REG - Sylvania Platinum - Annual Results Announcement
08/09/2022 07:01
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RNS Number : 7414Y Sylvania Platinum Limited 08 September 2022
_____________________________________________________________________________________________________________________________
8 September 2022
Sylvania Platinum Limited
("Sylvania", the "Company" or the "Group")
Final Results to 30 June 2022
Sylvania (AIM: SLP) is pleased to announce its final results for the year ended 30 June 2022. Unless otherwise stated, the consolidated financial information contained in this report is presented in United States Dollars ("USD").
Achievements
* Sylvania Dump Operations ("SDO") achieved target production of 67,053 4E PGM
ounces for the year (FY2021: 70,043 4E PGM ounces);
* Net revenue of $151.9 million (FY2021: $206.1 million);
* Group EBITDA of $82.8 million (FY2021: $144.9 million);
* Group net profit of $56.2 million (FY2021: $99.8 million);
* Windfall dividend of 2.25p per Ordinary Share declared by the Board of
Directors and paid in April 2022;
* Annual cash dividend of 8p per Ordinary Share declared by the Board of
Directors (FY2021: 4p per Ordinary Share);
* Positive Group cash balance of $121.3 million with no debt and no pipeline
financing;
* Bought back 6,590,923 shares in the market at the average price of 85.93p per
Ordinary Share, equating to $7.1 million and cancelled 6,000,000 shares;
* Doornbosch achieved 10-years Lost-Time Injury ("LTI") Free during June 2022
and received the 'Best-in-class Safety Performance' award by the Mine
Metallurgical Managers Association of South Africa;
* Tweefontein operation achieved record monthly, quarterly, six-monthly and
annual PGM production performance; and
* New Lesedi TSF successfully commissioned during March 2022 with optimisation
of the Lesedi MF2 plant continuing.
Challenges
* The lower PGM feed grades and recovery potential associated with the
significant increase in open cast ROM sources during the period impacted both
PGM production and operating costs for most of the year. Feed grades have
improved significantly since Q4 based on collaborative efforts between
operations and the host mine at Mooinooi;
* The temporary tailings-related suspension of operations at Lesedi during Q1
resulted in operational downtime that extended into Q2, but since the
commissioning of an additional water supply and the newly constructed tailings
dam facility during Q3, the operation was able to return to normal operations;
and
* The effect of high global inflation and economic uncertainty continues to
impact the cost of reagents, fuel and transport.
Opportunities
* The MF2 expansion at Tweefontein is on track to commence commissioning and to
start contributing PGM ounces during December 2022;
* Following the successful roll-out of MF2 and ultra-fine screening circuits at
various operations since 2017, this technology is now also being implemented
at Lannex, with commissioning scheduled towards the end of the 2023 calendar
year;
* Back-up power supply systems will be implemented at the three most affected
operations during the next year to mitigate any potential power supply
disruptions associated with either vandalism of power supply infrastructure or
potential loadshedding by the national power utility;
* As part of the Group's ongoing strategy to identify and secure additional
tailings resources to contribute towards both growth and life of operations,
the management team has concluded various studies during the year and
continues to engage with respective host mines on an exclusive basis in order
to progress towards successful collaborations;
* Preliminary results from the targeted studies commissioned during FY2021 on
both the Group's Volspruit and Northern Limb PGM opportunities are promising;
* Work together with a 'binding technology' player progressing to co-develop a
novel chemical bonding process to create a chromite ore pellet suitable for
ferrochrome ("FeCr") smelters, with the added potential to reduce smelters'
electrical energy consumption per ton of FeCr produced;
* Safe, healthy working operations and minimising environmental harm is
prioritised, guided by our values to strengthen and support the communities we
operate in, and work, to build a socially inclusive economy for all
stakeholders, shareholders, employees and hosting communities; and
* The Group continues to maintain strong cash reserves to provide funding for:
capital expansion and process optimisation projects; the safeguarding of
employees; upgrading the Group's exploration and evaluation assets; and
returning value to all shareholders.
Post Period End
* Post-period end, all of the conditions precedent for the sale of 100% of the
shares in, and claims against Grasvally Chrome Mine (Pty) Ltd, to Forward
Africa Mining (Pty) Ltd ("FAM") have been fulfilled and the sale became
unconditional as of 8 July 2022.
Commenting on the results, Sylvania's CEO Jaco Prinsloo said:
"I am pleased with the solid production performance of the SDO in delivering
67,053 4E PGM ounces for the period, particularly following the turbulent year
and the macroeconomic challenges we have all experienced. This performance is
testament to our teams' efforts, and I thank and commend all who have
contributed to this achievement.
"A key contributor to achieving this result was the stellar performance of the
Tweefontein plant which achieved monthly, quarterly, six-monthly and annual
production records during the period. Furthermore, and no less stellar, our
Doornbosch plant achieved ten-years Lost-Time Injury free in June 2022 and was
awarded the 'Best-in-class Safety Performance' commendation by the Mine
Metallurgical Managers Association of South Africa. Strong effort was put in
by all production teams and the newly commissioned MF2 circuit at Lesedi, as
well as the improvement in ROM PGM grade received from the host mine in the
last half of the year, assisted the Group to deliver ounces in the mid-range
of its stated production target.
"Clearly, commodity pricing has been more volatile than we have seen for some
time, with a 23% decrease in the average basket price received, which impacted
our overall financial results for the year. However, looking forward I am
optimistic about the uptick displayed in the chrome market.
"The impact of higher global cost inflation is inevitable, and we continue to
maintain prudent cash management with disciplined capital allocation and
control as well as production cost control. This ensures that the Company
remains in a position with sufficient cash reserves to cover working capital
for the pipeline period, finance capital projects, fund growth and exploration
and mitigate any potential future adverse impacts it may face. I am also
pleased to report that the Board has declared an annual cash dividend of 8p
per Ordinary Share for FY2022
"Looking ahead, I am confident that our operations will continue to deliver a
strong production performance and as a consequence have set an annual
production target of 68,000 to 70,000 ounces for the year ahead."
The Sylvania cash generating subsidiaries are incorporated in South Africa
with the functional currency of these operations being South African Rand
("ZAR"). Revenues from the sale of PGMs are received 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, Pounds Sterling ("GBP") and ZAR.
For the twelve months under review, the average ZAR:USD exchange rate was
ZAR15.21:$1 and the spot exchange rate was ZAR16.38:$1.
USD Unit Audited Unit ZAR
FY 20201 FY 2022 % Change % Change FY 2022 FY 2021
Production
2,700,685 2,393,355 -11% T Plant Feed T -11% 2,393,355 2,700,685
1.88 1.96 4% g/t Feed Head Grade g/t 4% 1.96 1.88
1,272,974 1,221,687 -4% T PGM Plant Feed Tons T -4% 1,221,687 1,272,974
3.17 3.21 1% g/t PGM Plant Feed Grade g/t 1% 3.21 3.17
53.99% 53.24% -1% % PGM Plant Recovery % -1% 53.24% 53.99%
70,043 67,053 -4% Oz Total 4E PGMs Oz -4% 67,053 70,043
94,041 85,659 -9% Oz Total 6E PGMs Oz -9% 85,659 94,041
3,762 2,890 -23% $/oz Average 4E Gross Basket Price(1) R/oz -20% 43,964 55,245
Financials(2)
188,293 142,489 -24% $'000 Revenue (4E) R'000 -25% 2,167,753 2,888,758
13,253 12,368 -7% $'000 Revenue (by-products including base metals) R'000 -7% 188,154 203,326
4,566 -2,912 -164% $'000 Sales Adjustments R'000 -163% -44,299 70,051
206,112 151,944 -26% $'000 Net Revenue R'000 -27% 2,311,608 3,162,135
44,648 48,039 8% $'000 Direct Operating costs R'000 7% 730,842 684,985
15,191 17,426 15% $'000 Indirect Operating costs $'000 14% 265,115 233,050
2,375 2,860 20% $'000 General and Administrative costs R'000 19% 43,510 36,429
144,860 82,768 -43% $'000 Group EBITDA $'000 -43% 1,259,195 2,222,416
1,332 1,254 -6% $'000 Net Interest R'000 -7% 19,078 20,437
43,407 24,778 -43% $'000 Taxation R'000 -43% 376,958 665,934
2,980 3,092 4% $'000 Depreciation and Amortisation R'000 3% 47,048 45,715
99,806 56,151 -44% $'000 Net Profit R'000 -44% 854,252 1,531,204
7,519 16,405 118% $'000 Capital Expenditure R'000 116% 249,579 115,356
106,135 121,282 14% $'000 Cash Balance R'000 30% 1,986,185 1,524,365
Ave R/$ rate R/$ -1% 15.21 15.34
Spot R/$ rate R/$ 14% 16.38 14.36
Unit Cost/Efficiencies
637 716 12% $/oz SDO Cash Cost per 4E PGM oz(3) R/oz 11% 10,899 9,779
475 561 18% $/oz SDO Cash Cost per 6E PGM oz(3) R/oz 17% 8,532 7,284
755 897 19% $/oz Group Cash Cost Per 4E PGM oz(3) R/oz 18% 13,643 11,590
563 702 25% $/oz Group Cash Cost Per 6E PGM oz(3) R/oz 24% 10,679 8,632
907 1,052 16% $/oz All-in Sustaining Cost (4E) R/oz 15% 16,008 13,910
981 1,256 28% $/oz All-in Cost (4E) R/oz 27% 19,109 15,052
(1) The gross basket price in the table is average gross basket for the year,
used for revenue recognition of ounces delivered over FY2022, before
penalties/smelting costs
and applying the contractual payability.
(2) Revenue (6E) for FY2022, before adjustments is $154.2 million (6E prill
split is Pt 51%, Pd 18%, Rh 9%, Au 0.3%, Ru 17%, Ir 5%).
(3) The cash costs include operating costs and exclude indirect cost for
example royalty tax and EDEP payments.
A. OPERATIONAL OVERVIEW
Health, safety and environment
During the period under review the operations continued to focus on health,
safety and environmental compliance. The Group is proud to report that there
were no significant health or environmental incidents reported during the year
and that the Company remains fatality-free since inception in 2006.
The Doornbosch operation achieved the significant industry milestone of ten
years Lost-Time Injury ("LTI") free. Both Lesedi and Lannex have exceeded
two-years LTI-free and Tweefontein achieved a one-year LTI-free milestone
during the year. Unfortunately, Mooinooi and Millsell both recorded one LTI
each when an employee on their plants fractured a finger during maintenance.
The Company continues to target zero harm to employees and every injury that
is recorded is fully investigated and corrective measures are implemented to
prevent any future reoccurrences.
Through the collaborative efforts of management and all our employees, we
continuously strive to maintain high safety standards and a safe working
environment at all operating sites, with each plant continuing to operate in
accordance with legislated safety and occupational regulations pertaining to
the industry and country as a whole.
Impact of COVID-19
Although South Africa emerged from a fifth wave of COVID-19 infections in the
country during H2 FY2022, the effects on a national level were far milder than
previously experienced. During the period under review, the Company reported
77 cases of the virus, with all employees returned to work. Sylvania has
reported 142 infections since the start of the pandemic.
During HY2 FY2022, lockdown regulations were eased with the mandatory wearing
of masks and limitations placed on gatherings, amongst others, being lifted
completely during the fourth quarter. Sylvania continues to encourage
responsible behaviour amongst all employees. The Company continues to support
vaccination to limit the spread of the pandemic although is ever cognisant
that this remains a personal choice.
In acknowledgement of the toll that the pandemic has had on the mental health
and wellbeing of employees and their loved ones, the Company implemented its
Employee Assistance Program ("EAP"). The EAP is available to all employees and
their immediate family members, as well as those living in the same household.
Although there is a focus on treatment and prevention, the program will
enhance the corporate culture of caring and wellness and enable continuous
management and measurement of reported cases to assist in identifying areas of
concern to implement remedial measures, thereby monitoring overall wellness
risk within the organisation. Reporting lines are confidential, and each case
is treated with utmost discretion to protect any subject's right to
privacy.
Operational performance
The SDO met the mid-range of the Company's stated guidance for the financial
year by delivering an annual production of 67,053 4E PGM ounces.
PGM Plant Feed Tons were 4% lower than the previous period despite facing
challenges related to lower quality feed sources and blends received from the
host mines at the Western Operations during the year, as well as the Lesedi
tailings dam related stoppage during HY1 FY2022. PGM feed grades increased
slightly by 1% year-on-year while recovery efficiencies decreased by 1%. This
was associated with the more oxidised ROM and current arisings material
treated at the Western Operations, with recovery for the combined SDO
remaining within the anticipated 52% to 54% range.
The SDO cash cost per 4E PGM ounce increased by 11% in ZAR (the functional
currency) from ZAR9,779/ounce to ZAR10,899/ounce while the USD cash cost
increased 12% to $716/ounce against $637/ounce in the prior year. The increase
in costs was primarily driven by higher electricity costs, reagent price
increases during the second part of the year and an increase in community
upliftment expenditure. The effect of high global inflation and uncertainty
continues to directly impact the cost of reagents, fuel and transport which
also impact operating costs.
Operational focus areas
Engagement with the host mine continued during the year to address the lower
PGM grades in ROM and current arisings sources. As announced in HY1 FY2022,
various initiatives were undertaken to investigate and evaluate potential
alternative feed sources. Preferred ore sources were identified, and improved
ROM feed grades were observed from April 2022 onwards, increasing considerably
during the fourth quarter particularly at the Mooinooi operation. The source
and quality of material being received from the host mine will continue to be
a focus to ensure production targets are maintained into the future.
Subsequent to the operational stoppage at the Lesedi operation announced in
our FY2021 Annual Report, various mitigatory measures were undertaken by the
Company to ensure safety at the plant, the nearby communities and the
environment. The anticipated ramp-up to normal production levels during the
second quarter of the 2022 financial year, was hampered by general water
shortages in the area as well as some technical difficulties experienced in
recovering return-water from the emergency tailings deposition facility at
Lesedi. Additional boreholes and the commissioning of a newly constructed
tailings facility allowed for the plant to return to full operation during HY2
FY2022. Together with optimisation of the new MF2 plant, improving recovery
efficiencies and resultant ounce production at the plant will remain a focus
of management.
The Company experienced localised power supply constraints to operations
during the year as a result of continuing vandalism and cable theft at
substations of the national power utility. This was also affected by the
re-implementation of loadshedding in the country. Our power mitigation
strategies are being implemented at the most affected operations - as is
explained in more detail in our ESG, Embedding our Strategy, report released
alongside the Company's Annual Report FY2022.
Capital Projects
Capital expenditure for the year increased 118% to $16.4 million (ZAR249.6
million), in line with the roll-out of planned projects.
The MF2 expansion at Tweefontein is on track for commissioning by the end of
the 2022 calendar year and is expected to start contributing PGM ounces from
December 2022.
Based on the successful roll-out of MF2 and ultra-fine screening circuits at
various operations since 2017 to improve process and PGM recovery
efficiencies, a project was initiated to implement this technology at Lannex,
with commissioning scheduled towards the end of the 2023 calendar year.
Approximately ZAR66.5 million ($4.1 million) is budgeted in FY2023 for
necessary expansion of the Company's tailing facilities to ensure integrity
and capacity at the tailings deposition facilities and to cater for remaining
sources that need to be processed.
The Company has also budgeted to install new emergency backup power generation
capacity at two of its plants in order to reduce the impact of power
interruptions caused by instability of the national and provincial supply
grids. While the Company is fully committed to reducing its carbon footprint
in line with ESG objectives, standalone emergency backup plants operating
fully on renewable technologies are not currently viable, but these will be
introduced in future where possible to lower diesel consumption and bolster
supply capacity during peak day time running hours.
As part of its commitment to further improve the viability of its exploration
projects at the Volspruit and Northern Limb projects, and to further unlock
economic potential from these owned assets, the Company anticipates spending
approximately ZAR70 million ($4.4 million) during FY2023 to perform further
resource optimisation and exploration drilling as detailed in the mineral
asset and development section, as well as on the required regulatory Social
and Labour Plan ("SLP") spend.
Some years ago, Sylvania partnered with a 'binding technology' player to
co-develop a novel chemical bonding process. The aim was to create a chromite
ore pellet suitable for ferrochrome ("FeCr") smelters but with the added
potential to markedly cut the smelters' electrical energy consumption per ton
of FeCr produced. In exchange for funding development costs in the venture,
Sylvania holds the licence for any future chrome pellet production in South
Africa. This research and development project is expected to yield positive
results and may enable the Company to diversify into other areas and
commodities.
Outlook
With the newly commissioned Lesedi MF2 in operation, improved ROM feed grades
at the Western Operations, together with the roll-out of the Tweefontein MF2,
the Company is confident that the operations will continue to deliver a strong
production performance. For that reason, Sylvania will target an annual
production of between 68,000 to 70,000 ounces for the financial year ahead.
Based on current resources and production scheduling and the planned
contribution of improvement projects currently in execution, PGM production
for FY2024 and FY2025 is targeted to increase.
B. FINANCIAL OVERVIEW
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2022
2022 2021
Note(s) $ $
Revenue 1 151,944,273 206,112,444
Cost of sales (61,823,181) (54,767,603)
Royalties tax 2 (6,920,404) (8,276,344)
Gross profit 83,200,688 143,068,497
Other income 82,132 1,146,710
Other expenses 3 (3,608,140) (2,334,764)
Operating profit before net finance costs and income tax expense 79,674,680 141,880,443
Finance income 1,711,371 1,705,366
Finance costs (457,363) (373,236)
Profit before income tax expense 80,928,688 143,212,573
Income tax expense 4 (24,777,844) (43,406,522)
Net profit for the period 56,150,844 99,806,051
Other comprehensive income/(loss)
Items that are or may be subsequently reclassified to profit and loss:
Foreign operations - foreign currency translation differences (17,747,559) 24,461,386
Total other comprehensive profit/(loss) (net of tax) (17,747,559) 24,461,386
Total comprehensive income for the year 38,403,285 124,267,437
Cents Cents
Earnings per share attributable to the ordinary equity holders of the Company:
Basic earnings per share 20.62 36.65
Diluted earnings per share 20.40 35.92
1. Revenue is generated from the sale of PGM ounces produced at the
six retreatment plants, net of pipeline sales adjustments, penalties and
smelting charges. Revenue excludes profit/loss on foreign exchange.
2. Royalty tax is paid at a rate of 7% on attributable Platinum ounces
and decreased from the prior reporting period due to the lower revenue.
3. Other expenses relate to corporate activities and include
consulting fees, audit fees, insurance, forex profit/(loss) on revenue,
directors' fees, share based payments and other administrative costs.
4. Income tax expense include current tax, deferred tax and dividend
withholding tax.
The average gross basket price for PGMs in the financial year was $2,890/ounce
- a 23% decrease on the previous year's basket price of $3,762/ounce. The
decrease in the overall PGM basket price was primarily due to a circa 33%
decrease in rhodium prices from record highs recorded during FY2021, and a
circa 27% decrease in palladium prices.
Revenue on 4E ounces delivered decreased by 24% in dollar terms to $142.5
million year-on-year (FY2021: $188.3 million) with revenue from base metals
and by-products contributing $12.4 million to the total revenue (FY2021: $13.3
million). Net revenue, after adjustments for ounces delivered in the prior
year but invoiced in FY2022, decreased 26% on the previous year's $206.1
million to $151.9 million.
The operational cost of sales is incurred in ZAR and represents the direct and
indirect costs of producing the PGM concentrate and amounted to ZAR996.0
million for the reporting period compared to ZAR918.0 million for the period
ended 30 June 2021. The main cost contributors being employee costs of
ZAR300.6 million (FY2021: ZAR277.8 million), reagents and milling costs of
ZAR81.1 million (FY2021: ZAR60.5 million), and electricity costs of ZAR113.4
million (FY2021: ZAR99.5 million). The fuel and transport expense increased
sharply in the second half of the financial year as a result of the high
global inflation and the escalating petrol and diesel costs. In addition to
these the Company paid royalty tax of ZAR105.3 million (FY2021: ZAR126.9
million). The decrease in mineral royalty tax is directly related to the
decrease in net revenue and earnings year-on year.
Group cash costs increased by 19% year-on-year from $755/ounce
(ZAR11,590/ounce) to $897/ounce (ZAR13,643/ounce). Direct operating costs
increased 7% in ZAR (the functional currency) from ZAR685.0 million to
ZAR730.8 million and indirect operating costs increased 14% from ZAR233.0
million to ZAR265.1 million. The increase in indirect costs is attributable
to the increase in the social responsibility cost of ZAR12.3 million (FY2021:
ZAR3.6 million).
All-in sustaining costs ("AISC") increased by 16% to $1,052/ounce
(ZAR16,008/ounce) from $907/ounce (ZAR13,910/ounce). Similarly all-in costs
("AIC") of 4E increased by 28% to $1,256/ounce (ZAR19,109/ounce) from
$981/ounce (ZAR15,052/ounce) recorded in the previous period as a result of
the increase in capital spend on strategic projects and exploration.
General and administrative costs, included in the Group cash costs, are
incurred in USD, GBP and ZAR and are impacted by exchange rate fluctuations
over the reporting period. These costs increased 20% to $2.9 million in the
reporting currency year-on-year mainly due to the increase in administrative
salaries and wages, legal and consulting fees.
Group EBITDA decreased 43% year-on-year to $82.8 million (FY2021: $144.9
million). The taxation expense for the year was $24.8 million (FY2021: $43.4
million) (as per the statement of profit or loss and other comprehensive
income and includes deferred taxation movements and dividend withholding tax)
and depreciation amounted to $3.1 million.
The Group net profit for the year was $56.2 million (FY2021: $99.8 million).
Interest is earned on surplus cash invested in South Africa at an average
interest rate of 4% per annum. Interest was paid on instalment sale agreements
for part of the period; however, all instalment sale agreements were settled
during the year under review.
Income tax paid for the financial year amounted to ZAR342.6 million ($22.5
million) compared to ZAR697.8 million ($45.5 million) for the previous
financial year. The decrease is as a result of decreased taxable profits
mainly due to the decrease in the basket price during the year as well as
slightly lower ounce production. Income tax is paid in ZAR on taxable profits
generated at the South African operations. Dividend withholding tax of $1.3
million (ZAR19.4million) was paid during the year.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED 30 JUNE 2022
2022 2021
Note $ $
Net cash inflow from operating activities 5 69,611,329 68,235,302
Net cash outflow from investing activities 6 (17,168,387) (7,585,842)
Net cash (outflow) / inflow from financing activities 7 (32,748,480) (21,956,967)
Net (decrease) / increase in cash and cash equivalents 19,694,462 38,692,493
Effect of exchange fluctuations on cash held (4,547,472) 11,566,330
Cash and cash equivalents at the beginning of reporting period 106,135,435 55,876,612
Cash and cash equivalents at the end of the reporting period 121,282,425 106,135,435
5. Net cash inflow from operating activities includes net cash inflow
from operations of $91,930,788, net finance income of $1,512,259 and taxation
paid of $23,831,718.
6. Net cash outflow from investing activities includes payments for
property, plant and equipment of $14,494,644, exploration and evaluation
assets of $1,907,396, advances paid to the joint operation and third-party
loan of $773,495 and assets held for sale $7,148.
7. Net cash outflow from investing activities includes dividend
payments $22,706,078, payment for share transactions $9,865,070 and the
repayment of borrowings and leases $177,332.
The cash balance on 30 June 2022 was $121.3 million (FY2021: $106.1 million),
including $0.8 million in financial guarantees (FY2021: $0.9 million). Cash
generated from operations before working capital movements was $85.2 million,
with net changes in working capital of $6.7 million mainly due to the movement
in trade receivables of $9.5 million. Net finance income amounted to $1.5
million and $23.8 million was paid in income tax for the period, including
dividend withholding tax of $1.3 million.
At the corporate level, 6.6 million shares were bought back through the Share
Buyback for a cost of $7.1 million which was announced in Q4. The Company
cancelled 6 million Treasury Shares at the end of June 2022. A further 2.1
million shares were bought back from employees which includes buybacks for tax
purposes during the period totalling $2.7 million. Dividends of $22.7 million
were paid out and a further $0.7 million was paid through the Employee
Dividend Entitlement Plan ("EDEP").
The impact of exchange rate fluctuations on cash held at year end was a $4.5
million loss due to the ZAR depreciating against the USD by 14%.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AT 30 JUNE 2022
2022 2021
Note(s) $ $
ASSETS
Non-current assets
Exploration and evaluation expenditure 46,087,453 45,351,817
Property, plant and equipment 46,298,978 39,915,437
Other financial assets 8(a) 283,450 298,864
Total non-current assets 92,669,881 85,566,118
Current assets
Cash and cash equivalents 9 121,282,425 106,135,435
Trade and other receivables 10 52,939,589 68,612,119
Other financial assets 8(b & c) 1,029,205 885,593
Inventories 11 4,258,960 3,838,147
Current tax asset 3,486,226 4,329,860
182,996,405 183,801,154
Assets held for sale 3,771,661 4,216,190
Total current assets 186,768,066 188,017,344
Total assets 279,437,947 273,583,462
EQUITY AND LIABILITIES
Shareholders' equity
Issued capital 12 2,801,557 2,861,557
Reserves 13 38,663,288 65,314,647
Retained profit/(Accumulated losses) 209,221,487 175,776,721
Total equity 250,686,332 243,952,925
Non-current liabilities
Borrowings 14 35,031 70,956
Provisions 15 5,936,804 4,539,937
Deferred tax liability 11,614,765 11,154,515
Total non-current liabilities 17,586,600 15,765,408
Current liabilities
Trade and other payables 11,110,196 13,652,017
Borrowings 14 48,957 212,651
11,159,153 13,864,668
Liabilities directly associated with the assets classified as held for sale 5,862 461
Total current liabilities 11,165,015 13,865,129
Total liabilities 28,751,615 29,630,537
Total liabilities and shareholder's equity 279,437,947 273,583,462
8. Other financial assets consist of:
a. Contribution paid to the host mine for rehabilitation purposes.
b. A loan receivable granted to TS Consortium from Sylvania South
Africa (Pty) Ltd. Sylvania South Africa (Pty) Ltd interest in the joint
operation increased to 75% during the reporting period.
c. A loan to Forward Africa Mining Pty (Ltd) secured over the
Grasvally Plant and bearing interest at the Johannesburg inter-Bank Offer Rate
(JIBOR) + 3%.
9. The majority of the cash and cash equivalents are held in ZAR and
USD.
10. Trade and other receivables consist mainly of amounts receivable for
the sale of PGMs.
11. Inventory held includes spares and consumables for the SDO.
12. The total number of issued ordinary shares at 30 June 2022 is
280,155,657 Ordinary Shares of US$0.01 each (including 14,024,869 shares held
in treasury)
13. Reserves include the share premium, foreign currency translation
reserve, which is used to record exchange differences arising from the
translation of financial statements of foreign controlled entities,
share-based payments reserve, treasury share reserve, the non-controlling
interests reserve and the equity reserve.
14. Interest bearing loans consist of right-of-use lease liabilities. All
instalment sale agreements were settled during the period of review.
15. Provision is made for the present value of closure, restoration and
environmental rehabilitation costs in the financial period when the related
environmental disturbance occurs.
C. MINERAL ASSET DEVELOPMENT
The Group owns various mineral asset development projects on the Northern Limb
of the Bushveld Igneous Complex located in South Africa, for which it has
approved mining rights. New targeted studies were commissioned during the 2021
financial year on both the Volspruit and Northern Limb PGM opportunities to
determine how best to optimise the respective projects. Significant progress
has been made towards unlocking mineral potential on these projects to
generate value for shareholders.
Volspruit Project
Based on the historical resource statements for Volspruit, the in situ grade
of the project was relatively low and as a consequence, low PGM concentrate
grades would have necessitated the need for very capital-intensive in-house
smelting and refining facilities. This was one of the primary reasons for the
relatively slow progress on this project in earlier years. Based on the
improved metal prices in recent years and an improved focus on unlocking the
potential and further value from existing assets, the Company initiated a
resource optimisation study, with the assistance of Earthlab Technical
Division ("Earthlab") which is a mining and exploration specialist company.
The primary objective is to improve the ore feed grades for the project to
enable the production of a higher grade, saleable PGM concentrate, eliminating
the need for expensive and complicated downstream processing infrastructure.
During the past year, Earthlab has reviewed historical exploration results of
the Volspruit North Pit resource (South Pit resource not optimised yet). A
revised geological interpretation was applied which allows for higher cut-off
grades, reducing the Mineral Resource to a smaller volume, but of a higher
quality. Due to the alternative definition of mineralised zones, estimated as
separate domains, the 3E PGM grade of the Mineral Resource Estimate increased
significantly and has enhanced the economic potential of the North Pit,
especially when combined with the relatively low waste to reef stripping
ratios anticipated.
The specific deliverables of the study include an upgraded JORC-compliant
Mineral Resource Statement and a Scoping Study Report based on the updated
Mineral Resource, which are expected to be published during Q1 FY2023. Based
on preliminary findings we believe that we would be able to further enhance
the value of this project by proceeding to a Pre-Feasibility Study during the
next financial year to allow for a JORC-compliant Ore Reserve and increased
confidence in the feasibility status of the entire mineral asset.
The investment for the permitting requirements in support of the existing
Mining Right continues with specialist technical teams currently working on
the authorisations. These authorisations include the Water Use License for the
mining and on-site processing of the ore, updating of the Environmental Impact
Assessment and the finalisation of the amended SLP which will update the Local
Economic Development ("LED") project that is included in the Mining Right held
by the Company.
Northern Limb Projects
The Company currently holds approved Mining Rights for PGMs and Base Metals
for both the Hacra and Aurora project areas. Similar to Volspruit, the
historical Mineral Resource Estimates for the respective project areas did not
support an acceptable in situ grade, or the ore feed grade to enable
acceptable quality saleable PGM concentrates, and consequently limited
progress was made in earlier years to develop these projects.
In 2020, the Company together with Earthlab, initiated a targeted review of
the Hacra and Aurora PGM and Base Metal projects through an infill drilling
programme, re-evaluation of existing drillhole data, and an optimisation
study. This initial proof of concept study was aimed at improving the resource
classification and updating the Mineral Resource Estimate over a specifically
identified target area that represents approximately 10% of the total strike
length held under Mining Rights by the Company. Further studies on the
remaining project areas under the Mining Right, including a scoping-level
mining study evaluating a new business case for the area is to follow
completion of the initial phase.
The interpretation and modelling of the mineralisation over the initial target
area on the La Pucella property of the Far Northern Limb will be completed
shortly, and the updated Mineral Resource Estimate is expected to be published
at the end of Q1 FY2023.
Based on the preliminary findings we believe that we may be able to further
enhance the value of this project by subjecting this Mineral Resource to a
scoping-level mining study to evaluate a business case for the La Pucella
target area of the Mining Right during the next year.
In addition, a similar study philosophy is planned for the three additional
target areas on strike, and down to a depth of 200m below surface during the
next financial year, contributing towards increasing and improving the overall
near-surface Mineral Resources for the Far Northern Limb project.
Grasvally Chrome Project
The Company reported on 11 July 2022 that all the conditions precedent for the
sale of 100% of the shares in, and claims against Grasvally Chrome Mine (Pty)
Ltd, to Forward Africa Mining (Pty) Ltd ("FAM") have been fulfilled and the
sale became unconditional on 8 July 2022. As announced in the HY1 FY2022
report, sales proceeds of ZAR100.0 million ($5.96 million as at 8 July 2022)
will be paid in fifteen equal quarterly instalments.
D. CORPORATE ACTIVITIES
Dividend Approval and Payment
On 6 September 2021, the Board declared a final dividend of 4p per Ordinary
Share, with a record date of 29 October 2021 and payment date of 3 December
2021.
In addition to the annual dividend paid, the Board declared a windfall
dividend of 2.25p per Ordinary Share for the calendar year 2021. Payment of
the windfall dividend was made on 8 April 2022 to shareholders on the register
at the close of business on 4 March 2022.
The Board has now declared the payment of a cash dividend for FY2022 of 8p per
Ordinary Share, payable on 2 December 2022. Payment of the dividend will be
made to shareholders on the register at the close of business on 28 October
2022 and the ex-dividend date is 27 October 2022. The declaration of the
dividend was done in accordance with the six metrics of our dividend policy,
namely:
• Liquidity and forecast cash requirements of the business: the
approximate six-month working capital cycle which needs to be provided for;
• Debt: some negative covenants could restrict the payment of
dividends in the event the Company were to secure external funding;
• Capital expenditure initiatives: expansion capital required to
grow the business and continue to extend the life of the SDO;
• Metal prices and Rand / Dollar exchange rate: fluctuations in
prices can have a major impact on the Company's results, especially with
lengthy payment terms.
• Legal considerations: Bermudan law permits a company to declare
or pay a dividend provided the liquidity and solvency requirements are met;
and
• Sustainability: the Company's ability to continue annual
dividend payments.
The Board has committed to review the dividend policy in the new financial
year and any changes will be communicated to shareholders in due course.
Further to the dividends paid to shareholders, in accordance with the
Company's EDEP whereby eligible employees receive an equivalent dividend paid
on shares bought back by the Company in the market and ring-fenced for the
EDEP, a total of ZAR10.4 million ($0.7 million) was paid out under the EDEP
during the financial year.
Transactions in Own Shares
One of the Company's strategic goals is to return capital to shareholders and
to continue to review opportunities to do so, as and when they arise.
At the commencement of the financial year, shares in the Company were valued
at 120p per Ordinary Share and at the close of FY2022, the share price had
depreciated 27% to 88p per Ordinary Share, largely influenced by the
macroeconomic and geopolitical environment. Although most of the factors
influencing the share price are outside of the Company's control, management
do monitor it closely and will continue to manage the business in the best way
possible to maximise shareholder value.
Options over 2,385,000 Ordinary Shares were exercised by various persons
displaying management responsibilities ("PDMRs") and employees which vested
from bonus shares awarded to them in August 2018. 1,066,850 of the vested
bonus shares were repurchased to satisfy the tax liabilities of PDMRs and
certain employees, and an additional 806,580 shares were bought back from
various employees. All shares awarded came from Treasury. In addition, the
Company bought back into Treasury a total of 263,724 shares at the 30-day VWAP
of 100.7725p per share from certain employees and a PDMR where the shares had
been awarded to the sellers under the Sylvania Platinum Award Scheme permitted
to be sold back during the specified periods of March and September.
During H2 FY2022, the Company concluded its third Share Buyback programme in
which it bought back 6,590,923 shares in the market at the average price of
85.93p per share, equating to $7,119,941.
The Company was notified that three of its Non-Executive Directors, namely
Adrian Reynolds, Simon Scott and Eileen Carr, had each purchased 20,000
Ordinary Shares in the Company on market. Consequently, Adrian's and Simon's
shareholdings in the Company total 20,000 Ordinary Shares each and Eileen's
shareholding totals 70,000 Ordinary Shares, representing 0.007%, 0.007% and
0.026% of the Company's total number of Ordinary Shares with voting rights.
During the financial year, a total of 6,000,000 Ordinary Shares held in
Treasury were cancelled. Following the above transactions, the Company's
issued share capital is 280,155,657 Ordinary Shares, of which a total of
14,024,869 Ordinary Shares are held in Treasury. Therefore, the total number
of Ordinary Shares with voting rights is 266,130,788.
Appointment of Directors
Sylvania announced during the financial year that it had appointed Adrian
Reynolds and Simon Scott as Independent, Non-Executive Directors effective 1
August 2021 and 1 January 2022 respectively. Roger Williams stepped down from
his role as Non-Executive Director effective 31 December 2021 after serving on
the Board of the Company since 2011.
As a result of the Directorate changes, and as part of a Board succession
plan, the following changes in committee roles were effected: Eileen Carr was
appointed Chair of the Audit Committee, Adrian Reynolds was appointed Chair of
the Remuneration Committee and Simon Scott has become a member of the Audit
Committee. Eileen Carr's role as Assistant Company Secretary is now being
carried out by a member of the Company's in-house legal staff.
E. ENVIRONMENT, SOCIAL AND GOVERNANCE ("ESG")
This year, for the first time, the Company has prepared a standalone ESG
report, Embedding our Strategy, which seeks to present the Company's
operational and non-financial performance to stakeholders in a meaningful way,
illustrating how material issues are managed. As a value-driven Company,
sustainability is fundamental to the way business is run, and it underpins the
Company's ESG strategy. Sylvania is committed to making a positive
contribution to the lives of its employees, the industry and host communities.
Sylvania's ESG journey follows a pathway that began with identifying and
activating the drivers of ESG, gathering baseline information on potential
material risks to ensure that future targets are based on verifiable
information and assumptions. The transition phase included designing an ESG
strategy and reporting framework. Finally, ESG was embedded throughout
Sylvania's business strategy, identifying and including ESG in the Sylvania
strategic risk register. This ensures that mitigation strategies for risks or
opportunities linked to ESG elements are prioritised.
The mining and processing sector is increasingly in the spotlight in terms of
its potential operational hazards and its impact on the environment, employees
and communities. As a mineral re-processor the Company takes its
responsibilities to the planet and its people as seriously as it does its
duties and obligations to customers and shareholders. Sylvania believes a
sustainable business in the industry is one with a diverse and inclusive
workforce where employees can thrive; and one which acts in a responsible
manner, reducing its impact on the environment and benefiting the communities
in which it operates. The Company's approach aligns with the ten principles
for sustainable development outlined by the International Council on Mining
and Metals ("ICMM"), which integrate with the 17 United Nations Sustainable
Development Goals ("UNSDGs").
This year, from an environmental perspective, the ESG report focuses on
climate action, water security and stewardship as well as tailings management
and rehabilitation. Socially, focus was on female empowerment, workforce
diversity and labour practises, employee participation and representation,
employee safety and health, training and development, communities, customers
and local stakeholder relationships as well as gender-based violence. In terms
of governance, focus was on process and code of conduct, sustained resources,
growth and diversification, stakeholders and engagement, as well as economic
contribution. Further details are outlined in the Company's report, ESG:
Embedding our Strategy.
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
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 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
EDEP Employee Dividend Entitlement Programme
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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