REG - Sylvania Platinum - First Quarter Report to 30 September 2023
25/10/2023 07:00
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RNS Number : 2341R Sylvania Platinum Limited 25 October 2023
25 October 2023
Sylvania Platinum Limited
("Sylvania", the "Company" or the "Group")
First Quarter Report to 30 September 2023
Sylvania (AIM: SLP), the platinum group metals ("PGM") producer and developer with assets in South Africa, announces its results for the three months ended 30 September 2023 (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 20,173 4E (25,533 6E) PGM ounces in
Q1 (Q4 FY2023: 19,072 4E (24,383 6E) PGM ounces), in line with guidance for
the Quarter;
* No Lost-Time Injuries ("LTIs") were recorded during the Quarter;
* SDO recorded $19.7 million net revenue for the Quarter (Q4 FY2023: $24.4
million);
* Group EBITDA of $2.8 million (Q4 FY2023: $7.8 million);
* Lannex MF2 flotation circuit commissioned with optimisation well advanced;
* Improved recoveries are expected at the completion and commissioning of the
Lannex fine grinding circuit; and
* The Thaba Joint Venture ("Thaba JV") project execution is progressing as
planned and ordering of long-lead time items and first construction packages
are in progress.
Outlook
* Commissioning of the Lannex fine grinding circuit expected by the end of Q2
FY2024;
* Continuous operational performance improvements relating to the optimisation
of feed sources, throughput, recoveries, and cost saving initiatives
implemented;
* An updated Mineral Resource Estimate ("MRE") statement for both Volspruit
North and South orebodies is currently under review;
* Preliminary Economic Assessment ("PEA") for the entire Volspruit project,
along with the results from the metallurgical test-work are expected during H2
FY2024; and
* The Group maintains strong cash reserves, which increased 2% in the Quarter to
allow funding of expansion and joint venture ("JV") initiatives, process
optimisation capital, upgrading of the Group's exploration and evaluation
assets with the potential to return value to shareholders.
Commenting on the results, Sylvania's CEO, Jaco Prinsloo, said:
"I am happy with the good start to the new financial year where the SDO
achieved 20,173 4E PGM ounces for the Quarter. This performance was achieved
on the back of a solid production effort from all operations, with all plants
exceeding production throughput targets, as well as the contribution of the
new Lannex flotation MF2 circuit that also added to our performance.
"The 15% lower PGM basket price recorded during the Quarter impacted both the
4E revenue as well as the sales adjustment for the Quarter. Consequently,
revenues and profits were lower than in Q4 FY2023, nonetheless, the Company
maintained a strong cash position.
"On the cost front, SDO cash costs decreased 3% in both rand and dollar terms,
benefiting from the higher ounces produced compared with Q4 FY2023. Operations
continue to navigate higher global cost inflation impacts and thus operating
cost focus remains a top priority for management.
"The Thaba JV announced during the Quarter represents a key milestone in
Sylvania's growth strategy and is a significant step forward for Sylvania
Metals in expanding our operations and leveraging the Group's expertise in the
recovery of chrome and PGM concentrates. The orders of long-lead time items
and first construction packages are in progress with civil construction works
expected to commence in Q2 FY2024. Additionally, an updated MRE statement for
both Volspruit North and South orebodies is currently under review. The PEA
for the Volspruit project, along with the results from the metallurgical
test-work are expected during H2 FY2024. The optimisation of value from the
exploration assets remains a key component of Sylvania Platinum's growth
strategy and will aid in supporting the Company's future value proposition for
all stakeholders."
Operational and Financial Summary
Production Unit Q4 FY2023 Q1 FY2024 % Change
Plant Feed T 702,236 666,824 -5%
Feed Head Grade g/t 1.81 1.93 7%
PGM Plant Feed Tons T 359,658 358,602 0%
PGM Plant Feed Grade g/t 2.89 2.94 2%
PGM Plant Recovery(1) % 57.01% 56.71% -1%
Total 4E PGMs Oz 19,072 20,173 6%
Total 6E PGMs Oz 24,383 25,533 5%
Unaudited USD ZAR
Unit Q4 FY2023 Q1 FY2024 % Change Unit Q4 FY2023 Q1 FY2024 % Change
Financials(3)
Average 4E Gross Basket Price(2) $/oz 1,581 1,344 -15% R/oz 29,524 25,069 -15%
Revenue (4E) $'000 21,826 19,631 -10% R'000 407,707 366,112 -10%
Revenue (by-products including base metals) $'000 3,454 3,303 -4% R'000 64,526 61,607 -5%
Sales adjustments $'000 (859) (3,201) 273% R'000 (16,056) (59,700) 272%
Net revenue $'000 24,421 19,733 -19% R'000 456,177 368,019 -19%
Direct Operating costs $'000 12,577 12,886 2% R'000 234,945 240,323 2%
Indirect Operating costs $'000 2,939 3,226 10% R'000 54,899 60,159 10%
General and Administrative costs $'000 701 699 0% R'000 13,095 13,036 0%
Group EBITDA $'000 7,806 2,818 -64% R'000 145,816 52,556 -64%
Net Interest $'000 1,642 -8% R'000 33,325 30,623 -8%
1,784
Net Profit(4) $'000 3,136 1,802 -43% R'000 58,580 33,607 -43%
Capital Expenditure $'000 6,185 3,218 -48% R'000 115,537 60,013 -48%
Cash Balance(5) $'000 124,983 126,865 2% R'000 2,360,929 2,402,823 2%
Ave R/$ rate R/$ 18.68 18.65 0%
Spot R/$ rate R/$ 18.89 18.94 0%
Unit Cost/Efficiencies(4)
SDO Cash Cost per 4E PGM oz(4) $/oz 660 639 -3% R/oz 12,319 11,913 -3%
SDO Cash Cost per 6E PGM oz(4) $/oz 516 505 -2% R/oz 9,636 9,412 -2%
Group Cash Cost Per 4E PGM oz(4) $/oz 824 782 -5% R/oz 15,392 14,584 -5%
Group Cash Cost Per 6E PGM oz(4) $/oz 645 618 -4% R/oz 12,049 11,526 -4%
All-in Sustaining Cost (4E) $/oz 881 830 -6% R/oz 16,446 15,476 -6%
All-in Cost (4E) $/oz 1,159 959 -17% R/oz 21,642 17,894 -17%
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 recorded 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 include
the work-in-progress ounces when applicable.
(2) The gross basket price in the table is the September 2023 gross 4E basket
used for revenue recognition of ounces delivered in Q1 FY2024, before
penalties/smelting costs and applying the contractual payability.
(3) Revenue (6E) for Q1 FY2024, before adjustments is $22.7 million (6E pill
split is Pt 53%, Pd 17%, Rh 9%, Au 0%, Ru 16%, Ir 5%). Revenue excludes
profit/loss on foreign exchange.
(4 ) The cash costs include operating costs and exclude indirect cost for
example royalty tax and EDEP payments.
(5 ) Q1 FY2024 cash balance includes restricted cash held as guarantees of
$0.8 million.
A. OPERATIONAL OVERVIEW
Safety, health and environment
The safety, health and environmental ("SHE") performance for this period has
again been impressive, driven by the concerted focus on compliance. The Group
is proud to report that there were no significant SHE related incidents
reported during this time.
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. Sylvania continuously strives 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 through the collaborative
efforts of management and employees. The 'Make It Personal' campaign is still
in full swing and will be supported by the launch of the 'Silly Season'
campaign in November 2023. Historically, a high number of accidents at mines
are reported during the last quarter of the calendar year. This period is
often challenging from a health and safety perspective and is commonly known
as 'Silly Season/ Critical Season'. Sylvania, therefore, is initiating a
safety campaign with the objective to proactively prevent incidents from
happening, focusing on current issues and challenges with the potential to
cause injuries and fatalities.
Meanwhile, the 'Make It Personal' campaign is designed to improve and maintain
personal safety on site. The Company believes that by making safety a personal
matter that everyone is responsible for, it will become second nature for all.
This will assist to ensure all workers make it home safely, every day, in line
with Sylvania's goal of achieving Zero Harm.
The current lost-time injury frequency rate ("LTIFR") for the financial year
is 0.00 which is a marked improvement from last quarter when two LTIs were
reported.
Operational performance
The SDO delivered 20,173 4E PGM ounces for the Quarter, which was a 6%
improvement on Q4 FY2023. The increased PGM ounces included approximately 995
4E PGM ounces released from stock and was supported by the consistency of the
PGM feed tons and a 2% improvement in PGM feed grade, while PGM recoveries
declined marginally during the period. The slightly lower PGM recovery was
primarily due to Mooinooi and Lesedi experiencing lower recovery efficiencies
associated with current feed sources.
The Lannex MF2 flotation circuit has been commissioned with optimisation well
advanced. The completion of the fine grinding circuit is expected towards the
end of Q2 FY2024. Recovery improvements have been noted with further
improvements expected at the completion and commissioning of the fine grinding
circuit.
SDO operating cash costs per 4E PGM ounce decreased 3% in rand and dollar
terms to ZAR11,913/ounce and $639/ounce respectively (Q4 FY2023:
ZAR12,319/ounce and $660/ounce). The average ZAR:USD exchange rate remained
largely unchanged during the Quarter.
The Group incurred capital expenditure of ZAR60.0 million ($3.2 million), in
line with planned capital project schedules.
Operational opportunities
The Lannex flotation MF2 circuit has been successfully commissioned. With the
construction, completion and commissioning of the fine grinding circuit
scheduled for Q2 FY2024, a further increase in recoveries is expected.
PGM concentrate quality remains a focus area with the potential to improve
smelter payability, as both concentrate grade and metal recoveries contribute
positively towards the revenue stream of the Group. A filtration plant is also
being evaluated to facilitate the conversion to dry filtered concentrate
instead of the current slurry tankers, which would assist in reducing
concentrate transport costs and remediate handling challenges at off-take
smelters.
The effect of load curtailment of power at Lesedi decreased significantly from
the 221 hours downtime recorded in Q4 FY2023 to 81 hours in Q1 FY2024, no
other operations were impacted. In line with the power mitigation strategy,
the Lesedi back-up generator installation is progressing and scheduled for
commissioning during the latter part of Q2 FY2024.
The Company's Pelletiser project, developed with a 'binding technology'
player, continues to make progress. Following the completion of the
pilot-scale work, discussions are still ongoing with potential industry
partners to assess the commercial viability of the technology.
B. FINANCIAL OVERVIEW
Financial performance
Revenue (4E) for the Quarter decreased by 10% to $19.6 million (Q4 FY2023:
$21.8 million) impacted by the 15% decrease in the basket price recorded in
September 2023 and applied to calculate revenue for ounces produced and
delivered in the Quarter. These deliveries are invoiced in the following
quarter and revenue will be adjusted in the month of invoice. The higher
ounces produced in the quarter contributed $1.2 million to the gross revenue.
The average 4E gross basket price for the Quarter was $1,344/ounce against
$1,581/ounce in Q4 FY2023, impacted mainly by the drop in rhodium and
palladium prices in Q1 FY2024.
Net revenue for the Quarter, which includes base metals and by-products and
the quarter-on-quarter sales adjustment, was $19.7 million (Q4 FY2023: $24.4
million). 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 decreased by 5% in rand terms from
ZAR15,392/ounce to ZAR14,584/ounce and saw a 5% decrease in dollar terms from
$824/ounce in the previous quarter to $782/ounce as a result of the 5%
increase in ounce production quarter-on-quarter.
General and administrative costs were unchanged at $0.70 million
quarter-on-quarter. These costs are incurred in USD, GBP and ZAR and were
minimally impacted by the exchange rate as the USD/ZAR exchange
quarter-on-quarter remained aligned.
Group EBITDA for the Quarter was $2.8 million (Q4 FY2023: $7.8 million) and
net profit was $1.8 million (Q4 FY2023: $3.1 million), the decrease was
primarily a result of the lower basket price and increase in total operating
costs.
The Group cash balance increased 2% from $125.0 million (including restricted
cash held as guarantees of $0.8 million) to $126.9 million during the Quarter.
Cash generated from operations before working capital movements was $3.1
million with net changes in working capital amounting to $0.7 million, which
is mainly due to the change in trade debtors and trade creditors. The 15%
decrease in basket price off-set marginally by a 6% increase in production,
resulted in the decrease in the trade debtors balance quarter-on-quarter.
Trade debtors arise from the concentrate delivered in the Quarter but only
paid for in the following quarter as per the concentrate off-take
agreements.
Provisional payments for both mineral royalty tax and income tax are made in
December 2023 in line with the South African tax authority timelines, at an
anticipated rate of 6% - 7% for mineral royalty tax on applicable ounces, and
27% on taxable income in South Africa. A final cash dividend for FY2023 of 5
pence per Ordinary Share was declared and is payable on 1 December 2023 to all
shareholders on the register at the close of business on 27 October 2023. The
Group spent $3.2 million on capital projects for the quarter mainly at Lannex
for the Lansky Screens $0.6 million (ZAR10.8 million); MF2 project $0.4
million (ZAR6.8 million) and elevated penstock and drains $0.2 million (ZAR3.4
million) and at Mooinooi for the recommissioning of the tailings storage
facility $0.2 million (ZAR3.4 million).
C. MINERAL ASSET DEVELOPMENT AND JOINT VENTURES
The Group holds approved mining rights for three PGM-base metal projects on
the Northern Limb of the Bushveld Igneous Complex in South Africa.
Optimisation of the assets has been on-going since 2021 in order to ascertain
how best to develop these projects. An Exploration Results and Resource
Statement was completed during FY2023, and further work continues based on
recommendations made in this report.
Volspruit Project
Work has continued on both the Volspruit North and South orebodies with large
diameter boreholes being drilled on the North in order to better understand
metal recoveries as well as provide the required detail for plant and
infrastructure design to be completed during the Preliminary Feasibility Study
("PFS"). This phase of work will commence upon the completion of a positive
PEA, which is expected in the second half of FY2024. Results from the
metallurgical test-work are expected in the same period.
Updated draft MRE statements for both the North and South ore bodies have been
received and are currently under review. These updated draft statements
include estimates for rhodium and ruthenium which historically have not been
assayed for. Samples collected from the large diameter drilling campaign were
assayed for 6E PGMs and the results statistically analysed against the
historic assay database. Strong relationships exist between the presence of
platinum, palladium, gold, rhodium and ruthenium, which allows for the latter
two PGM values to be predicted from the historical 3E PGM results. It is
anticipated that these statements will be published within the next quarter
once the internal review process has been completed.
Steady progress is being made in the permitting process necessary for the
existing mining right. Local Economic Development projects are gaining
traction with discussions kicking off with the relevant local municipalities.
The Water Use License application for mining and on-site processing operations
and the updated Environmental Impact Assessment submissions are expected to be
made in the first quarter of FY2025, which although later than anticipated,
does allow for a more comprehensive public engagement process to be completed.
Far Northern Limb Projects
Relogging of the historical core continues across the Aurora project area with
more than 75% of the work being completed. Once the final data has been
compiled and assessed a targeted drilling programme will be designed and
implemented. This is likely to occur during the fourth quarter of FY2024 to
support an updated MRE and PEA to be commissioned for Aurora.
As reported in the Statement of Exploration Results, Mineral Resources, and
Scoping Study released in FY2023, some significant results were returned from
the Hacra North underground target. A review of the work undertaken to date
has been finalised and results from the study will be released in the second
quarter of FY2024.
D. THABA JV
On 9 August 2023, the Company announced that its wholly owned South African
subsidiary, Sylvania Metals (Pty) Ltd "Sylvania Metals"), entered into an
unincorporated JV Agreement with Limberg Mining Company (Pty) Ltd ("LMC"), a
subsidiary of ChromTech Mining Company (Pty) Ltd ("ChromTech"), the 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 annual production of approximately 6,500 4E
PGM ounces and introducing 200,000 tons of chromite concentrate to Sylvania
Metals' existing annual production profile. The project execution phase will
be 18-24 months with first production expected in H2 FY2025.
The first contractor is already on site for demolition of redundant works and
to make space at the plant's front-end for new crushing infrastructure and for
the optimisation of conveyor transfers and stockpile capacity. Procurement of
long-lead items and the first construction packages are currently in progress.
The Thaba JV's civil works are on schedule to commence during Q2 FY2024.
E. CORPORATE ACTIVITIES
Notification of Transaction by PDMR
The Company announced on 12 September 2023 that Adrian Reynolds, Non-Executive
Director, purchased 20,000 ordinary shares of $0.01 each in the Company
("Ordinary Shares") at 80.40 pence per Ordinary Share on 11 September 2023.
Following this transaction, his shareholding in the Company totals 40,000
Ordinary Shares, representing 0.01% 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 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. Additionally,
the Thaba JV comprises chrome beneficiation and PGM processing plants,
treating a combination of ROM and historical chrome tailings from the JV
partner, adding a full margin chromite concentrate revenue stream. 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 FY2024
The following definitions apply throughout the period:
3E PGMs 3E ounces include the precious metal elements platinum, palladium and gold
4E PGMs 4E 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 costs All-in sustaining cost plus non-sustaining and expansion capital expenditure
All-in sustaining cost Production costs plus all costs relating to sustaining current production
and sustaining capital expenditure
CLOs Community Liaison Officers
Current arisings 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
GISTM Global Industry Standard on Tailings Management
GRI Global Reporting Initiative
JORC Joint Ore Reserves Committee
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
MRE Mineral Resource Estimate
Mt Million Tons
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
PEA Preliminary Economic Assessment
PFS Preliminary Feasibility Study
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
SHE Safety, health and environmental
SLP Social and Labour Plan
Sylvania Sylvania Platinum Limited, a company incorporated in Bermuda
Sylvania Metals Sylvania Metals (Pty) Limited
tCO2e Tons of carbon dioxide equivalent
Thaba JV Thaba Joint Venture
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
Zero Harm The South African mining industry is committed to the shared aspiration of
achieving the goal of Zero Harm, which aims to ensure that mineworkers return
home from work healthy and unharmed every day
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