REG - Sylvania Platinum - Chrome Ore & PGM Treatment Joint Venture Agreement

Sylvania PlatinumAnnouncement

09/08/2023 07:00

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RNS Number : 7743I  Sylvania Platinum Limited  09 August 2023

 
 

 

 

 

 
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9 August 2023

 

 

Sylvania Platinum Limited

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

 

Chrome Ore and PGM Treatment Joint Venture Agreement

 

 

Sylvania (AIM: SLP), the platinum group metals ("PGM") producer and developer,
with assets in South Africa, is pleased to announce that its wholly owned
South African subsidiary, Sylvania Metals (Pty) Limited ("Sylvania Metals"),
has entered into an unincorporated Joint Venture Agreement ("JV") with Limberg
Mining Company (Pty) Limited ("LMC"), a subsidiary of ChromTech Mining Company
(Pty) Limited ("ChromTech"). The JV will process PGM and chrome ores from
historical tailings dumps and current arisings ("Mining Area") from the
Limberg Chrome Mine, located on the northern part of the Western Limb of the
Bushveld Complex, South Africa. The JV will trade and operate under the name
Thaba Joint Venture ("Thaba JV").

 

The Thaba JV represents a major step in delivery of Sylvania's growth strategy
and is a significant step forward for Sylvania Metals in expanding its
operations and leveraging its expertise in the recovery of chrome and PGM
concentrates, adding attributable production of approximately 6,500 4E PGM
ounces and introduce 200,000 tons of chromite concentrate to Sylvania Metals'
existing annual production profile.

 

Highlights

 * Sylvania Metals has entered into a 50:50 JV agreement to recover chromite and
PGM concentrates from run-of-mine ores and historical tailings deposited on
the Tailings Storage Facility ("TSF") at the Limberg Chrome Mine;

 * New processing infrastructure will include a new secondary fine chromite and
PGM beneficiation plant;

 * Sylvania Metals will share equally in both the PGM and chromite concentrate
revenue and it is estimated that the Thaba JV will produce approximately
13,000 4E PGM ounces (approximately 15,500 6E PGM ounces) and 400,000 tons of
metallurgical grade chromite concentrate per year over the initial 10 years of
the JV, which the parties may negotiate to further extend;

 * The Thaba JV will increase forecast annual production of 4E PGM ounces by
approximately 9% and add chrome to the Company's commodity portfolio;

 * The capital and establishment costs ("Upfront Capex") at the Thaba JV of
approximately ZAR600 million (̴̴̴̴̴̴̴ $32 million) will initially be
funded by Sylvania Metals from its existing cash resources.  The initial
working capital facility required by the Thaba JV following commissioning will
be advanced by Sylvania Metals (̴̴̴̴̴̴̴ $5 million);

 * Sylvania Metals will manage the Thaba JV on behalf of the partners who will
collectively apply their respective PGM and chrome expertise to maximise
recovery efficiencies and production;

 * The project execution phase will be 18-24 months with first production
expected in H2 FY2025;

 * Attractive investment return indicated on the Thaba JV, exceeds Company IRR
hurdle rate of at least 20% per annum and with a cash pay back within three
years of commissioning, based on current long term consensus pricing, and

 * The first PGM beneficiation facility on primary chrome ore and tailings on the
northern part of the Western Limb of the Bushveld Complex and will be an
enabler for further growth opportunities in the region.

 

Jaco Prinsloo, CEO of Sylvania, said: "The Thaba JV combines the strengths
and expertise of both companies in the mining and processing industry -
Sylvania Metals has a proven track record in the recovery, sale, and
distribution of PGMs, while LMC contributes ChromTech's extensive experience
of chrome operations, with particular expertise in fine chrome beneficiation.
We are looking forward to collaborating with LMC, who will provide access
rights to the Mining Area and brings its knowledge and skills in mining and
processing operations to ensure the production of low-cost, high-grade
chromite concentrate and PGMs from the Middle Group Reef on the north of the
Western Limb of the Bushveld Complex in South Africa.

 

"We are excited about the prospects of the Thaba JV to create substantial
value for our shareholders, and to add chrome to our portfolio of commodities,
whilst strengthening our PGM production. The Thaba JV will add an attributable
production of approximately 6,500 4E PGM ounces and 200,000 tons of chromite
concentrate to Sylvania Metals' existing production profile and offers an
attractive investment return on the project that exceeds our Company IRR
hurdle rate of at least 20%, along with a cash pay back of less than three
years from commissioning, based on current long term consensus pricing.

 

"The establishment of the JV holds significant potential for Sylvania as it
aligns with the Company's growth strategy and enhances its position in the
mining and processing industry. The JV will enable Sylvania Metals to access
valuable resources, expand its production capabilities, and strengthen its
distribution channels for target products, ultimately driving value for the
Group and its stakeholders."

Jono Gay, CEO of LMC, said: "The establishment of the Thaba JV is a
ground-breaking collaboration between industry leading operators that is
anticipated to generate sustainable value for all stakeholders. LMC eagerly
anticipates the formation of this long-lasting partnership with Sylvania
Metals. Both our companies share a philosophy for unwavering excellence,
underpinned by our collective commitment to Environmental, Social and
Governance principles. With this JV, we are poised to unlock LMC's potential
and position it as a key growth engine within the ChromTech Group.  In light
of our continued business diversification into open-cast chrome and PGM
mining, LMC, the most recent acquisition of the ChromTech Group, represents an
essential growth area for our company."

 

Figure 1: Location of Thaba JV in comparison to other Sylvania Platinum assets

 

 

Details of the Joint Venture Agreement

 

The LMC Thaba Chrome Mine is an established open cast chrome mine on the
northern part of the Western Limb of the Bushveld Complex with approximately
two million tons of existing chrome tailings and an existing Run of Mine
("ROM") chrome beneficiation plant. LMC has been under voluntary business
rescue since late 2020, impacted by COVID-19, lower chrome market prices and
illegal mining activities that have since been fully resolved. The mine is
currently in production and marketing LG6 chrome ore. The mine has a 30-year
mining right which was issued during 2010 for both chrome and PGMs and all
operations will take place under the existing LMC permits and regulatory
approvals.

 

The Thaba JV will treat a combination of approximately 50,000 tons per month
ROM ore and 16,000 tons per month historical chrome tailings dump material
from LMC's Thaba Mine and will produce approximately 13,000 4E PGM ounces (
̴̴̴̴̴̴̴ 15,500 6E PGM ounces) and 400,000 tons of chromite concentrate
per year over the initial 10 years (50% attributable to Sylvania Metals). The
addition of 6,500 attributable 4E PGM ounces will increase the Company's
estimated annual production by approximately 9%.

 

The JV will construct new secondary fine chrome and PGM beneficiation plants
which are anticipated to commence commissioning within approximately 18 months
from 1 September 2023 with first production and sales expected during H2
FY2025. These beneficiation plants will be similar to those at the Mooinooi
Sylvania Dump Operations in terms of circuit configuration and technology and
therefore the Company is confident it can replicate its previously established
and tested methods and utilise its expertise to maximise both production and
deliver value for all stakeholders.

The Thaba JV agreement provides for an equal 50% participation interest for
Sylvania Metals and LMC, allowing for a fair distribution of profits generated
from the operations conducted by the Thaba JV. Both parties will share in the
revenue, costs and ultimately profit generated by the Thaba JV.

 

The total capital expenditure (inclusive of all engineering fees, costs, and
expenses) required to undertake and complete the Build Project is
provisionally budgeted at ZAR600 million (̴̴̴̴̴̴̴ $32 million). This
will initially be funded by Sylvania Metals from its existing cash resources
and will be spent over the 18-24 months of the Build Project. Ultimately, the
JV partners will contribute equally to all capital costs except the Upfront
Capex, subject to the final Build Project Budget approved by the JV Board.
LMC's 50% portion of the Upfront Capex will be funded by way of a loan from
Sylvania Metals. The loan will bear interest linked to the South African Prime
Lending rate (currently 11.75%) and will be repaid to Sylvania Metals in equal
quarterly instalments commencing on the first anniversary of the commissioning
of the PGM and chrome plants. Repayments will be made from LMC's attributable
profits of the JV, and any shortfall will be funded by LMC. In case of an
Event of Default, Sylvania has the right to demand immediate repayment or
claim specific performance from LMC.

 

The loan advanced to LMC will be secured by means of a Special Notarial Bond
to be registered over the existing two million tons chrome tailings resources.
Additionally, Sylvania Metals shall, on a revolving credit basis at a similar
interest rate, fund the approximate $5 million working capital and operating
expenditure requirements, together with all other business and operational
costs, of the JV in compliance with the relevant approved budget and any
applicable capital expenditure programmes for a maximum period of 24 months if
required.

 

LMC will perform all mining activities and will supply both ROM ore and chrome
tailings material to the JV according to a Material Supply Agreement, while
Sylvania Metals is appointed as the JV Manager and will operate the chrome and
PGM plants under a Management Services Agreement. Marketing of the chromite
concentrate and PGMs will be undertaken by the JV partners and profits shared
equally. The Thaba JV will comprise a Board made up of an equal number of
representatives from each JV partner. While the initial agreed duration of
the JV Agreement is 10 years from the date of first production, the parties
could negotiate in good faith to further extend the term to benefit from the
remaining life of the Thaba Chrome Mine.

 

Inside information

 

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.

 

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                             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/)

 

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