REG - Sylvania Platinum - 3rd Quarter Results
28/04/2023 07:00
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RNS Number : 8515X Sylvania Platinum Limited 28 April 2023
_____________________________________________________________________________________________________________________________
28 April 2023
Sylvania Platinum Limited
("Sylvania", the "Company" or the "Group")
Third Quarter Report to 31 March 2023
Sylvania (AIM: SLP), the platinum group metals ("PGM") producer and developer with assets in South Africa, announces its results for the quarter ended 31 March 2023 ("Q3" 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 17,926 4E (22,884 6E) PGM ounces in
Q3 (Q2: 19,276 4E (24,630 6E) PGM ounces);
* SDO recorded $26.5 million net revenue for the quarter (Q2: $37.1 million);
* Group EBITDA of $9.8 million (Q2: $20.0 million);
* Group cash balance of $144.2 million (Q2: $123.9 million);
* Successful commissioning of Tweefontein MF2 improves metal recoveries; and
* Optimisation of blending improves results, especially at the Eastern
operations.
Outlook
* FY2023 production guidance increased, targeting 72,000 to 74,000 4E PGM ounces
following strong production to date;
* Lannex MF2 construction in progress, with commissioning scheduled during HY1
FY2024, which will further improve PGM recovery efficiencies;
* The recent relogging and additional sampling data collected at Volspruit will
be subject to an updated Mineral Resource Estimate ("MRE") during Q4 FY2023,
which will include a rhodium resource over 100% of the project area;
* Available data from recently completed La Pucella study and historical
exploration are being analysed to develop an exploration strategy to prove
continuity over the entire Aurora strike length;
* Work on the Hacra project continues towards a MRE, using updated data from the
recently completed relogging program; and
* The Group maintains strong cash reserves to: allow funding of capital
expansion and process optimisation projects; upgrade the Group's exploration
and evaluation assets; and return value to shareholders.
Commenting on the Q3 results, Sylvania's CEO, Jaco Prinsloo said:
"The SDO delivered 17,926 4E PGM ounces for the quarter, which was ahead of
expectations. Traditionally Q3 is a lower quarter in terms of production as a
result of the slower start-up after the December break at the host mines and
the shorter February month. In comparison with Q3 FY2022, production increased
by 13.2% due to various interventions at the operations which have assisted in
improving the recovery efficiencies at some of the plants.
"The 21% decrease in the basket price for the quarter, particularly reflecting
the rhodium and palladium prices, impacted revenues but the Company remains in
a strong cashflow and cash position.
"With the strong production performance for the year to date and positive
results following the post-commissioning optimisation of the Tweefontein MF2,
the Company is pleased to increase the annual PGM production guidance to
between 72,000 and 74,000 4E PGM ounces for FY2023."
Disclaimer
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.
USD Unit Unaudited Unit ZAR
Q2 FY2023 Q3 FY2023 % Change % Change Q3 FY2023 Q2 FY2023
Production
645,832 575,973 -11% T Plant Feed T -11% 575,973 645,832
1.94 1.92 -1% g/t Feed Head Grade g/t -1% 1.92 1.94
341,528 322,366 -6% T PGM Plant Feed Tons T -6% 322,366 341,528
3.22 2.98 -7% g/t PGM Plant Feed Grade g/t -7% 2.98 3.22
57.78% 55.58% -4% % PGM Plant Recovery(1) % -4% 55.58% 57.78%
19,276 17,926 -7% Oz Total 4E PGMs Oz -7% 17,926 19,276
24,630 22,884 -7% Oz Total 6E PGMs Oz -7% 22,884 24,630
2,432 1,932 -21% $/oz 4E Gross basket price(2) R/oz -20% 34,305 42,859
Financials(3)
33,113 25,034 -24% $'000 Revenue (4E) R'000 -24% 444,488 583,437
3,587 3,193 -11% $'000 Revenue (by-products including base metals) R'000 -10% 56,681 63,210
357 -1,717 -581% $'000 Sales adjustments R'000 -585% -30,486 6,283
37,057 26,510 -28% $'000 Net revenue R'000 -28% 470,683 652,930
11,382 12,337 8% $'000 Direct operating costs R'000 9% 219,045 200,542
4,208 3,404 -19% $'000 Indirect operating costs R'000 -18% 60,434 74,137
788 733 -7% $'000 General and administrative costs R'000 -6% 13,018 13,887
20,005 9,784 -51% $'000 Group EBITDA(5) R'000 -51% 173,764 352,486
990 1,581 60% $'000 Net Interest R'000 61% 28,079 17,439
13,647 6,112 -55% $'000 Net profit(5) R'000 -55% 108,549 240,468
3,621 1,864 -49% $'000 Capital Expenditure R'000 -48% 33,106 63,802
123,895 144,182 16% $'000 Cash Balance R'000 22% 2,567,881 2,112,416
R/$ Ave R/$ rate R/$ 1% 17.76 17.62
R/$ Spot R/$ rate R/$ 4% 17.81 17.05
Unit Cost/Efficiencies
590 688 17% $/oz SDO Cash Cost Per 4E PGM oz(4) R/oz 17% 12,219 10,404
462 539 17% $/oz SDO Cash Cost Per 6E PGM oz(4) R/oz 18% 9,572 8,142
751 843 12% $/oz Group Cash Cost Per 4E PGM oz(4) R/oz 13% 14,972 13,237
588 660 12% $/oz Group Cash Cost Per 6E PGM oz(4) R/oz 13% 11,722 10,360
867 932 7% $/oz All-in sustaining cost (4E) R/oz 8% 16,548 15,279
1,010 1,007 0% $/oz All-in cost (4E) R/oz 0% 17,883 17,803
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 )PGM plant recovery is calculated on the production ounces that exclude
the work-in-progress ounces of approximately 1,500 ounces from December,
delivered in January 2023.
(2 )The gross basket price in the table is the March 2023 gross 4E basket
used for revenue recognition of ounces delivered in Q3 FY2023, before
penalties/smelting costs and applying the contractual payability.
(3 )Revenue (6E) for Q3, before adjustments is $28.0 million (6E prill split
is Pt 52%, Pd 17%, Rh 9%, Au 0%, Ru 17%, Ir 5%). Revenue excludes
profit/loss on foreign exchange.
(4) ( )The cash costs include direct operating costs and exclude indirect
costs such as royalty tax and EDEP payments.
(5) The net profit and Group EBITDA excludes the profit on the sale of
Grasvally Chrome Mine (≈$1.4 million) previously held as an asset held for
sale.
A. OPERATIONAL OVERVIEW
Health, safety and environment
Health, safety and environment remains a focus area on all operations and the
Company is pleased to report that no significant occupational health or
environmental incidents occurred during the quarter. While Lannex achieved
three-years Lost-Time Injury ("LTI") free during the period and Doornbosch
operation remains at 10 years LTI-free, we unfortunately experienced one LTI
at the Mooinooi operation (ankle sprain), and one LTI at the Lesedi operation
(knee sprain) during March 2023. Millsell and Tweefontein both remain
LTI-free for more than a year.
Operational performance
The SDO delivered 17,926 4E PGM ounces for the quarter. This is above target
as the third quarter historically yields lower production as a result of the
January ramp up at the host mines, but still represented a 7% decrease in
ounces on the previous quarter. PGM feed grades and volumes were
consequently impacted due to lower ROM and current arisings material during
the period, and the shorter February month. PGM feed grade and recoveries were
10% and 8% above the business plan for the quarter while quarter on quarter
performance was lower with PGM flotation plant throughput decreasing by 6%.
Although the total SDO recovery efficiency is slightly down for the quarter in
line with expectations for blend of feed material received, the commissioning
and optimisation of the Tweefontein MF2 has contributed to an 8% above plan
recovery, which will be a significant contributor going forward. Overall, the
SDO operations performed well and further improvements are expected during the
fourth quarter.
Lesedi experienced increased Eskom load curtailment this quarter of 95.6hrs,
which impacted throughput, stability and performance. As part of its
mitigating measures, the Company is in the process of procuring back-up power
generators for Lesedi and Millsell, and these should be commissioned during Q1
FY2024. Lannex recoveries under the revised reagent regime remain above
business plan with further optimisation ongoing.
SDO operating cash costs per 4E PGM ounce increased 17% in both rand and
dollar terms to ZAR12,219/ounce and $688/ounce (Q2: ZAR10,404/ounce and
$590/ounce) respectively. The increase in cash costs per ounce is principally
a result of the lower ounces produced in the quarter and the 1% depreciation
of the average ZAR:USD exchange rate.
The Group incurred capital expenditure of ZAR33.1 million ($1.9 million), in
line with planned capital project schedules. The main contributors were
ZAR11.4 million ($0.6 million) spent on the MF2 project, ZAR8.2 million ($0.5
million) on stay-in-business capital and tailings dams and ZAR8.9 million
($0.5 million) on exploration.
Operational focus areas
The successful implementation of the formal planned maintenance system at
Millsell, together with the operational focus on equipment runtime and
stability, has produced improved results at the plant for the quarter. The
roll out of the system at additional operations is underway.
The Mooinooi operation continues to monitor the ROM grades received from the
host mine which have decreased but remained above the business plan, and this
is an ongoing focus area for the Company.
Cost control and optimisation continues with positive results and unit costs
well in line with the business plan year to date. Ongoing improvements remain
a focus area on all operations and are expected to further reduce costs.
Operational opportunities
Optimisation of blending opportunities from the current SDO surface resources
has provided positive results, especially at the Eastern operations.
Construction of the Lannex MF2 Plant continues and is on target to commence
commissioning during Q1 FY2024, which follows the successful roll-out and
performance of similar MF2s at all other SDO operations between 2017 and 2023.
Testwork on reagent optimisation is ongoing in collaboration with suppliers.
B. FINANCIAL OVERVIEW
Financial performance
Revenue (4E) for the quarter decreased by 24% to $25.0 million (Q2: $33.1
million), impacted by the 21% decrease in the basket price recorded in March
and applied to calculate revenue for ounces produced and delivered in the
quarter but only invoiced in Q4. The average 4E gross basket price for the
quarter was $1,932/ounce against $2,432/ounce in Q2 with the largest commodity
price drop noted in rhodium and palladium. Net revenue for the quarter, which
includes base metals and by-products and the quarter-on-quarter sales
adjustment, was $26.5 million (Q2: $37.1 million). The downwards sales
adjustment in dollar and rand terms is due to the reversal of provisional
revenue raised in Q2, which was reversed and re-raised in Q3 at the actual
prices in accordance with the off-take agreements. 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 increased by 13% in rand terms from
ZAR13,237/ounce to ZAR14,972/ounce and increased 12% in dollar terms from
$751/ounce in the previous quarter to $843/ounce.
General and administrative costs decreased from $0.79 million to $0.73
million. These costs are incurred in USD, GBP and ZAR and are impacted by the
exchange rate fluctuations over the reporting period.
Group EBITDA for the quarter was $9.8 million (Q2: $20.0 million) and net
profit was $6.1 million (Q2: $13.6 million), the decrease was primarily a
result of the lower basket price and higher total group costs (direct and
indirect cash and non-cash costs).
The Group cash balance increased 16% to $144.2 million at the quarter end (Q2:
$123.9 million). Cash generated from operations before working capital
movement was $9.8 million, with net changes in working capital amounting to
$12.9 million, which is mainly due to the changes in trade debtors. The
decrease in the basket price and lower ounce production during Q3 resulted in
a lower trade debtors balance quarter-on-quarter, as trade debtors arise from
the concentrate delivered in the quarter but paid for in the following quarter
per the off-take agreement.
The Group spent $1.9 million on capital for the quarter compared to $3.6
million in the previous quarter. Dividend tax of $0.5 million was paid to the
authorities on the payment of a dividend from a subsidiary to the holding
company.
The impact of exchange rate fluctuations on cash held at the end of Q3 FY2023
was $1.4 million loss due to the spot ZAR to USD exchange rate at 31 March
2023 depreciating by 4%.
C. MINERAL ASSET DEVELOPMENT
The Group owns various mineral asset exploration and development projects on
the Northern Limb of the Bushveld Igneous Complex located in South Africa, for
which it has approved mining rights. Targeted studies are underway on both the
Volspruit and Northern Limb PGM opportunities to determine how best to
optimise the respective projects. Progress has been made towards unlocking
mineral potential on these projects to generate value for shareholders.
Volspruit Project
Following the release of the Results and Resource Statement in October 2022,
the revised Scoping Study to include the remaining 42% of the total project
area consisting of the South Body is currently underway. Relogging of the
South Body has been completed and the remaining relogging of the North Body
will be completed in early May. The results from the rhodium sampling will be
received during Q4 FY2023 and will also include iridium and ruthenium to be
evaluated as part of the same study. While the initial Scoping Study completed
on the North Body relied on the validated borehole database to complete the
Study, further relogging was scheduled to define the geological constraints of
the mineralisation. The relogging and additional sampling data collected will
be subject to an updated Volspruit MRE, which will include rhodium resource
over 100% of the project area. The updated MRE will then be subject to a
Preliminary Economic Assessment ("PEA") during Q1 FY2024 as previously
reported.
The permitting requirements under the Mining Right as communicated in the
interim report continues. The Water-Use Licence, the updating of the
Environmental Impact Assessment ("EIA") and the finalisation of the Social and
Labour Plan are all included within these activities.
Far Northern Limb Projects
Continued resource optimisation studies are underway on the entire strike
extent of the newly discovered T-Zone of the Aurora project. By applying the
new geological interpretation, relogging of the historical boreholes in the
possession of the Company has been completed over 8.4km of the 16.7km of the
projects near surface strike length. It can be reported that of the historical
core, 102 of the 159 drillholes in the Company's possession have been fully
relogged. The relogging will inform the continuity of mineralised T-Zone and
provide inputs for an optimised exploration strategy. The outcomes of the
optimised exploration strategy will be subject to a preliminary MRE, which
will indicate the size of a potential MRE over the entire strike length of the
Aurora project and determine any infill studies that may be required. A PEA
will only be commissioned once an updated MRE for the combined Aurora project
is available.
Progress towards declaring a maiden Mineral Resource on the Hacra project
continues, and the relogging of both the Hacra North underground and the Hacra
South near surface historical core, implementing the new geological
interpretation, has been completed.
D. CORPORATE ACTIVITIES
Notification of Transaction by PDMR
The Company announced on 31 March 2023 that Eileen Carr, Non-Executive
Director sold and subsequently purchased 13,811 ordinary shares of $0.01 each
in the Company ("Ordinary Shares") for her Self-Invested Pension Plan ("SIPP")
at 89 pence per Ordinary Share.
Following the two transactions her shareholding in the Company remained
unchanged at 70,000 Ordinary Shares, representing 0.02% of the total number of
Ordinary Shares with voting rights.
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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