REG - Sylvania Platinum - 3rd Quarter Results

Sylvania PlatinumAnnouncement

29/04/2019 07:05

RNS Number : 3642X
Sylvania Platinum Limited
29 April 2019
 


 
 
 
 
 
 
                             _____________________________________________________________________________________________________________________________
 
29 April 2019
 
 
Sylvania Platinum Limited
 ("Sylvania", "the Company" or "the Group")
 AIM (SLP)
 
Third Quarter Report to 31 March 2019
 
 
The Directors are pleased to present the results for the quarter ended 31 March 2019 ("Q3" or the "quarter").  Unless otherwise stated, the consolidated financial information contained in this report is presented in USD.
 
 
Achievements
·      16,256 4E PGM ounces produced in Q3;
·      SDO PGM plant recoveries improved 3% to 48%;
·      Gross basket price increased 15% to $1,383/ounce quarter-on-quarter;
·      Net revenue increased 23% to $18.3 million;
·      Group EBITDA improved 55% to $8.2 million in Q3;
·      Group net profit up 33% to $5.0 million for the quarter; and
·      Cash balance increased 17% from $20.2 million to $23.7 million.
 
 
Challenges
·      The water supply to Lesedi operation improved during Q3, but intermittent shortages still continued to disrupt production during the period;
·      Power outages and loadshedding at various SDO operations resulted in unplanned downtimes; and
·      Temporary disruption in higher grade current arisings from host mine at Doornbosch impacted on grade delivered to PGM plant.
 
 
Opportunities
·      Mooinooi Project Echo MF2 module commissioned earlier than planned;
·      Additional new water boreholes, an additional storage dam and water supply line were commissioned at Lesedi during March and early April 2019 to improve running time going forward;
·      Doornbosch to commence a new million-ton tailings dam during Q4 and current arisings from Doornbosch host mine expected to return to normal after repairs and improvements to their circuits;
·      Lesedi spiral section is progressing well and on track for commissioning late Q4 FY2019; and
·      Company continues to generate free cash.
 
 
 
 
 
Commenting on the Q3 results, Sylvania's CEO Terry McConnachie said:
 
"I am pleased to report that after a challenging Q2, the SDO performed significantly better and delivered 16,256 ounces in Q3.  With the increase in production and gross basket price, as well as the decrease in cash costs, the Company has once again generated positive cash flows enabling us to continue to internally fund our Project Echo and expansion projects and still grow our cash in the bank.
 
We are forecasting ~21,800 ounces for Q4, up marginally on the Q4 FY2018, provided there are no unforeseen disruptions.  We are revising our production guidance to 72,000 ounces for FY2019, which would mean record production being attained in Q4. With Mooinooi MF2 now added, grade improvement at Doornbosch and more consistent production at Lesedi, this should be achievable."
  
 
 
 
 
 
 



USD


Unit


Unaudited


Unit


ZAR




Q2 FY2019


Q3 FY2019


% Change


% Change


Q3 FY2019


Q2 FY2019




















Production




















560,855


527,693


-6%


T


Plant Feed


T


-6%


527,693


560,855




2.21


2.40


9%


g/t


Feed Head Grade


g/t


9%


2.40


2.21




278,891


297,489


7%


T


PGM Plant Feed Tons


T


7%


297,489


278,891




3.56


3.54


-1%


g/t


PGM Plant Feed Grade


g/t


-1%


3.54


3.56




46.75%


48.00%


3%


%


PGM Plant Recovery


%


3%


48.00%


46.75%




14,907


16,256


9%


Oz


Total 4E PGMs


Oz


9%


16,256


14,907




20,003


22,224


11%


Oz


Total 6E PGMs


Oz


11%


22,224


20,003










































1,204


1,383


15%


$/oz


Average gross basket price


R/oz


16%


19,868


17,146


























































Financials




















12,301


15,739


28%


$'000


Revenue (4E)


R'000


25%


219,425


176,122




1,388


1,726


24%


$'000


Revenue (by products)


R'000


21%


24,061


19,874




1,188


882


-26%


$'000


Sales adjustments


R'000


-28%


12,295


17,005




14,877


18,347


23%


$'000


Net revenue


R'000


20%


255,781


213,001










































9,016


9,774


8%


$'000


Operating costs


R'000


6%


136,262


129,106




585


434


-26%


$'000


General & administration


R'000


-28%


6,052


8,376




5,269


8,172


55%


$'000


Group EBITDA


R'000


51%


113,933


75,451




194


260


34%


$'000


Net Interest


R'000


30%


3,629


2,781




3,742


4,960


33%


$'000


Net profit


R'000


29%


69,145


53,584










































2,626


2,119


-19%


$'000


Capital Expenditure


R'000


-21%


29,548


37,605










































20,220


23,725


17%


$'000


Cash Balance


R'000


14%


330,753


289,556






















































R/$


Ave R/$ rate


R/$


-3%


13.94


14.32


























































Unit Cost/Efficiencies




















606


599


-1%


$/oz


SDO Cash Cost Per 4E PGM oz


R/oz


-4%


8,353


8,672




451


438


-3%


$/oz


SDO Cash Cost Per 6E PGM oz


R/oz


-5%


6,110


6,463




635


624


-2%


$/oz


Group Cash Cost Per 4E PGM oz


R/oz


-4%


8,699


9,094




473


456


-4%


$/oz


Group Cash Cost Per 6E PGM oz


R/oz


-6%


6,363


6,777




657


644


-2%


$/oz


All-in sustaining cost (4E)


R/oz


-4%


8,981


9,402




821


756


-8%


$/oz


All-in cost (4E)


R/oz


-10%


10,536


11,757



1   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. 
 




A. OPERATIONAL OVERVIEW
 
Health, safety and environment
The SDO operations performed well during the quarter without any safety, health or environmental incidents during the period.  Lannex achieved the milestone of four years without a Lost Time Injury ("LTI") during January 2019.  Lesedi remains LTI-free for more than seven years, Tweefontein and Doornbosch plants remain more than six years LTI-free, while Millsell remains more than four years LTI-free. 
 
Operational performance
The SDO delivered 16,256 ounces for the quarter, a 9% increase on Q2's 14,907 ounces.  The increased production was due to a combination of a 7% improvement in PGM feed tons and 3% improvement in recovery efficiencies, while the PGM feed grade was similar to the previous period.
 
The total SDO cash costs for the period decreased 4% in ZAR terms to ZAR 8,353/ounce and decreased 1% in USD terms to $599/ounce.  The capital expenditure was ZAR 29.5 million for the quarter, a 21% decrease quarter-on-quarter and is aligned with the planned and forecast Project Echo roll-out and project schedule.
 
Operational focus areas  
The abnormal drought conditions continued to impact water availability and supply to the Western operations, particularly Lesedi. Measures to mitigate the impact, such as additional boreholes and water transfer from neighbouring operations have helped improve supply, but Lesedi still experienced significant downtime during the quarter. The final upgrades to the water supply system were completed during the final week of March 2019 and the plant has since been running well with limited downtime.
 
Management continued to focus on the Doornbosch re-mining operation at the current dump, which is at the end of its life. This improved PGM feed tons but the significantly lower than planned current arisings feed from the host mine still impacted negatively on the PGM feed grade during the quarter. The overall chrome mining and treatment rate of the host mine did not deteriorate, but the specific ratio of current arisings to other products reduced, which lead management to investigate and implement process improvements at the host mine operation. As a result, since late March, current arisings tons and PGM feed grades have been improving.
 
Optimisation of the enhanced process circuit modifications that utilise improved fine screening technology needed for more efficient upgrading of PGMs at Doornbosch, Millsell and Tweefontein, was commissioned during the previous quarter and will also help improve PGM feed grades and ounce production.
 
Operational opportunities 
The Mooinooi MF2 module, which is part of Project Echo, was commissioned earlier than planned during the last week of March 2019. It is currently being optimised and is expected to boost PGM ounces in Q4 and beyond.
 
The construction of the Lesedi chrome plant project, comprising of the dismantling and relocation of the redundant Steelpoort chrome circuit, is progressing well and is on track to be completed in the second half of the calendar year. This will enable chrome removal at Lesedi's PGM plant, in line with the standard SDO operating model employed at the Group's existing operations, and will contribute towards higher PGM feed grades and ounce production at the operation.
 
B. FINANCIAL OVERVIEW
 
Financial performance
The higher basket price, coupled with the increase in ounce production, were the main contributors to the increase in net revenue of 23% from $14.9 million to $18.3 million for the quarter.  The gross basket price improved 15% to $1,383/oz quarter-on-quarter as a result of the continued upward trend of Palladium and Rhodium. 
 
The total operating costs increased 6% in ZAR terms (the SDO functional currency) to ZAR 136.3 million, compared to the ZAR 129.1 million in Q2.  This is due mainly to the increase in electricity costs following a rebate received from the host mine in the previous quarter and planned transport costs in the East to transport dump material to the Lannex operation.  General and administrative costs are incurred in USD, GBP and ZAR.  These costs decreased 26% quarter-on-quarter from $0.6 million to $0.4 million. 
 
Group cash costs decreased from ZAR 9,094/oz to ZAR 8,699/oz due to higher ounce production and in dollar terms the Group cash costs decreased 2% from $635/oz to $624/oz. 
 
The all-in sustaining cost ("AISC") and all-in cost ("AIC") also decreased as a result of the decrease in capital expenditure and higher ounce production in Q3. The Group AISC decreased 4% to ZAR 8,981/ounce against Q2's ZAR 9,402/ounce and the AIC decreased 10% to ZAR 10,536/ounce from ZAR 11,757/ounce recorded in Q2. In dollar terms the Group AISC decreased 2% from $657/ounce to $644/ounce and the Group AIC decreased 8% to $756/ounce from $821/ounce.  
 
The EBITDA increased 55% from $5.3 million to $8.2 million for Q3.  The increase can be attributed to the higher ounce production as well as the higher basket price.
 
The Group cash balance at 31 March 2019 was $23.7 million (including guarantees), a $3.5 million increase on the previous quarter's cash balance of $20.2 million.  Cash generated from operations before working capital movements was $8.2 million with net changes in working capital amounting to a decrease of $2.6 million due mainly to the increase in trade debtors which have a four-month payment pipeline.  An amount of $2.1 million was spent on capital and the impact of exchange rate fluctuations on cash held at the quarter end was an increase of $0.01 million.
 
The Company remains committed to funding all planned capital projects and expansion from internal cash reserves.
 
C. MINERAL ASSET DEVELOPMENT AND OPENCAST MINING PROJECTS
 
The Company has continued to upgrade the value of its mineral asset development activities during the quarter, so as to be able to continue to defend title. However, until an improvement in market conditions occurs, this will result in very limited spend.
 
Grasvally Chrome Project
The execution and registration of the Mining Right has now been completed.  The process of rehabilitation of the surface dumps on the mine continues, with Grasvally Chrome Mine completing the final stages of compliance with the Mining Health and Safety Act before rehabilitation operations commence. 
  
 
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
 
 
CONTACT DETAILS
 



For further information, please contact:








Terence McConnachie (Chief Executive Officer)


+44 777 533 7175
 














Nominated Advisor and Broker








Liberum Capital Limited


+44 (0) 20 3100 2000




Richard Crawley / Chris Britton


















Communications








Alma PR Limited


+44 (0) 7580 216 203




Josh Royston / Helena Bogle







 
This announcement is released by Sylvania Platinum Limited and contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 ("MAR"), and is disclosed in accordance with the Company's obligations under Article 17 of MAR.
For the purposes of MAR and Article 2 of Commission Implementing Regulation (EU) 2016/1055, this announcement is being made on behalf of the Company by Terence McConnachie.



ANNEXURE
 



GLOSSARY OF TERMS FY2019




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




ASX


Australian Securities Exchange




Current risings


Fresh chrome tails from current operating host mines processing operations




DMR


Department of Mineral Resources




EBITDA


Earnings before interest, tax, depreciation and amortisation




EA


Environmental Authorisation




EIA


Environmental Impact Assessment




EIR


Effective interest rate




EMPR


Environmental Management Programme Report




GBP


Great British Pound




IASB


International Accounting Standards Board




IFRIC


International Financial Reporting Interpretation Committee




IFRS


International Financial Reporting Standards




I&APs


Interested and Affected Parties




Lesedi


Phoenix Platinum Mining Proprietary Limited, renamed Sylvania Lesedi




LSE


London Stock Exchange




LTI


Lost time injury




MF2


Milling and flotation technology




MPRDA


Mineral and Petroleum Resources Development Act




MRA


Mining Right Application




MTO


Mining Titles Office




NOMR


New Order Mining Right




NWA


National Water Act 36 of 1998




Option Plan


Sylvania Platinum Limited Share Option Plan




PGM


Platinum group metals comprising mainly platinum, palladium, rhodium and gold




PAR


Pan African Resources Plc




Phoenix


Phoenix Platinum Mining Proprietary Limited, renamed Sylvania Lesedi




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




Programme


Sylvania Platinum Share Buyback Programme




Project Echo


Secondary PGM Milling and Flotation (MF2) program announced in FY2017 to design and install additional new additional fine grinding mills and flotation circuits at Millsell, Doornbosch, Tweefontein and Mooinooi.




Revenue (by products)


Revenue earned on Ruthenium, Iridium, Nickel and Copper




RoM


Run of mine




SDO


Sylvania dump operations




Shares


Common shares




Sylvania


Sylvania Platinum Limited, a company incorporated in Bermuda




USD


United States Dollar




WIP


Work in progress




WULA


Water Use Licence Application




UK


United Kingdom of Great Britain and Northern Ireland




ZAR


South African Rand



 




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