost-time injury
 LTIFR                      Lost-time injury frequency rate
 MF2                        Milling and flotation technology
 MPRDA                      Mineral and Petroleum Resources Development Act
 MRA                        Mining Right Application
 MRE                        Mineral Resource Estimate
 NWA                        National Water Act 36 of 1998
 PGM                        Platinum group metals comprising mainly platinum, palladium, rhodium and gold
 PDMR                       Person displaying managerial responsibility
 PEA                        Preliminary Economic Assessment
 Pipeline ounces            6E ounces delivered but not invoiced
 Pipeline revenue           Revenue recognised for ounces delivered, but not yet invoiced based on
                            contractual timelines
 Pipeline sales adjustment  Adjustments to pipeline revenues based on the basket price for the period
                            between delivery and invoicing
 PFS                        Pre-Feasibility Study
 Project Echo               Secondary PGM Milling and Flotation (MF2) program announced in FY2017 to
                            design and install additional new fine grinding mills and flotation circuits
                            at Millsell, Doornbosch, Tweefontein, Mooinooi and Lesedi.
 Revenue (by products)      Revenue earned on Ruthenium, Iridium, Nickel and Copper
 Rh                         Rhodium
 ROM                        Run of mine
 SDO                        Sylvania dump operations
 Sylvania                   Sylvania Platinum Limited, a company incorporated in Bermuda
 TRIFR                      Total recordable injury frequency rate
 TSF                        Tailings storage facility
 UNSDGs                     United Nations Sustainability Development Goals
 USD                        United States Dollar
 WULA                       Water Use Licence Application
 UK                         United Kingdom of Great Britain and Northern Ireland
 ZAR                        South African Rand

 

 

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