REG - Sylvania Platinum - 3rd Quarter Results
29/04/2022 07:00
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RNS Number : 8387J Sylvania Platinum Limited 29 April 2022
_____________________________________________________________________________________________________________________________
29 April 2022
Sylvania Platinum Limited
("Sylvania", the "Company" or the "Group")
Third Quarter Report to 31 March 2022
Sylvania (AIM: SLP) announces its results for the quarter ended 31 March 2022 ("Q3" or the "quarter"). Unless otherwise stated, the consolidated financial information contained in this report is presented in United States Dollars ("USD" or "$").
Achievements
* Sylvania Dump Operations ("SDO") achieved 15,840 4E PGM ounces in Q3 (Q2:
16,605 ounces).;
* SDO recorded $47.9 million net revenue for the quarter (Q2: $38.8 million),
enhanced by strong PGM basket prices;
* Group EBITDA of $30.0 million (Q2: $22.3 million);
* Net profit of $21.2 million (Q2: $15.5 million);
* Group cash balance of $138.0 million (Q2: $110.1 million); and
* Lesedi plant fully operational since March 2022 following earlier tailings and
water related disruptions.
Challenges
* PGM feed grades in ROM material remain at a lower level at the Mooinooi
operation during the quarter: Investigation of potential solutions undertaken
in conjunction with the host mine have proven positive. Preferred ore sources
have been identified which have led to improved ROM feed grades post quarter
end. This is expected to improve PGM grades and therefore production and
output in the coming months; and
* Higher production costs per ounce at the operations impacted by an increase in
the cost of reagents, increased fuel and transport cost and the lower ounce
production quarter on quarter.
Opportunities
* The new Lesedi tailings storage facility ("TSF") has been completed and
commissioning of the tailings deposition facility commenced in February;
* Cold commissioning of the new Lesedi MF2 project commenced during March 2022
and circuit optimisation is in progress. First slurry was treated
post-period end;
* Tweefontein MF2 remains on track for commissioning H1 FY2023;
* Production is expected to increase significantly during the next quarter due
to progress at Lesedi and the improvements identified post quarter end at
Mooinoi; 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 returning value to all stakeholders.
Commenting on the Q3 results, Sylvania's CEO, Jaco Prinsloo said:
"The SDO achieved 15,840 ounces for the quarter, in line with expectations
taking into account the production downtime and instability experienced at
Lesedi during the first part of the quarter due to the temporary suspension of
operations. Low-grade ROM resources at our Mooinooi operation continue to be
addressed with the host mine, with measures identified to increase the grade
post quarter end."
"From a financial perspective, we benefited from a significantly stronger PGM
basket price during the quarter, with net revenue increasing 24% to $47.9
million and net profit increasing 36% to $21.2 million. SDO cash costs per
ounce increased, mainly due to the drop in ounces produced for the quarter as
well as being impacted by higher reagent costs. SDO cash costs are expected to
improve during Q4 based on higher projected ounce production."
"I am expecting a strong operational performance from all operations during
the final quarter of FY2022 based on initial positive results at Mooinooi to
improve ROM feed grades in collaboration with our host mine, and at Lesedi,
where production is expected to increase significantly during the next quarter
as feed is stabilised and the MF2 circuit optimised. This should enable us to
achieve the target production of 66,000 to 68,000 ounces for FY2022 as
communicated earlier."
USD Unit Unaudited Unit ZAR
Q2 FY2022 Q3 FY2022 % Change % Change Q3 FY2022 Q2 FY2022
Production
584,620 561,110 -4% T Plant Feed T -4% 561,110 584,620
1.94 1.98 2% g/t Feed Head Grade g/t 2% 1.98 1.94
295,011 300,869 2% T PGM Plant Feed Tons T 2% 300,869 295,011
3.17 3.17 0% g/t PGM Plant Feed Grade g/t 0% 3.17 3.17
55.20% 51.59% -7% % PGM Plant Recovery % -7% 51.59% 55.20%
16,605 15,840 -5% Oz Total 4E PGMs Oz -5% 15,840 16,605
21,431 20,080 -6% Oz Total 6E PGMs Oz -6% 20,080 21,431
2,710 3,327 23% $/oz 4E Gross basket price(1) R/oz 21% 50,654 41,831
Financials(2)
32,955 38,462 17% $'000 Revenue (4E) R'000 15% 585,639 508,797
2,824 3,004 6% $'000 Revenue (by-products including base metals) R'000 5% 45,743 43,596
2,984 6,415 115% $'000 Sales adjustments R'000 112% 97,671 46,073
38,763 47,881 24% $'000 Net revenue R'000 22% 729,054 598,466
13,393 14,270 7% $'000 Direct operating costs R'000 5% 217,284 206,331
735 751 2% $'000 General and administrative costs R'000 1% 11,442 11,348
22,331 30,009 34% $'000 Group EBITDA R'000 33% 456,929 344,769
12 424 3,433% $'000 Net Interest R'000 3,410% 6,459 184
15,518 21,165 36% $'000 Net profit R'000 35% 322,275 239,581
4,274 4,241 -1% $'000 Capital Expenditure R'000 -2% 64,580 65,993
110,062 138,037 25% $'000 Cash Balance R'000 15% 2,020,382 1,755,066
R/$ Ave R/$ rate R/$ -1% 15.23 15.44
R/$ Spot R/$ rate R/$ -8% 14.64 15.95
Unit Cost/Efficiencies
772 839 9% $/oz SDO Cash Cost Per 4E PGM oz(3) R/oz 7% 12,770 11,915
598 662 11% $/oz SDO Cash Cost Per 6E PGM oz(3) R/oz 9% 10,074 9,231
832 938 13% $/oz Group Cash Cost Per 4E PGM oz(3) R/oz 11% 14,287 12,844
645 740 15% $/oz Group Cash Cost Per 6E PGM oz(3) R/oz 13% 11,270 9,951
968 1,141 18% $/oz All-in sustaining cost (4E) R/oz 16% 17,368 14,942
1,192 1,379 16% $/oz All-in cost (4E) R/oz 14% 21,002 18,397
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 March 2022 gross 4E
basket used for revenue recognition of ounces delivered in Q3 FY2022, before
penalties/smelting costs and applying the contractual
payability, while historic gross basket price quoted in earlier
announcements included revenue from 6E elements.
2 Revenue (6E) for Q3, before adjustments is $41.3 million (6E prill
split is Pt 50%, Pd 19%, Rh 9%, Au 0.3%, Ru 16%, Ir 5%). Revenue excludes
profit/loss on foreign exchange.
3 The cash costs include direct operating costs and exclude royalty
tax and EDEP payments.
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 the Doornbosch
operation remains nine-years Lost-time Injury ("LTI") free, while Lesedi
achieved the milestone of two-years LTI-free during the period and Lannex
remains one-year LTI-free.
Operational performance
The SDO delivered 15,840 4E PGM ounces for the quarter, a 5% decrease
quarter-on-quarter, but in line with expectations. The ROM ore feed grade
challenges at Mooinooi and production interruptions and instability continued
through the quarter at Lesedi as reported on in the half year results, with
operational improvements to mitigate these challenges detailed below.
PGM Plant feed tonnages increased 2% compared with the previous quarter.
While the PGM plant feed grade remained consistent the PGM recovery
efficiency decreased 7% during the period, which contributed towards the 5%
lower PGM ounce production for the quarter. The PGM recovery efficiency was
primarily impacted by a higher ratio of more oxidised open cast ROM sources at
Mooinooi as well as oxidised current arisings at Millsell during the period.
SDO operating cash costs per 4E PGM ounce increased in rand and dollar terms
quarter-on-quarter by 7% and 9% respectively to ZAR12,770/ounce and $839/ounce
(Q2: ZAR11,915/ounce and $772/ounce) mainly as a result of the lower ounce
production in Q3. The total operating costs were in line with the previous
quarter and increased slightly as a result of annual increases in reagents,
increased fuel and transport cost and the lower ounce production quarter on
quarter. The average ZAR:USD exchange rate depreciated by 1% during the
quarter.
The Group incurred capital expenditure of ZAR64.6 million ($4.2 million),
which is aligned with planned capital project schedules, the majority of which
related to the newly commissioned Lesedi TSF and Lesedi MF2 projects. Capital
expenditure was also incurred for the Doornbosch and Mooinooi TSF projects
that are in progress.
Operational focus areas
The new Lesedi TSF was successfully commissioned during March 2022 while
monitoring of the old Lesedi tailings dam, which is in a safe and stable
condition, continues. The commissioning of the new TSF has allowed for the
Lesedi plant to return to full operation with the focus on ramping up
production during Q4 as the recently commissioned MF2 circuit is being
optimised and is expected to contribute to improved efficiencies and ounces
going forward.
While the low ROM grade at the Mooinooi plant has persisted throughout the
quarter, significant technical work and source testing together with the host
mine has progressed satisfactorily to a point where the preferred ore sources
have been identified. Post the reporting period, improved ROM feed grades were
observed during April 2022 and an improvement in PGM grade is expected to
manifest throughout the months going forward with improved production and
output for Q4 at the Mooinooi plant.
Operational opportunities
Construction of the Tweefontein MF2 Plant continues and is on target to be
commissioned during the latter part of Q2 FY2023. Focus remains on areas of
continuous improvement through all SDO Operations, on both the Eastern and
Western Limbs.
Impact of COVID-19 and South African Government imposed lockdown regulations
During the quarter, the South African Government imposed State of Disaster was
lifted and thus the lockdown regulations imposed on the nation were eased
further. The Company reported 5 active cases of COVID-19 during the quarter,
totalling 142 since the start of the pandemic. Sylvania continues to encourage
our employees to be vaccinated against COVID-19 with the intent to limit the
impact and spread of the virus, whilst remaining cognisant that vaccines are a
personal choice. Management continues to monitor the situation and to
implement measures for both the corporate office and operations to limit
interaction and exposure where possible and the Employee Assistance Program
("EAP") implemented for all Sylvania's employees, immediate family members as
well as those living in the same household, continues to enhance the corporate
culture of caring and wellness amongst our staff.
B. FINANCIAL OVERVIEW
Financial performance
Despite lower ounce production, revenue (4E) for the quarter increased 17% to
$38.5 million (Q2: $33.0 million) on the back of the higher basket price in
March applied to record revenue for the quarter. Net revenue for the quarter,
which includes base metals and by-products, and the quarter-on-quarter sales
adjustment, increased 24%. The average 4E gross basket price for Q3 was
$3,327/ounce against $2,710/ounce in Q2.
Group cash costs per 4E PGM ounce increased by 11% in rand from
ZAR12,844/ounce to ZAR14,287/ounce and increased 13% in dollar terms from
$832/ounce in the previous quarter to $938/ounce during Q3.
General and administrative costs increased quarter-on-quarter from $0.74
million to $0.75 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 from $22.3 million to $30.0 million and net profit
increased from $15.5 million to $21.2 million as a result of the increase in
the basket price.
The Group cash balance increased from $110.1 million to $138.0 million during
the quarter. Cash generated from operations before working capital movements,
was $31.0 million with net changes in working capital amounting to a decrease
of $1.0 million. The net decrease in working capital is the combined effect of
an increase in trade receivables ($3.8 million) mainly due to an increase in
basket price, and an increase in trade payables ($2.8 million). The Group
spent $4.2 million on capital during the current quarter.
Post period end, the Company paid a Windfall Dividend of 2.25p per Ordinary
Share ($8.3 million) to shareholders on the register on 4 March 2022.
Dividend withholding tax amounting to $1.1 million on dividends declared
internally will be paid in Q4 as a result of dividends declared at the end of
Q3. Provisional income tax and mineral royalties' tax will also be payable
in June 2022 at rates of 28% and 7% respectively.
C. MINERAL ASSET DEVELOPMENT AND OPENCAST MINING PROJECTS
Volspruit Platinum Opportunity
The final reporting of the fieldwork completed in the second quarter is
underway and will form part of the applications for the mandated outstanding
authorisations. The amendment to the approved Environmental Impact Assessment
and the application for a Water Use License are running concurrently and are
due to be submitted to the relevant authorities before the end of the calendar
year.
A process of review and restating of the JORC compliant resource is near
completion with the final reporting of the work due in the fourth quarter.
Further metallurgical test work for PGM flotation is required to determine the
recovery potential and payability on a revised plant feed grade following the
redefined resource, forming part of the current study scope. A Preliminary
Economic Assessment will determine the current feasibility status of the
project, which will be reported at the financial year end.
Northern Limb Projects
With the current drilling programme completed during the second quarter, all
logging and sampling of the drilled core were completed during Q3. The final
laboratory report of the submitted samples is expected during Q4, with the
mandatory QAQC process (the process used to measure and assure the quality of
the product) to follow. Additional relogging on historically drilled core,
applying the new geological interpretation, has been commissioned during Q3 to
apply the revised interpretation to previously drilled core, which is expected
to increase the confidence in the geological model. The resource estimation of
the target areas, including the relogged drill core, will be completed in July
2022, as previously reported. The results of the current resource
classification will be released to the market when available.
Grasvally
Following the signing of an amended Sale Agreement on 3 November 2021, whereby
Sylvania sold its 74% share in Grasvally Chrome Mine (Pty) Ltd to a 100%
empowerment company, the parties are in the process of finalising the
requirements for the final conditions precedent to be fulfilled, which include
an application for ministerial consent for the sale in terms of section 11 of
the Mineral and Petroleum Resources Development Act. This has been
submitted to the Department of Mineral Resources and Energy and the Company
awaits the outcome.
D. CORPORATE ACTIVITIES
Share Buyback
During the period, the Company announced that it had bought back a total of
263,724 shares at the 30-day VWAP of 100.7725 pence per share from certain
employees and a PDMR. The shares had been awarded to the sellers under the
Sylvania Platinum Limited Award Scheme, whereby shares acquired through the
scheme can be sold back during specified periods, being March and September.
Following the transaction, the Company's issued share capital is 286,155,657
Ordinary Shares, of which a total of 13,433,946 Ordinary Shares are held in
Treasury, which includes 7,500,000 Ordinary Shares held for the Employee
Dividend Entitlement Plan. Therefore, the total number of Ordinary Shares
with voting rights is 272,721,711.
Payment of Windfall Dividend
The Board paid a windfall dividend on 8 April 2022 totalling $8.3 million. The
windfall dividend of 2.25p per ordinary share was paid to shareholders on the
register on the record date of 4 March 2022.
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
Communications
Alma PR Limited +44 (0) 20 3405 0205
Justine James / Josh Royston / Matthew Young sylvania@almapr.co.uk (mailto:sylvania@almapr.co.uk)
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 and a chrome prospect in the Northern
Limb of the Bushveld Complex.
For more information visit https://www.sylvaniaplatinum.com/
(https://www.sylvaniaplatinum.com/)
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse regulation
(EU) no.596/2014 as amended by the Market Abuse (Amendment) (EU Exit)
Regulations 2019.
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
Jaco Prinsloo.
ANNEXURE
GLOSSARY OF TERMS FY2022
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
CLOs Community Liaison Officers
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
EA Environmental Authorisation
EAP Employee Assistance Program
EEFs Employment Engagement Forums
ESG Environment, social and governance
EIA Environmental Impact Assessment
EIR Effective interest rate
EMPR Environmental Management Programme Report
ESG Environment, Social and Governance
GBP Pounds Sterling
GHG Greenhouse gases
IASB International Accounting Standards Board
ICE Internal combustion engine
IFRIC International Financial Reporting Interpretation Committee
IFRS International Financial Reporting Standards
Lesedi Phoenix Platinum Mining Proprietary Limited, renamed Sylvania Lesedi
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
NWA National Water Act 36 of 1998
PGM Platinum group metals comprising mainly platinum, palladium, rhodium and gold
PAR Pan African Resources Plc
PDMR Person displaying management responsibility
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
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
ROM Run of mine
SDO Sylvania dump operations
Sylvania Sylvania Platinum Limited, a company incorporated in Bermuda
tCO2e Tons of carbon dioxide equivalent
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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