REG - Sylvania Platinum - Fourth Quarter Report to 30 June 2022
28/07/2022 07:00
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RNS Number : 0548U Sylvania Platinum Limited 28 July 2022
_________________________________________________________________________________________________________________________
28 July 2022
Sylvania Platinum Limited
("Sylvania", the "Company" or the "Group")
Fourth Quarter Report to 30 June 2022
Sylvania (AIM: SLP) announces its results for the quarter ended 30 June 2022 ("Q4" or the "quarter"). Unless otherwise stated, the consolidated financial information contained in this report is presented in United States Dollars ("USD" or "$").
Achievements
* Sylvania Dump Operations ("SDO") achieved 18,837 4E PGM ounces in Q4 (Q3:
15,840 ounces), making a strong contribution towards a total 67,053 4E PGM
ounces achieved for FY2022;
* SDO recorded $34.9 million net revenue for the quarter (Q3: $47.9 million),
reflecting a 22% lower PGM basket price received during the quarter;
* Group EBITDA of $16.8 million (Q3: $30.0 million);
* Group cash balance of $121.3 million, after payment of the windfall dividend,
share buyback and year-end taxes (Q3: $138.0 million);
* 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 SA;
* Tweefontein operation achieved record monthly, quarterly and annual PGM
production performance; and
* Sale of Grasvally Chrome Mine (Pty) Ltd became unconditional 8 July 2022
.
Challenges
* PGM feed grade of ROM ore from the host mine at Mooinooi has improved during
the past quarter, but remains a focus area to ensure output ounce targets are
achieved in the future; and
* The effect of high global inflation and uncertainty continues to impact the
cost of reagents, fuel and transport.
Opportunities
* Tweefontein MF2 project is currently in execution and expected to contribute
to production ounces from early in the 2023 calendar year;
* Lannex MF2 opportunity was assessed and a project was initiated during the
past quarter to target commissioning of a new MF2 plant towards the end of the
2023 calendar year; and
* The Group maintains strong cash reserves to allow funding of capital expansion
and process optimisation projects, upgrading the Group's exploration and
evaluation assets and to return value to shareholders.
Commenting on the Q4 results, Sylvania's CEO, Jaco Prinsloo said:
"I am very pleased with the strong finish to the financial year where the SDO
achieved 18,837 ounces for the quarter. The strong performance was achieved
on the back of a solid production effort from all operations, especially
Tweefontein plant which achieved record monthly and quarterly PGM ounces,
improved ROM PGM feed grade received from the host mine at Mooinooi and the
contribution of the recently commissioned Lesedi MF2 circuit also added to our
performance."
"The 22% lower PGM basket price received during the quarter impacted both the
4E revenue as well as the sales adjustment for the quarter. Consequently,
revenues and profits were lower, but still resulted in a strong cash position
after the payment of the windfall dividend, taxes and share buybacks during
the period."
"On the cost front, SDO cash costs decreased 13% in rand and 15% in dollar
terms, benefitting from the higher ounces produced, but operations are still
navigating higher global cost inflation impacts and thus operating cost focus
will remain a priority."
"Despite the challenges faced over the past few quarters, I am pleased with
the significantly improved production performance of the SDO for Q4. The
Company was therefore able to achieve a PGM production of 67,053 ounces for
FY2022 to meet the mid-range of our earlier stated guidance for the year."
USD Unit Unaudited Unit ZAR
Q3 FY2022 Q4 FY2022 % Change % Change Q4 FY2022 Q3 FY2022
Production
561,110 647,249 15% T Plant Feed T 15% 647,249 561,110
1.98 2.04 3% g/t Feed Head Grade g/t 3% 2.04 1.98
300,869 331,578 10% T PGM Plant Feed Tons T 10% 331,578 300,869
3.17 3.30 4% g/t PGM Plant Feed Grade g/t 4% 3.30 3.17
51.59% 53.49% 4% % PGM Plant Recovery % 4% 53.49% 51.59%
15,840 18,837 19% Oz Total 4E PGMs Oz 19% 18,837 15,840
20,080 23,751 18% Oz Total 6E PGMs Oz 18% 23,751 20,080
3,327 2,589 -22% $/oz 4E Gross basket price(1) R/oz -20% 40,361 50,654
Financials(2)
38,462 34,397 -11% $'000 Revenue (4E) R'000 -8% 536,161 585,639
3,004 3,232 8% $'000 Revenue (by-products including base metals) R'000 10% 50,381 45,743
6,415 -2,683 -142% $'000 Sales adjustments R'000 -143% -41,825 97,671
47,881 34,946 -27% $'000 Net revenue R'000 -25% 544,717 729,054
12,000 12,175 1% $'000 Direct operating costs R'000 4% 189,782 182,767
4,955 3,600 -27% $'000 Indirect operating costs R'000 -26% 56,107 75,469
751 758 1% $'000 General and administrative costs R'000 3% 11,816 11,442
30,009 16,787 -44% $'000 Group EBITDA R'000 -43% 261,678 456,929
424 499 18% $'000 Net Interest R'000 20% 7,781 6,459
21,165 13,817 -35% $'000 Net profit R'000 -33% 215,384 322,275
4,241 4,350 3% $'000 Capital Expenditure R'000 5% 67,810 64,580
-
138,037 121,268 -12% $'000 Cash Balance R'000 -2% 1,985,958 2,020,382
-
R/$ Ave R/$ rate R/$ 2% 15.59 15.23
R/$ Spot R/$ rate R/$ 12% 16.38 14.64
Unit Cost/Efficiencies
758 646 -15% $/oz SDO Cash Cost Per 4E PGM oz(3) R/oz -13% 10,075 11,538
598 513 -14% $/oz SDO Cash Cost Per 6E PGM oz(3) R/oz -12% 7,990 9,102
938 794 -15% $/oz Group Cash Cost Per 4E PGM oz(3) R/oz -13% 12,390 14,287
740 630 -15% $/oz Group Cash Cost Per 6E PGM oz(3) R/oz -13% 9,826 11,270
1,141 911 -20% $/oz All-in sustaining cost (4E) R/oz -18% 14,205 17,368
1,379 1,108 -20% $/oz All-in cost (4E) R/oz -18% 17,269 21,002
The Sylvania cash generating subsidiaries are incorporated in South Africa
with the functional currency of these operations being ZAR. Revenues from
the sale of PGMs are incurred in USD and then converted into ZAR. The
Group's reporting currency is USD as the parent company is incorporated in
Bermuda. Corporate and general and administration costs are incurred in USD,
GBP and ZAR.
(1 ) The gross basket price in the table is the June 2022 gross 4E
basket used for revenue recognition of ounces delivered in Q4 FY2022, before
penalties/smelting costs and applying the contractual payability.
(2 ) Revenue (6E) for Q4, before adjustments is $37.6 million (6E
prill split is Pt 52%, Pd 19%, Rh 9%, Au 0.3%, Ru 16%, Ir 4%). Revenue
excludes profit/loss on foreign exchange.
(3 ) The cash costs include direct operating costs and exclude
indirect cost for example royalty tax and EDEP payments.
A. OPERATIONAL OVERVIEW
Health, safety and environment
The Company is pleased to report that no significant occupational health or
environmental incidents occurred during the quarter. The Doornbosch
operation achieved a phenomenal ten-years Lost-time Injury ("LTI") free during
June 2022 and the operation received an industry award from the Mine
Metallurgical Managers Association for the best achievement in the Small Plant
category. Both Lesedi and Doornbosch have exceeded two-years LTI-free, and all
SDO were LTI-free for the quarter.
Operational performance
The SDO delivered 18,837 4E PGM ounces for the quarter, a 19% increase
quarter-on-quarter as the new Lesedi MF2 circuit and Mooinooi grade
improvements, together with Tweefontein's record performance for the quarter,
increased output at the plants.
The increased PGM ounce production was achieved through a combination of 10%
higher PGM feed tons attributable to Lesedi's throughput which stabilised
after tailings-related interruptions during previous quarters. A 4% PGM feed
grade and 4% recovery efficiency improvement during the quarter also
contributed to the increase in ounces. The PGM feed grades improved through
collaboration with the host mine to improve the feed grade from ROM ore
sources, while the post-commissioning optimisation of the Lesedi MF2 circuit
and reagent optimisation at Lannex assisted to improve the PGM recovery
efficiency at those two plants. Tweefontein in particular had an excellent
production quarter, achieving both record monthly PGM ounces in June 2022 and
record quarterly production for Q4, resulting in FY2022 being a record year
for the flagship operation.
SDO operating cash costs per 4E PGM ounce decreased 13% in rand and 15% in
dollar terms quarter-on-quarter to ZAR10,075/ounce and $646/ounce (Q3:
ZAR11,538/ounce and $758/ounce). The higher ounce production had a positive
influence on unit costs while reagent price increases, transport costs and
fuel price increases continued to impact on operating costs. The average
ZAR:USD exchange rate depreciated by 2% during the quarter.
The Group incurred capital expenditure of ZAR67.8 million ($4.4 million),
which is aligned with planned capital project schedules. A significant
portion was spent on the construction of the Lesedi TSF and newly commissioned
Lesedi MF2 projects. In addition, funds were spent on the new Mooinooi and
Doornbosch TSFs as well as the Tweefontein MF2 project.
Operational focus areas
The new Lesedi TSF was successfully commissioned during March 2022 with the
new MF2 tailings pipeline and infrastructure feeding the dam, together with
the return water system to the plant, also being successfully commissioned and
are now operational. The optimisation of the Lesedi MF2 plant is continuing
and management's focus is on improving recovery efficiencies and resultant
ounce contribution.
The ROM PGM feed grade from the host mine at Mooinooi has increased
significantly over the past quarter following various collaborative efforts on
site during recent months. PGM plant performance has also consequently
improved. Focus remains on tracking the source and quality of material being
received to ensure production targets are achieved and maintained into the
future.
Operational opportunities
Operational opportunities include technical focus on improving recoveries and
cost saving initiatives at all operations. In addition, the completion of
construction and commissioning of the Tweefontein MF2 by the end of the 2022
calendar year is further expected to contribute towards improved PGM recovery
efficiencies and ounces.
Impact of COVID-19 and South African Government imposed lockdown regulations
During the quarter, the lockdown regulations imposed on South Africa were
lifted as the country emerged from its fifth wave of coronavirus infections.
Consequently, the mandatory requirement to wear masks in public was removed
and the limitations imposed on gatherings was ended. The Company reported no
active cases of COVID-19 during the quarter and thus remains at a total of 142
infections reported since the start of the pandemic.
While all regulations have been lifted, Sylvania continues to encourage
responsible behaviour amongst employees and will continue to monitor the
situation and to implement measures for both the corporate office and
operations to limit interaction and exposure where possible.
B. FINANCIAL OVERVIEW
Financial performance
Despite the higher ounce production, revenue (4E) for the quarter decreased
11% to $34.4 million (Q3: $38.5 million) on the back of the 22% lower basket
price recorded in June and applied to calculate revenue for ounces produced
and delivered in the quarter but only invoiced in Q1 FY2023. The average 4E
gross basket price for Q4 was $2,589/ounce against $3,327/ounce in Q3. Net
revenue for the quarter, which includes base metals and by-products, and the
quarter-on-quarter sales adjustment as a result of the lower basket price was
$35.0 million (Q3: $47.9 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 13% in rand from
ZAR14,287/ounce to ZAR12,390/ounce and decreased 15% in dollar terms from
$938/ounce in the previous quarter to $794/ounce during Q4.
General and administrative costs increased slightly quarter-on-quarter from
$0.75 million to $0.76 million. These costs are incurred in USD, GBP and ZAR
and are impacted by the exchange rate fluctuations over the reporting period.
Group EBITDA decreased from $30.0 million to $16.8 million and net profit
decreased from $21.2 million to $13.8 million, primarily as a result of the
decrease in the basket price.
The Group cash balance decreased from $138.0 million to $121.3 million during
the quarter. Cash generated from operations before working capital movements,
was $18.8 million with net changes in working capital amounting to a decrease
of $0.1 million. Dividend withholding tax of $1.1 million was paid during Q4
and provisional income tax and mineral royalties' taxes of $14.3 million were
paid at the end of June 2022 at rates of 28% and 7% respectively. The Group
spent $4.4 million on capital during the current quarter and paid $8.3 million
as a windfall dividend in April 2022. A total of $7.1 million was spent on the
share buyback programme in the quarter. The 12% depreciation of the spot ZAR
exchange rate against the USD quarter-on-quarter had a $5.0 million negative
effect on the cash held at quarter end.
C. MINERAL ASSET DEVELOPMENT
Volspruit Project
The Volspruit Project technical report is expected to be completed during Q2
FY2023. It will include a new mineral resource estimate based on further
borehole information and a new orebody model. It will also include ore reserve
conversion based on a mining study to pre-feasibility level as well as a
scoping level assessment of the planned processing plant and related
infrastructure.
The outstanding metallurgical test work for PGM flotation is expected to be
completed during Q1 FY2023.
The Preliminary Economic Assessment, slightly delayed by a change in scope,
will be completed by end Q1 FY2023 (September 2022).
The final reporting for the environmental field studies completed during Q2
and required for the amendment of the Environment Impact Assessment ("EIA")
and the Water Use Licence Application ("WULA"), is expected to be completed
during the first quarter of FY2023. The drafting for the amendment to the
approved EIA and the WULA continue concurrently, and the applications are due
to be submitted to the relevant authorities during the Q2 FY2023.
Further work will be carried out in the forthcoming financial year to progress
the feasibility status of the processing plant and TSF to allow for a JORC
compliant Ore Reserve and increased confidence in the feasibility status of
the entire opportunity.
Northern Limb Projects
All core logging of recently-drilled boreholes for the target area, (which
represents approximately 10% of the overall Northern Limb deposit strike
length), is complete, including the relogging programme reported in Q3. The
Quality Assurance and Quality Control ("QAQC") procedures have been completed
to measure and assure the quality of the product during the period. The
final stage requiring the interpretation and modelling of the data collected
during the current programme for a resource estimation over the first target
area will be completed during August 2022. The results of the resource
estimation will be released when available.
Based on the findings from the initial study and results from the first target
area, the same study philosophy is planned to be applied to two to three
additional target areas during the next financial year, contributing towards
increasing and improving the overall mineral resource for the Northern Limb
project.
Grasvally
Post period end the Company reported on 11 July 2022 that 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. 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
Share Buyback and Cancellation
During the period, the Company announced a Share Buyback up to a total value
of $8.5 million. The purpose of the Share Buyback was to reduce the share
capital of the Company and all Ordinary Shares purchased would be cancelled.
There was no guarantee that the Share Buyback would be implemented in full or
that any repurchases would be made, however, at the end of the period, the
Company had bought back a total of 6,590,923 shares at the average price of
85.93 pence per share, equating to $7.1 million.
On 27 June 2022, the Company announced that 6 million Ordinary Shares held in
Treasury were cancelled. Following these 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 in Sylvania is 266,130,788 Ordinary Shares.
Notice of Transactions by PDMRs
The Company was notified during the period that two of its Non-Executive
Directors, namely Simon Scott and Eileen Carr, had each purchased 20,000
Ordinary Shares in the Company. Following these transactions, Simon's
shareholding in the Company totals 20,000 Ordinary Shares, and Eileen's
shareholding totals 70,000 Ordinary Shares, representing a respective 0.007%
and 0.026% of the Company's 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
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
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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