REG - Sylvania Platinum - Fourth Quarter Report to 30 June 2023
27/07/2023 07:00
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RNS Number : 3965H Sylvania Platinum Limited 27 July 2023
_____________________________________________________________________________________________________________________________
27 July 2023
Sylvania Platinum Limited
("Sylvania", the "Company" or the "Group")
Fourth Quarter Report to 30 June 2023
Sylvania (AIM: SLP), the platinum group metals ("PGM") producer and developer with assets in South Africa, announces its results for the quarter ended 30 June 2023 ("Q4" or the "quarter"). Unless otherwise stated, the consolidated financial information contained in this report is presented in United States Dollars ("USD" or "$").
Highlights
* Sylvania Dump Operations ("SDO") produced 19,072 4E (24,383 6E) PGM ounces in
Q4 (Q3: 17,926 4E (22,884 6E) PGM ounces);
* SDO produced 75,469 4E (95,965 6E) PGM ounces for FY2023 (FY2022: 67,053 4E
PGM ounces; 85,659 6E PGM ounces)
* Exceeded production forecast for the year, which had previously been increased
from 72,000 to 74,000 4E PGM ounces;
* Paid first interim dividend of 3 pence per Ordinary Share on 6 April 2023;
* SDO recorded $24.4 million net revenue for the quarter (Q3: $26.5 million);
* Group EBITDA of $7.8 million (Q3: $9.8 million);
* Group cash balance of $125.0 million as at 30 June 2023 (Q3: $144.2 million),
the reduction primarily due to periodic tax payments of $13.7 million,
dividend payments of $9.9 million and share buybacks of $3.6 million during
the quarter;
* Doornbosch achieved 11-years Lost-Time Injury ("LTI") free during June 2023;
* Successful commissioning of Tweefontein MF2 improves metal recoveries;
* Optimisation of blending improved results, especially at the Eastern
operations; and
* Pilot-scale work on Pelletizer project completed, the Company is currently
engaging potential industry partners to assess the commercial viability of the
technology.
Outlook
* Re-mining of Dam 6A at the Mooinooi Plant has commenced with the focus on
optimising the blend to ensure the planned grade profile is achieved;
* The commissioning of the Lannex MF2 flotation circuit is expected to commence
in Q1 FY2024, which will further improve PGM recovery efficiencies;
* Continuous operational performance improvements relating to the optimisation
of feed sources, throughput, recoveries, and cost saving initiatives
implemented;
* The updated Mineral Resource Estimate ("MRE") at Volspruit is expected to be
completed during Q1 FY2024, and the Preliminary Economic Assessment ("PEA")
for the entire project is expected during Q3 FY2024; and
* The Group maintains strong cash reserves to allow funding of expansion and
process optimisation capital and upgrading of the Group's exploration and
evaluation assets with the potential 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 19,072 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
Tweefontein MF2 circuit that also added to our performance.
"The 18% 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 than in Q3, but still resulted in a strong
cash position after the payment of taxes, first interim dividends, and share
buybacks during the period.
"On the cost front, SDO cash costs increased 1% in rand and decreased 4% in
dollar terms, benefitting from the higher ounces produced and weaker exchange
rate, but operations are still navigating higher global cost inflation impacts
and thus operating cost focus remains a priority.
"Despite the challenging macro environment, I am pleased with the
significantly improved production performance of the SDO for Q4 which resulted
in the Company achieving PGM production of 75,469 ounces for FY2023, exceeding
our increased guidance for the year."
Disclaimer
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse regulation
(EU) no.596/2014 as amended by the Market Abuse (Amendment) (EU Exit)
Regulations 2019.
For the purposes of MAR and Article 2 of Commission Implementing Regulation
(EU) 2016/1055, this announcement is being made on behalf of the Company by
Jaco Prinsloo.
USD Unit Unaudited Unit ZAR
Q3 FY2023 Q4 FY2023 % Change % Change Q4 FY2023 Q3 FY2023
Production
575,973 702,236 22% T Plant Feed T 22% 702,236 575,973
1.92 1.81 -6% g/t Feed Head Grade g/t -6% 1.81 1.92
322,366 359,658 12% T PGM Plant Feed Tons T 12% 359,658 322,366
2.98 2.89 -3% g/t PGM Plant Feed Grade g/t -3% 2.98 2.89
55.58% 57.01% 3% % PGM Plant Recovery(1) % 3% 57.01% 55.58%
17,926 19,072 6% Oz Total 4E PGMs Oz 6% 19,072 17,926
22,884 24,383 7% Oz Total 6E PGMs Oz 7% 24,383 22,884
1,932 1,581 -18% $/oz 4E Gross basket price(2) R/oz -14% 29,524 34,305
Financials(3)
25,034 21,826 -13% $'000 Revenue (4E) R'000 -8% 407,707 444,488
3,193 3,454 8% $'000 Revenue (by-products including base metals) R'000 14% 64,526 56,681
(1,717) (859) -50% $'000 Sales adjustments R'000 -47% (16,056) (30,486)
26,510 24,421 -8% $'000 Net revenue R'000 -3% 456,177 470,683
12,337 12,577 2% $'000 Direct operating costs R'000 7% 234,945 219,045
3,404 2,939 -18% $'000 Indirect operating costs R'000 -9% 54,899 60,434
733 701 -4% $'000 General and administrative costs R'000 1% 13,095 13,018
9,784 7,806 -20% $'000 Group EBITDA R'000 -16% 145,816 173,764
1,581 1,784 13% $'000 Net Interest R'000 19% 33,325 28,079
6,112 3,136 -49% $'000 Net profit R'000 -46% 58,580 108,549
1,864 6,185 232% $'000 Capital Expenditure R'000 249% 115,537 33,106
144,182 124,983 -13% $'000 Cash Balance R'000 -8% 2,360,929 2,567,881
R/$ Ave R/$ rate R/$ 5% 18.68 17.76
R/$ Spot R/$ rate R/$ 6% 18.89 17.81
Unit Cost/Efficiencies
688 660 -4% $/oz SDO Cash Cost Per 4E PGM oz(4) R/oz 1% 12,319 12,219
539 516 -4% $/oz SDO Cash Cost Per 6E PGM oz(4) R/oz 1% 9,636 9,572
843 824 -2% $/oz Group Cash Cost Per 4E PGM oz(4) R/oz 3% 15,392 14,972
660 645 -2% $/oz Group Cash Cost Per 6E PGM oz(4) R/oz 3% 12,049 11,722
932 881 -5% $/oz All-in sustaining cost (4E) R/oz -1% 16,446 16,548
1,007 1,159 15% $/oz All-in cost (4E) R/oz 21% 21,642 17,883
The Sylvania cash generating subsidiaries are incorporated in South Africa
with the functional currency of these operations being ZAR. Revenues from
the sale of PGMs are incurred in USD and then converted into ZAR. The
Group's reporting currency is USD as the parent company is incorporated in
Bermuda. Corporate and general and administration costs are incurred in USD,
GBP and ZAR.
(1 ) PGM plant recovery is calculated on the production ounces that
include the work-in-progress ounces.
(2 ) The gross basket price in the table is the June 2023 gross 4E
basket used for revenue recognition of ounces delivered in Q4 FY2023, before
penalties/smelting costs and applying the contractual payability.
(3 ) Revenue (6E) for Q4, before adjustments is $25.1 million (6E
pill split is Pt 52%, Pd 17%, Rh 9%, Au 0%, Ru 17%, Ir 5%). Revenue excludes
profit/loss on foreign exchange.
(4) ( ) The cash costs include direct operating costs and exclude
indirect cost for example royalty tax and Employee Dividend Entitlement Plan
("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 11 years LTI-free on 26 June 2023, which is a remarkable achievement
by industry and global standards, and management are exceptionally proud of
the Doornbosch team. Lannex achieved three years LTI free during the period
and Millsell and Tweefontein are now both LTI-free for more than a year.
Operational performance
The SDO delivered 19,072 4E PGM ounces for the quarter. This 6% improvement
in PGM ounces was enabled by a 12% improvement in PGM feed tons and 3%
improvement in PGM recoveries, while the plant feed head grade decreased 6%
quarter-on-quarter.
The Tweefontein MF2 circuit has been optimised following commissioning in Q2
FY2023 and continues to contribute to improved recoveries. The commissioning
of the Lannex MF2 flotation circuit is expected to commence in Q1 FY2024 with
the fine grinding circuit to commence towards the end of Q2 FY2024.
Progressive improvement in recoveries is expected at Lannex from Q2 FY2024.
Load curtailment continued to impact the performance of the Lesedi operation
contributing to 221 hours downtime during the first two months of the quarter,
but fortunately no other operations were materially affected. The procurement,
installation and commissioning of the back-up generator for Lesedi is expected
to be complete by the end of Q1 FY2024.
SDO operating cash costs per 4E PGM ounce increased 1% in rand terms and
decreased 4% in dollar terms to ZAR12,319/ounce and $660/ounce (Q3:
ZAR12,219/ounce and $688/ounce) respectively. The average ZAR:USD exchange
rate depreciated by 5% during the quarter.
The Group incurred capital expenditure of ZAR115.5 million ($6.2 million), in
line with planned capital project schedules. The main contributors were
ZAR25.6 million ($1.4 million) spent on Lannex MF2, ZAR24.3 million ($1.3
million) on various Tailings Storage Facilities, and ZAR3.1 million ($0.17
million) on exploration.
Operational focus areas
Overall operational performance has been excellent with production guidance
exceeded for the quarter and for the financial year. Management continues to
focus on optimisation of feed sources, blending strategy and reagent regimes
to further enhance performance. ROM grades received from the host mine remain
on target and collaboration is ongoing regarding further improvements in this
area.
Water consumption at the Lesedi re-mining operations and the re-mining
operation of Dam 6A at the Mooinooi Plant that commenced during the quarter
remains a focus area, as well as optimal blending to ensure the planned grade
profile is achieved.
Focus also remains on final PGM concentrate quality through optimisation of
mass pull, concentrate grade and metal recoveries to contribute positively
towards the revenue stream of the Group.
Operational maintenance has improved resulting in higher equipment
availabilities and throughput for the quarter, Roll-out of the maintenance
system is ongoing.
The decreasing metal prices and resultant impact on margins have reinforced
the importance of managing operating costs and prudent capital spend.
Operating costs continue to be reviewed on a regular basis.
Operational opportunities
Continuous operational performance improvements relating to the optimisation
of feed sources, throughput, recoveries and cost saving initiatives have been
identified and are achievable. This includes test work on optimising the
reagent regimes on all operations.
Construction of the Lannex MF2 Plant is on target to commence commissioning in
the latter part of Q1 FY2024, with commissioning of the fine grinding circuit
to follow during Q2 FY2024.
The Company's Pelletizer project, developed in partnership with a 'binding
technology' player, has progressed well. Pilot-scale work has been completed
and potential industry partners are being engaged to assess the commercial
viability of the technology.
B. FINANCIAL OVERVIEW
Financial performance
Revenue (4E) for the quarter decreased by 13% to $21.8 million (Q3: $25.0
million) impacted by the 18% decrease in the basket price recorded in June 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 average 4E gross basket price for the
quarter was $1,581/ounce against $1,932/ounce in Q3, impacted mainly by the
drop in rhodium and palladium prices.
Net revenue for the quarter, which includes base metals and by-products and
the quarter-on-quarter sales adjustment, was $24.4 million (Q3: $26.5
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 increased by 3% in rand terms from
ZAR14,972/ounce to ZAR15,392/ounce. A 2% decrease in dollar terms from
$843/ounce in the previous quarter to $824/ounce was due to the 5%
depreciation in ZAR/USD average exchange rate quarter on quarter.
General and administrative costs decreased from $0.73 million to $0.70
million. These costs are incurred in USD, GBP and ZAR and are impacted by the
exchange rate fluctuations over the reporting period.
Group EBITDA for the quarter was $7.8 million (Q3: $9.8 million) and net
profit was $3.1 million (Q3: $6.1 million), the decrease was primarily a
result of the lower basket price and higher costs.
The Group cash balance for the quarter was $125.0 million (Q3: $144.2
million). Dividend withholding tax of $1.3 million, provisional income tax of
$9.9 million and mineral royalty tax of $2.5 million were paid to the South
African Revenue Services during Q4. The Company paid its first cash interim
dividend of 3 pence per Ordinary Share amounting to $9.9 million on 6 April
2023 to all shareholders on the register at the close of business on 3 March
2023. A further $3.6 million was spent on the share buyback programme during
the quarter. The Group spent $6.2 million on capital during Q4 (Q3: $1.9
million), comprising of $0.2 million on exploration projects and $6.0 million
on improvement and stay in business capital. The increase in capital spend is
mainly due to the work on tailings dams at various plants as well as the MF2
project at Lannex and was in line with planned capital project schedules.
Cash generated from operations before working capital movement was $7.8
million. Net changes in working capital amounted to $4.1 million, which is
mainly due to the decrease in trade debtors of $4.9 million as a result of
lower commodity prices in Q4.
The impact of exchange rate fluctuations on cash held at the end of Q4 FY2023
was ZAR37.6 million ($2 million) loss as a result of the 6.1% weakening of the
ZAR to USD at 30 June 2023.
C. MINERAL ASSET DEVELOPMENT
The Group holds approved and executed Mining Rights for various mineral asset
projects on the Northern Limb of the Bushveld Igneous Complex located in South
Africa which are currently in the exploration and optimisation stage. Detailed
studies are underway on both the Volspruit and Far Northern Limb PGM project
areas to determine how best to optimise the respective projects. Continued
progress has been made in understanding the approach of unlocking the mineral
potential on these projects to generate value for shareholders.
Volspruit Project
Following the release of the Exploration Results and Resource Statement in
October 2022, the scope for the remainder of FY2023 was to optimise the
reinterpreted Mineral Resource on the North Body which included a complete
relogging programme, metallurgical drilling for recovery test work and
sampling for the inclusion of rhodium ("Rh"), ruthenium ("Ru"), and iridium
("Ir"). In addition, further work is being conducted on the South Body
resource, which has the potential to increase overall tonnages by up to 40%.
All relogging of the existing core over the North and South Body is complete.
All required samples have been submitted for 6E PGMs assay with results
expected imminently. The updated MRE is expected to be completed during Q1
FY2024, and the PEA for the entire project expected during Q3 FY2024. This
marks a slight delay from the previous reporting schedule as further sampling
and additional assays were required to validate the existing dataset.
The permitting requirements under the Mining Right as communicated in the
interim report continues. The Water-Use Licence, updating of the Environmental
Impact Assessment and finalisation of the Social and Labour Plan are all
included within these activities. Submission of the application will commence
in the first quarter of FY2024 with the process expected to take up to 14
months for finalisation from the relevant authorities.
Far Northern Limb Projects
Optimisation studies to determine the continuation of the newly discovered
T-Zone as reported in the Exploration Results and Resource Statement in
October 2022 continues. Relogging of historical core from the farms La
Pucella, Nonnenwerth and Harriets Wish has been completed confirming the
geological re-interpretation along two thirds of the full strike length of the
project area. Exploration programmes are currently being designed to maximise
the potential of the project area.
MRE studies for the Hacra North underground Target are under review, while the
relogging of the near-surface mineralisation located in the south of the
property is currently undergoing validation and will be subject to ongoing
study during the first half of FY2024.
D. CORPORATE ACTIVITIES
Share Buyback and Cancellation
During the period, the Company conducted a Share Buyback and bought back a
total of 3,624,275 Ordinary Shares at an average price of 79.36 pence per
share, equating to $3.6 million in aggregate. The purpose of the Share Buyback
was to reduce the share capital of the Company.
Additionally, during the period, the Company acquired 116,250 Ordinary Shares
of $0.01 each in the Company ("Ordinary Shares") from employees. The Ordinary
Shares were purchased at the 30-day VWAP price of 90.4148 pence per Ordinary
Share and placed into Treasury.
Post year-end, on 14 July 2023, the Company announced that 3,624,275 Ordinary
Shares held in Treasury had been cancelled. Following this share cancellation,
the Company's issued share capital is 275,375,725 Ordinary Shares, of which, a
total of 12,315,461 Ordinary Shares are held in Treasury. Therefore, the total
number of Ordinary Shares with voting rights in Sylvania is 263,060,264
Ordinary Shares.
Notice of Annual Results: Investor presentation
The Company confirms it will announce its Final Results for the year ended 30
June 2023 on Thursday, 7 September 2023.
Sylvania's CEO, Jaco Prinsloo, and CFO, Lewanne Carminati, will host a live
investor presentation, via the Investor Meet Company platform, on 7 September
2023 at 12:00 BST.
The presentation is open to all existing and potential shareholders. Questions
can be submitted pre-event via your Investor Meet Company dashboard up until
9.00am the day before the meeting or at any time during the live presentation.
Investors can sign up to Investor Meet Company for free and add to
meet Sylvania via:
https://www.investormeetcompany.com/sylvania-platinum-limited/register-investor
(https://www.investormeetcompany.com/sylvania-platinum-limited/register-investor)
Investors who already follow Sylvania on the Investor Meet Company platform
will automatically be invited.
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/)
ANNEXURE
GLOSSARY OF TERMS FY2023
The following definitions apply throughout the period:
4E PGMs 4E PGM ounces include the precious metal elements Platinum, Palladium, Rhodium
and Gold
6E PGMs 6E ounces include the 4E elements plus additional Iridium and Ruthenium
AGM Annual General Meeting
AIM Alternative Investment Market of the London Stock Exchange
All-in sustaining cost Production costs plus all costs relating to sustaining current production
and sustaining capital expenditure.
All-in cost All-in sustaining cost plus non-sustaining and expansion capital expenditure
Current risings Fresh chrome tails from current operating host mines processing operations
DMRE Department of Mineral Resources and Energy
EBITDA Earnings before interest, tax, depreciation and amortisation
EDEP Employee Dividend Entitlement Plan
EIA Environmental Impact Assessment
EIR Effective interest rate
EMPR Environmental Management Programme Report
ESG Environment, Social and Governance
GBP Pounds Sterling
IFRIC International Financial Reporting Interpretation Committee
IFRS International Financial Reporting Standards
JORC Australian Joint Ore Reserves Committee
LSE London Stock Exchange
LTI Lost-time injury
LTIFR Lost-time injury frequency rate
MF2 Milling and flotation technology
MPRDA Mineral and Petroleum Resources Development Act
MRA Mining Right Application
MRE Mineral Resource Estimate
NWA National Water Act 36 of 1998
PGM Platinum group metals comprising mainly platinum, palladium, rhodium and gold
PDMR Person displaying managerial responsibility
PEA Preliminary Economic Assessment
Pipeline ounces 6E ounces delivered but not invoiced
Pipeline revenue Revenue recognised for ounces delivered, but not yet invoiced based on
contractual timelines
Pipeline sales adjustment Adjustments to pipeline revenues based on the basket price for the period
between delivery and invoicing
PFS Pre-Feasibility Study
Project Echo Secondary PGM Milling and Flotation (MF2) program announced in FY2017 to
design and install additional new fine grinding mills and flotation circuits
at Millsell, Doornbosch, Tweefontein, Mooinooi and Lesedi.
Revenue (by products) Revenue earned on Ruthenium, Iridium, Nickel and Copper
Rh Rhodium
ROM Run of mine
SDO Sylvania dump operations
Sylvania Sylvania Platinum Limited, a company incorporated in Bermuda
TRIFR Total recordable injury frequency rate
TSF Tailings storage facility
UNSDGs United Nations Sustainability Development Goals
USD United States Dollar
WULA Water Use Licence Application
UK United Kingdom of Great Britain and Northern Ireland
ZAR South African Rand
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