REG - Sylvania Platinum - Half-year Report
21/02/2023 07:00
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RNS Number : 5535Q Sylvania Platinum Limited 21 February 2023
_____________________________________________________________________________________________________________________________
21 February 2023
Sylvania Platinum Limited
("Sylvania", the "Company" or the "Group")
Interim financial results for the six months ended 31 December 2022
Sylvania (AIM: SLP), the platinum group metals ("PGM") producer and developer with assets in South Africa, is pleased to announce its results for the six months ended 31 December 2022 ("HY1 FY2023"). Unless otherwise stated, the consolidated financial information contained in this report is presented in United States Dollars ("USD" or "$").
Financial Highlights
* Net revenue generated for the period totalled $79.9 million (HY1 FY2022: $69.1
million);
* Group EBITDA of $45.6 million (HY1 FY2022: $36.2 million);
* Net profit of $32.6 million (HY1 FY2022: $24.4 million);
* Cash balance at 31 December 2022 of $123.9 million (HY1 FY2022: $110.1
million);
* Bought back 1,085,000 ordinary $0.01 shares ("Ordinary Shares") from
employees, all transferred to Treasury;
* Cancelled 1,155,657 Ordinary Shares held in Treasury;
* Final dividend of 8p per Ordinary Share for FY2022 paid in December 2022
(FY2021:4p);
* New Dividend Policy approved by the Board and effective from 1 July 2022; and
* Interim dividend of 3p per Ordinary Share declared by the Board, to be paid in
April 2023.
Operational Highlights
* Sylvania Dump Operations ("SDO") delivered 38,471 4E PGM ounces (HY1 FY2022:
32,376 4E PGM ounces);
* ROM grades at Mooinooi have increased significantly contributing to additional
ounce production;
* Construction of the Tweefontein MF2 complete with optimisation to be concluded
during Q3;
* An updated Mineral Resource Estimate ("MRE") and Scoping Study on the
Volspruit North Body was reported in October 2022; and
* An updated MRE for the La Pucella Target area of the Aurora Project and
Exploration results for the Hacra Project on the Far Northern Limb reported
during the period.
ESG Highlights
* Zero Lost-time Injuries ("LTI") across all SDO;
* Quarterly Carbon Footprint reporting undertaken for the HY1 FY2023 period;
* New initiatives relating to improved water management undertaken at the
Company's operations during the period and a Water Balance developed for each
plant; and
* Support for three ongoing internships and eight internal learnerships, plus
twelve external bursaries maintained, and Community Based Employee Training
provided to ten employees.
Outlook
* FY2023 production guidance increased, targeting 70,000 to 72,000 4E PGM ounces
following strong production in HY1 FY2023;
* Lannex MF2 project scheduled for commissioning towards the end of Q4 FY2023;
* An updated MRE and Scoping Study to combine the Volspruit North and South Body
and to include rhodium anticipated to be completed in Q1 FY2024;
* Reagent optimisation at all SDO underway to explore improved efficiencies; and
* The Group remains debt free and continues to generate sufficient cash reserves
to fund capital expansion projects, process optimisation projects, upgrade the
Group's exploration and evaluation assets and to return value to shareholders.
Commenting on the period, Sylvania's CEO Jaco Prinsloo said:
"I am pleased to report that the SDO have achieved 38,471 ounces of PGM
production in the period. The 19% year-on-year increase in HY1 production is
testament to the commitment of both our operations and management teams to
delivering on forecast and through their continued efforts, particularly in
working together with our host mine, to overcome the difficulties previously
faced with ROM and feed grades at our Western operations.
"A result of the increased ounces produced, is the healthy Revenue and Net
Profit reported, both of which are robust and provide the Company with
sufficient cash reserves to continue to fund capital and optimisation
projects, as well as the advanced studies undertaken at our exploration
projects. It also gives me great pleasure to announce that the Board has
approved a new Dividend Policy for FY2023 and has declared our first interim
dividend of 3p payable in April. This is a great achievement for the team
considering the 15% drop in the average gross basket price and a 15% average
ZAR/$ depreciation over the period.
"As we advance into the second half of the financial year, I anticipate
continued solid results as the Tweefontein MF2 capital project is optimised
and as we work towards the commissioning of the Lannex MF2 in the latter part
of the period. Additionally, we expect to provide further clarity on the
significant potential at our exploration projects as we continue our studies
and increase our resources.
"I look forward to keeping shareholders updated on our progress."
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.
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 six months under review the average USD:ZAR exchange rate was
ZAR17.32:$1 and the closing exchange rate at 31 December 2022 was ZAR17.05:$1.
USD Unit Unaudited Unit ZAR
HY1 2022 HY1 2023 % Change % Change HY1 2023 HY1 2022
Production
1,184,996 1,337,785 13% T Plant Feed T 13% 1,337,785 1,184,996
1.91 1.92 1% g/t Feed Head Grade g/t 1% 1.92 1.91
589,240 690,912 17% T PGM Plant Feed Tons T 17% 690,912 589,240
3.17 3.19 1% g/t PGM Plant Feed Grade g/t 1% 3.19 3.17
53.93% 56.47% 5% % PGM Plant Recovery % 5% 56.47% 53.93%
32,376 38,471 19% Oz Total 4E PGMs Oz 19% 38,471 32,376
41,828 48,697 16% Oz Total 6E PGMs Oz 16% 48,697 41,828
2,966 2,513 -15% $/oz Average gross basket price(1) R/oz -2% 43,532 44,574
Financials(2)
65,812 70,923 8% $'000 Revenue (4E) R'000 24% 1,228,715 989,094
5,628 7,020 25% $'000 Revenue (by-products including base metals) R'000 44% 121,614 84,585
-2,384 1,959 182% $'000 Sales adjustments R'000 195% 33,936 -35,842
69,056 79,902 16% $'000 Net Revenue R'000 33% 1,384,265 1,037,837
23,838 23,170 -3% $'000 Direct Operating costs R'000 12% 401,418 358,292
6.661 8,923 34% $'000 Indirect Operating costs R'000 54% 154,593 100,112
1,352 1,503 11% $'000 General and administrative costs R'000 28% 26,032 20,322
36,166 45,639 26% $'000 Group EBITDA(4) R'000 45% 790,467 543,532
10,527 13,241 26% $'000 Taxation R'000 45% 229,334 158,214
1,641 1,967 20% $'000 Depreciation and amortisation R'000 38% 34,068 24,659
24,360 32,633 34% $'000 Net profit(4) R'000 54% 565,204 366,108
7,414 6,206 -16% $'000 Capital Expenditure R'000 -4% 107,488 111,421
110,062 123,895 13% $'000 Cash Balance R'000 20% 2,112,410 1,755,066
- - - R/$ Ave R/$ rate R/$ 15% 17.32 15.03
- - - R/$ Spot R/$ rate R/$ 7% 17.05 15.95
Unit Cost/Efficiencies
736 602 -18% $/oz SDO Cash Cost per 4E PGM oz(3) R/oz -6% 10,434 11,067
570 476 -16% $/oz SDO Cash Cost per 6E PGM oz(3) R/oz -4% 8,243 8,566
881 742 -16% $/oz Group Cash Cost Per 4E PGM oz(3) R/oz -3% 12,851 13,247
682 586 -14% $/oz Group Cash Cost Per 6E PGM oz(3) R/oz -1% 10,150 10,254
1,025 889 -13% $/oz All-in sustaining cost (4E) R/oz 0% 15,398 15,404
1,216 1,017 -16% $/oz All-in cost (4E) R/oz -4% 17,623 18,273
( )
(1) The gross basket price in the table is average gross basket for the
period, used for revenue recognition of ounces delivered over HY1 FY2023,
before penalties/smelting costs and applying the contractual payability.
(2) Revenue (6E) for HY1 FY2023, before adjustments is $77.5 million (6E prill
split is Pt 52%, Pd 18%, Rh 9%, Au 0.2%, Ru 16%, Ir 5%).
(3) The cash costs include direct operating costs and exclude royalty tax.
(4) Net profit and Group EBITDA exclude profit from the sale of Grasvally
Chrome Mine (Pty) Ltd previously held as an asset for sale.
A. OPERATIONAL OVERVIEW
Health, safety and environment
During the period under review there were no significant occupational health
or environmental incidents reported. There were no LTIs recorded and the
Doornbosch operation remains 10 years LTI-free. The Lesedi operation achieved
the milestone of three years LTI-free during the period and Lannex has
exceeded two years LTI-free. Mooinooi and Tweefontein have each exceeded
one-year LTI-free.
Operational performance
The SDO achieved 38,471 ounces for the first half of the 2023 financial year
which was 19% higher than the corresponding period in the 2022 financial
year. The increase in production is primarily due to improved feed grades,
stability and flotation performance at Mooinooi as well as the newly
commissioned Lesedi MF2 plant and improved recovery efficiencies. A step
change improvement in recovery following the implementation of a new flotation
reagent regime at Lannex also contributed to the increased ounces.
PGM plant feed grade increased by 1% during the period and PGM plant recovery
increased 5% when compared to HY1 FY2022, primarily related to the increase in
and stabilisation of ROM feed from the host mine at Mooinooi.
Consequently, due to the improved production performance, an increase to the
full year PGM production estimate was announced in January 2023 with 70,000 to
72,000 ounces now targeted by the Company for the full year.
SDO cash costs per ounce decreased 18% from $736/ounce to $602/ounce while the
average ZAR:USD exchange rate depreciated 15%.
Operational focus areas
During the period, the SDO developed a new improved planned maintenance system
which was successfully implemented at Millsell. This is expected to improve
plant availabilities and runtime, resulting in improved process stability and
increased efficiencies and is being rolled out to selected priority
operations.
ROM grades at the Mooinooi operation have increased significantly and the
operation continues to focus on communication with the host mine in relation
to the preferred source of ROM and associated grades in order to sustain these
better grades.
Focus remains on the operational aspects of the SDO tailings facilities by the
operations teams, the engineer on record, relevant expert advisers, and
associated service providers.
Reagent optimisation continues at all plants to explore improved efficiencies
and further contribute to an increase in metal recoveries.
The control of operational costs has been well managed during the period with
continued attention being paid by the SDO.
Capital Projects
Capital spend decreased during the current period compared to the
corresponding period in FY2022 from $7.4 million to $6.2 million during HY1
FY2023, comprising $5.3 million optimisation and stay-in-business capital, as
well as $0.9 million spent on exploration projects. All capital projects are
fully funded from current cash reserves.
The secondary milling and flotation (MF2) project at Tweefontein was completed
during the period and commissioning commenced during December 2022. Full
optimisation is planned to be reached in the coming months.
The Lannex MF2 project is under construction and scheduled for commissioning
during early FY2024. The construction of the MF2 module will improve the
upgrading and recovery of PGMs at the plants.
In order to mitigate current power interruptions at Lesedi and Millsell
operations which are most affected by the current Eskom loadshedding stages,
back-up power generation projects have been initiated and are currently in
execution at these operations, with commissioning of the first system at
Lesedi anticipated during the next four to six months.
Outlook
The first half of the financial year has created a strong platform for the
Company. The Lesedi MF2 plant, improved feed grades and recovery efficiencies
have resulted in increased production and, subsequently, the increase in the
production guidance for FY2023 to 70,000 to 72,000 4E PGM ounces.
The Lannex MF2 project is scheduled for commissioning towards the end of the
financial year which should see further improvements to PGM recoveries.
Additionally, the Company is continuing to explore reagent optimisation across
all SDO in order to improve efficiencies.
While not anticipating a more significant impact on operations than during
HY1, the Company acknowledges the risks associated with the current
electricity supply situation in South Africa and Eskom's loadshedding
programme, and hence we maintained a relatively cautious outlook for the
remainder of the year in terms of our production guidance.
The exploration projects in the Northern Limb hold significant potential for
the Company. In the second half of this year focus remains on further
improving the confidence in and expanding resources and quantifying the
potential benefit from these assets. An updated Scoping Study is underway at
Volspruit which will now include value from the South Body and rhodium, which
were initially excluded from the North Body Scoping Study, as well as studies
aimed at improving the resources estimate for the Aurora project and towards
declaring a maiden mineral resource estimate for the Hacra project.
Despite the lower 4E PGM basket price, the Board remains optimistic on the
overall PGM price outlook, whereby palladium and rhodium are expected to
remain in deficit and the demand forecast is robust with anticipated increased
automotive sales. The SDO is well positioned, with low operating costs and
improving PGM recoveries and ROM grades.
As always, the Company will continue to focus on the parameters that it is
able to control, with specific focus on improving direct operating costs,
maintaining a safe, stable and efficient production environment, and ensuring
disciplined capital allocation and control.
Sylvania remains committed to its ESG initiatives and will continue to publish
an ESG Report annually.
B. FINANCIAL OVERVIEW
Condensed Consolidated Statement of Profit or Loss and Other Comprehensive
Income
For the half year ended 31 December 2022
31 December 2022 31 December 2021
$ $
Note(s) Reviewed Reviewed
Continuing Operations
Revenue 1 79,901,718 69,055,528
Cost of sales (30,271,919) (29,192,755)
Royalties tax (3,796,403) (3,046,322)
Gross profit 45,833,396 36,816,451
Other income 45,547 38,607
Other expenses 2 (2,202,060) (2,330,331)
Operating profit before net finance income/costs and income tax expense 43,676,883 34,524,727
Finance income 2,359,757 731,855
Finance costs (536,505) (369,302)
Profit before income tax expense from continuing operations 45,500,135 34,887,280
Income tax expense 3 (12,866,977) (10,527,209)
Net profit for the period from continuing operations 32,633,158 24,360,071
Discontinued Operations
Profit after tax for the period from discontinued operations 4 1,351,227 -
Net profit for the period 33,984,385 24,360,071
Other comprehensive loss
Items that are or may be subsequently reclassified to profit and loss:
Foreign operations - foreign currency translation differences (4,977,923) (13,222,604)
Total other comprehensive loss (net of tax) (4,977,923) (13,222,604)
Total comprehensive income for the year 29,006,462 11,137,467
Cents Cents
Earnings per share attributable to the ordinary equity holders of the Company:
Basic earnings per share 12.75 8.93
Diluted earnings per share 12.65 8.86
1. Revenue is generated from the sale of PGM ounces produced at
the six retreatment plants, net of pipeline sales adjustments.
2. Other expenses relate to corporate activities and include
consulting fees, audit fees, travel, advisor and PR costs, share registry
costs, directors' fees, share based payments and other smaller administrative
costs.
3. Income tax expense includes current tax, deferred tax and
capital gains tax.
4. Profit on discontinued operations is the profit after tax of
Grasvally Chrome Mine (Pty) Ltd, previously held as an asset held for sale.
The average gross basket price for PGMs for the six months to 31 December 2022
was $2,513/ounce compared to $2,966/ounce for the period ended 31 December
2021. The Group recorded net revenue of $79.9 million for the six months to 31
December 2022, a 16% increase half-year on half-year, as a result of the
higher PGM ounce production, slightly lower basket price, as well as a
positive sales adjustment for the period.
The operational cost of sales represents the direct and indirect costs of
producing the PGM concentrate and amounted to ZAR556.0 million for the
reporting period compared to ZAR458.4 million for the six months to 31
December 2021. The main cost contributors being salaries and wages of ZAR170.4
million (HY1 FY2022: ZAR144.5million), mining costs of ZAR61.1 million (HY1
FY2022: ZAR53.2 million), reagents and milling costs of ZAR51.1 million (HY1
FY2022: ZAR33.0 million) and electricity of ZAR64.9 million (HY1 FY2022:
ZAR55.8 million).
Group cash cost per ounce was ZAR12,851/ounce compared to ZAR13,247/ounce in
the previous corresponding period. The all-in sustaining cost ("AISC") for the
Group amounted to ZAR15,398/ounce and an all-in cost ("AIC") of
ZAR17,623/ounce for the period to 31 December 2022. This compares to the AISC
and AIC for 31 December 2021 of ZAR15,404/ounce and ZAR18,273/ounce
respectively.
General and administrative costs were $1.5 million (ZAR26.0 million) for the
six months against $1.4 million (ZAR20.3 million) for the corresponding period
in the prior year. These costs are incurred in USD, GBP and ZAR and relate
mainly to regulatory costs, insurance, advisory and public relations costs,
consulting and legal fees, directors' fees, computer expenses and travelling
costs.
Interest is earned on surplus cash invested in South Africa at an average
interest rate of 4.35% per annum as well as on the loan to Forward Africa
Mining with regards to the Grasvally Chrome Mine (Pty) Ltd ("Grasvally") sale
at JIBOR + 3%. Interest expense is accounted for on various lease agreements
for example office rental at rates intrinsic to the relevant lease agreements.
Income tax is paid in ZAR on taxable profits generated at the South African
operations at a rate of 27%. The income tax charge for the six months to 31
December 2022 was ZAR228.0 million compared to ZAR136.1 million for the six
months to 31 December 2021 due to the increase in profit and the capital gains
tax as a result of the sale of shares with regards to Grasvally. Deferred tax
movements of ZAR6.0 million for the Group relate mainly to unredeemed capital
expenditure and provisions.
CONSOLIDATED STATEMENT OF CASHFLOWS
For the half year ended 31 December 2022
31 December 2022 31 December 2021
$ $
Reviewed Reviewed
Net cash inflow from operating activities 5 37,678,401 31,599,803
Net cash outflow from investing activities 6 (6,554,000) (8,109,477)
Net cash (outflow) from financing activities 7 (26,909,718) (17,178,177)
Net increase in cash and cash equivalents 4,214,683 6,312,149
Effect of exchange fluctuations on cash held (1,601,737) (2,385,646)
Cash and cash equivalents at the beginning of reporting period 121,282,425 106,135,435
Cash and cash equivalents at the end of the reporting period 123,895,371 110,061,938
Note: This is a condensed cashflow statement. Please refer to the Half Year
Interim Financial Statements for more detail.
5. Net cash inflow from operating activities includes a net
operating cash inflow of $43.2 million, net finance income of $2.1 million and
taxation paid of $7.7 million.
6. Net cash outflow from investing activities includes payments
for property, plant and equipment of $5.3 million, exploration and evaluation
assets of $0.9 million, and loans to joint operations and third parties of
$0.35 million.
7. The net cash outflow from financing activities includes the
repayment of borrowings of $0.2 million, payments of share transactions of
$1.1 million and payments of dividends to shareholders of $25.6 million.
Cash is held in USD and ZAR. As at 31 December 2022, the Company's cash and
cash equivalents balance was $123.9 million. Cash generated from operations
before working capital was $46.8 million for the reporting period, with a
change in working capital of $3.6 million mainly due to the movement in trade
receivables and trade payables as a result of the higher ounces produced and
an increase in the cost base. $7.7million was paid in provisional income tax
and the Company spent $6.2 million on capital expenditure comprising of $5.3
million on specific optimisation and stay in business projects, and $0.9
million on exploration projects. In December 2022, $25.6 million was paid to
shareholders as a dividend. The Group holds a portion of cash in ZAR to fund
operational working capital and capital projects. A foreign exchange loss of
$1.6 million was incurred due to the 7% depreciation of the ZAR against the
USD.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2022
31 December 2022 30 June 2022
$ $
Note(s) Reviewed Audited
ASSETS
Non-current assets
Exploration and evaluation expenditure 46,647,621 46,087,453
Property, plant and equipment 48,200,777 46,298,978
Other financial assets 8 6,425,154 283,450
Other assets 15,012 -
Total non-current assets 101,288,564 92,669,881
Current assets
Cash and cash equivalents 9 123,895,371 121,282,425
Trade and other receivables 10 56,850,687 52,939,589
Other financial assets 8 1,309,622 1,029,205
Inventories 11 5,430,203 4,258,960
Current tax asset - 3,486,226
187,485,883 182,996,405
Assets held for sale - 3,771,661
Total current assets 187,485,883 186,768,066
Total assets 288,774,447 279,437,947
EQUITY AND LIABILITIES
Shareholders' equity
Issued capital 12 2,790,000 2,801,557
Reserves 13 33,091,971 38,663,288
Retained profit/(Accumulated losses) 218,104,153 209,221,487
Total equity 253,986,124 250,686,332
Non-current liabilities
Borrowings 14 593,854 35,031
Provisions 15 5,416,237 5,936,804
Deferred tax liability 11,804,808 11,614,765
Total non-current liabilities 17,814,899 17,586,600
Current liabilities
Trade and other payables 14,364,861 11,110,196
Current tax liability 2,249,120 -
Borrowings 14 359,443 48,957
16,973,424 11,159,153
Liabilities directly associated with the assets classified as held for sale - 5,862
Total current liabilities 16,973,424 11,165,015
Total liabilities 34,788,323 28,751,615
Total liabilities and shareholder's equity 288,774,447 279,437,947
8. Other financial assets mainly consist of:
o A loan granted to TS Consortium by Sylvania South Africa (Pty) Ltd $362,141
(2022: $348,420). The loan is unsecured, bears interest at 7% per annum and is
repayable on demand.
o A loan granted to Forward Africa Mining by Sylvania Metals (Pty) Ltd
$947,480 (2022: $680,785). The loan is secured over the Grasvally Plant, bears
interest at the Johannesburg Inter-Bank Offer Rate (JIBOR) + 3%, compounded
monthly in arrears.
o A loan granted to Forward Africa Mining by Sylvania Metals (Pty) Ltd and
Sylvania Resources (Pty) Ltd with regards to the sale of shares and claims
agreement in respect of the Grasvally Chrome Mine (Pty) Ltd sale $6,142,227
(2022: $0 nil). The loan is secured over the Grasvally plant, bears interest
at the Johannesburg Inter-Bank Offer Rate (JIBOR) + 3%, compounded monthly in
arrears. The loan is repayable in 15 equal instalments commencing at the end
of the quarter following the first anniversary of the effective date.
o Contribution paid to the host mine for rehabilitation purposes $282,928
(2022: $283,450). The debtor is ZAR denominated and was translated at a spot
rate of ZAR17.50 (2022: ZAR16.38).
9. 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 is spares and consumables for the SDO.
12. The total number of issued ordinary shares at 31 December 2022 is
279,000,000 Ordinary Shares of US$0.01 each (including 12,199,212 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 and the equity reserve.
14. Borrowings relate to the right-of-use liability.
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 of opencast mining projects
The Group owns various mineral asset exploration and development projects on
the Northern Limb of the Bushveld Igneous Complex located in South Africa, for
which it has approved mining rights. Targeted studies are underway 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 Platinum Opportunity
The release of the Exploration Results and Resource Statement in October of
2022 included the MRE and Scoping Study for the Volspruit North Body.
The Volspruit North Body is estimated to include approximately 58% of the
total project area and indicated a positive investment return based on a
conservative set of assumptions used at the time. To further improve the value
of the Voslpruit opportunity, a revised Scoping Study is underway to now
include the value from the South Body and rhodium, which were initially
excluded from the earlier Scoping Study due to further work that was required
at the time in terms of the JORC requirements.
Current studies to include both the rhodium resources and the South Body
resources include the relogging of the South Body historical core, a drilling
programme to acquire the required samples for rhodium assay from the North
Body and additional assay data which will be subjected to a MRE in the fourth
quarter with the results becoming available in Q1 FY2024. The updated MRE,
that includes 100% of the study area and a rhodium resource will then be
subject to a Preliminary Economic Assessment ("PEA") during Q1 FY2024.
Continued investment and workstream requirements for the permitting under the
Mining Right is underway and application for the Water-use Licence, the
updating of the Environmental Impact Assessment ("EIA") and the finalisation
of the Social and Labour Plan ("SLP") all included within these activities.
Far Northern Limb Projects
The JORC compliant Mineral Resource over the La Pucella target area of the
Aurora Project was completed in October 2022, with the exciting new discovery
of the T-Zone mineralisation found near surface along the strike of the study
area.
Continued resource optimisation studies are underway to determine on the
Aurora Project area to fully realise the future value of the asset. Studies
will include relogging of historical core and implementing the new geological
interpretation on additional available strike length, which will determine an
optimised drilling strategy that is planned to start during HY2 FY2023. Based
on initial study results and current strategy, a PEA will only be commissioned
once an updated MRE for the combined Aurora project area is available.
Work is also in progress towards declaring a maiden Inferred MRE on the Hacra
North underground resource and a programme of relogging of the historical core
has commenced on the Hacra South near-surface resource, with both expected to
be completed in HY2 FY2023. The relogged data will be subject to a MRE using
the new geological interpretation as determined on the La Pucella project and
is expected to be completed at the financial year end.
D. CORPORATE ACTIVITIES
Dividend Payment
On 2 December 2022, the Board paid a dividend for FY2022 totalling $25.6
million, equating to 8p per Ordinary Share, to shareholders on the register on
the record date of 28 October 2022.
Dividend Policy
The Board has reviewed the Company's Dividend Policy and effective 1 July
2022, the New Dividend Policy will be able to pay out a minimum of 40% of
adjusted free cash flow for the financial year. Where annual dividends are
declared, these will be paid in two tranches with an interim dividend equating
to one third of the forecast full dividend and the final dividend equating to
the remaining unpaid balance of the minimum of 40% of actual adjusted free
cash flow. The payment of dividends remains at the discretion of the Board.
As a consequence of the new Dividend Policy, the Board has declared its first
interim dividend of 3p per Ordinary Share, payable on 6 April 2023. Payment of
the interim dividend will be made to shareholders on the register at the close
of business on 3 March 2023 and the ex-dividend date is 2 March 2023.
Transactions in Own Shares
1,755,000 Ordinary Shares were exercised by various persons displaying
management responsibilities (PDMRs) and employees which vested from bonus
shares awarded to them in August 2019. 702,300 of the vested bonus shares were
repurchased to satisfy the tax liabilities of PDMRs and certain employees, and
an additional 382,700 shares were bought back from various employees. All
shares awarded came from Treasury.
On 15 December 2022 1,155,657 Ordinary Shares held in Treasury were cancelled.
Accordingly, at the end of the period the Company's issued share capital was
279,000,000 Ordinary Shares, of which a total of 12,199,212 Ordinary Shares
were held in Treasury, which includes 7,500,000 Ordinary Shares held for the
Employee Dividend Entitlement Plan. Therefore, the total number of Ordinary
Shares with voting rights was 266,800,788.
The Company will continue to evaluate further share buy backs as the
opportunity arises as part of its commitment to returning value to the
shareholders.
E. ENVIRONMENT, SOCIAL AND GOVERNANCE (ESG)
The Company's approach to ESG reporting is guided by global frameworks and
best practice guidelines including:
· The Global Reporting Initiative ("GRI") - setting the standards
for best practice in sustainability reporting;
· The United Nations Sustainable Development Goals ("UNSDGs") -
17 goals to address the global challenges facing the international community;
· The United Nations Task Force on Climate-Related Financial
Disclosures ("TCFD") - a framework for improving and increasing reporting on
climate-related financial information; and
· The Sustainability Accounting Standards Board ("SASB") - SASB
standards identify the ESG issues most applicable to performance in different
industries.
FY2022 saw the Company's first ESG report outlining operational and
non-financial performance. The following update builds on the initial
disclosures as the ESG journey has become embedded throughout the
organisation. Further details on the disclosures can be found in the Company's
Condensed Consolidated Interim Financial Statements for the half year ended 31
December 2022.
Environment
Energy and Greenhouse Gas Emissions
Quarterly Carbon Footprint reporting was undertaken for the HY1 FY2023 period,
measured in metric tonnes of carbon dioxide equivalent (tCO(2)e) for GHG
Protocol Scope 1 and Scope 2 emissions. The Carbon Footprint report for the
HY1 FY2023 reporting period showed a slight increase in Scope 1 emissions
while there is a slight decrease in Scope 2 emissions. However, the GHG
emission intensity, which is a factor of CO(2) per tonnes reprocessed
tailings, is decreasing over time.
In December 2022, the Company procured the services of specialists who
compiled a Baseline TCFD report that aims to develop recommendations for
voluntary climate-related financial disclosures that are consistent,
comparable, reliable, clear, and efficient, and provide decision-useful
information to investors. Energy Transition and a Carbon Emissions Priority
Plan were some of the main themes covered in the TCFD report.
Water Management
New initiatives relating to improved water management were undertaken at the
Company's operations during the period. A Water Balance was developed for each
plant and will be updated biannually. An automated, live water balance system
is in the Second Phase of implementation with flow metres installed along the
critical line to increase the accuracy of water flow and use at the
operations. In addition, the Company together with specialists in the field
commenced with investigations into the feasibility to construct and utilise
thickeners that will result in a decrease in water volume losses on the
tailings.
Production rate and Tailings Storage Facilities ("TSF")
Due to the nature of the activities and operations of the Company in the
reworking of mineral waste dumps and redepositing (or recycling) tailings, the
overall impact is considered to have an inherently positive impact.
In line with the Global Industry Standard on Tailings Management ("GISTM"), in
terms of the operations, the condition and management of the Tweefontein,
Lannex, Lesedi and Doornbosch TSFs were assessed in separate annual reports
and the remaining operations followed in January 2023. The results of the
assessments indicated positive findings.
Sylvania and its appointed consultants recently completed the first phase of
pilot scale TSF slope rehabilitation trials at the Tweefontein operation. The
purpose of the trial is to develop a method of rehabilitating TSFs on
decommissioning, which is low-cost, environmentally friendly and sustainable.
This trial has delivered results which indicate that this method is also very
suitable for rehabilitation during operation of the TSF, to minimise the time
and cost of end-use closure.
The first phase of on-site trials prepared five seedbeds on two slopes of the
operational TSF using one as a control site with no treatment while different
treatments were applied to the remaining four seedbeds. A mixture of six
indigenous grass seeds were sown on all seedbeds and on completion of the
trials it was found that the seedbed treated with mulch far outperformed the
others. All sites indicated a remarkable increase in biodiversity through
establishment of insects and other life species.
Further phases of trials will continue to investigate suitable plant species
and collect data about biodiversity augmentation. On completion of the trials
and subsequent reporting, closure plans can be updated to reflect the organic
amendment method for each TSF site, reducing rehabilitation liability and
closure cost and proposing a rehabilitation method that will establish a
protected biodiversity area on a previously barren and undesirable waste site.
It is currently estimated that two to three years of aftercare would be
required to establish a sustainable growth cycle for the seedbeds, and that
the growth cycle can be established during the final operating years of the
TSF.
Social
Incident statistics
No LTIs, serious or reportable environmental incidents were recorded during
the period and all operations remain fatality free since inception. Focused
training interventions and other inspections aimed at trackless mobile
machinery and tracking management, equipment safeguarding, equipment handling,
working in elevated position and slip and fall are being implemented to
continuously improve control effectiveness. Annually the Company runs a safety
awareness campaign during the months of November and December motivating the
importance to drive health and safety during this period. Topics covered
this year included road safety, alcohol and drug abuse, gender-based violence,
and communication.
Community, customer and stakeholder relationship
During the reporting period, 29 additional people were employed by the
Company, resulting in a total staff compliment of 641 at December 2022. The
percentage of Unionised employees grew from 69% to 81% at December 2022.
The Company continued its ongoing contributions towards Corporate Social
Investment ("CSI") Projects during the HY1 FY2023 reporting period. These
included maintenance work, provision of supplies, furniture and groceries to
various organisations.
Sylvania recognised World Aids Day in December 2022 and supports an ongoing
anti gender-based violence campaign at the operations.
As South Africa is one of the most biodiverse countries in the world there is
a duty on the stakeholders, such as the mining industry, to ensure that
conservation is promoted, and wildlife is protected for current and future
generations. As such, Sylvania engaged with non-profit organisations to
investigate how to partner on initiatives such as the Endangered Wildlife
Trust ("EWT") focussing on threatened wildlife species including the illegal
trade of Pangolin scales and Rhino horns as well as partnering on the
revegetation of the tailings dams to create renewed biodiversity.
Demographics and diversity
Woman in Mining remains a strategic focus point at Sylvania as noted from a
steady growth of female employees during the HY1 FY2023 reporting period. The
effectiveness of the current initiatives and internal controls are reflected
through the total female representation increasing to 22.15% at the end of
December 2022, and 14 (48.28%) of the 29 new recruits being female.
Human Capital
In terms of Sylvania's SLP and contribution to community development and
training, Sylvania supports three ongoing internships and eight internal
learnerships. 12 external bursaries were maintained during the reporting
period and Community Based Employee Training was provided to 10 employees.
External training was provided to over 600 people.
Governance
Regulatory Compliance
No material legal compliance risks or fines were issued for any aspects linked
to governance, tax or other financial management aspects.
For owned land, various initiatives are being undertaken to ensure compliance
with issued authorisations, permits and licences linked to all business
processes, exploration to rehabilitation and closure requirements. The permits
incorporate binding commitments and obligations that must be monitored to
ensure compliance. This is crucial, as delays in acquiring permits or failing
to comply with their conditions and commitments can have significant
financial, operational, legal and reputational consequences.
Sylvania's licence to operate relates directly to environmental permits and
authorisations under relevant sections of the:
* Mineral and Petroleum Resources Development Act 2002 (MPRDA) - mining rights,
environmental management programme reports as well as social and labour plans;
* National Environmental Management Act 1998 (NEMA), sectorial national
legislation and related regulations including environmental impact assessments
linked with the listed activities being performed; and
* National Water Act 1998 (NWA) - water-use licences.
Economic contribution
The following economic contributions continued during HY1 FY2023:
1. Employee and related payments including:
* Salaries and wages.
* Contributions and employees' tax paid.
* Employee dividend participation scheme.
2. Regulatory payments to South African Revenue Services including:
* Income tax.
* Value added tax.
* Dividend withholding tax.
* Mineral royalty tax.
Economic Contribution: National and Local Governance:
Indicator Unit HY1 FY2022 HY2 FY2022 HY1 FY2023
Salaries and wages ZAR 112,274,767 114,173,623 165,727,530
Contributions and employee tax paid ZAR 49,167,874 67,671,874 69,771,798
Employee dividend participation scheme ZAR 10,379,249 - 11,657,520
Income tax ZAR 163,263,070 179,289,312 189,643,504
Value added tax ZAR 115,923,116 125,187,215 119,333,103
Dividend withholding tax ZAR 3,821,053 15,585,526 -
Mineral royalty tax ZAR 42,552,299 63,844,707 47,902,038
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 / Rachael Brooks 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
Adjusted free cash flow Free cash flow is the calculated cash flow from operating activities less
forecast capital expenditure for the reporting period, adjusted for debt
commitments and covenants and committed future growth/expansion capital
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
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
JIBOR Johannesburg Inter-Bank Offer Rate from time to time published by the South
African Reserve Bank
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
SLP Social and Labour Plan
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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