REG - Sylvania Platinum - Second Quarter Report to 31 December 2022
30/01/2023 07:01
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RNS Number : 2265O Sylvania Platinum Limited 30 January 2023
_____________________________________________________________________________________________________________________________
30 January 2023
Sylvania Platinum Limited
("Sylvania", the "Company" or the "Group")
Second Quarter Report to 31 December 2022
Sylvania (AIM: SLP), the platinum group metals ("PGM") producer and developer with assets in South Africa, announces its results for the quarter ended 31 December 2022 ("Q2" 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 19,276 4E PGM ounces in Q2 (Q1:
19,194 ounces);
* SDO recorded $37.1 million net revenue for the quarter (Q1: $42.9 million);
* Group EBITDA of $20.0 million (Q1: $26.4 million);
* Group cash balance of $123.9 million (Q1: $138.6 million) after payment of
the FY2022 dividend amounting to $25.6 million, as well as provisional income
and royalty taxes during the period;
* Zero Lost-time Injury ("LTI") across all SDO;
* ROM grades at Mooinooi have increased significantly contributing to
additional ounce production;
* Construction of the Tweefontein MF2 is complete with optimisation to be
concluded during Q3 FY2023;
* Mineral Resource Estimate ("MRE") and Scoping Study for the Volspruit
Project, which focussed solely on the Volspruit North Body announced; 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 quarter.
Outlook
* FY2023 production guidance increased, targeting 70,000 to 72,000 4E PGM ounces
following strong production in the first half of FY2023;
* Construction of the Lannex MF2 project continues and is scheduled for
commissioning towards the end of Q4 FY2023;
* Back-up power generation projects for Lesedi and Millsell are currently in
execution phase with targeted commissioning during Q4 FY2023;
* An updated MRE and Scoping Study is underway to combine the Volspruit North
and South Body and to include rhodium. This is anticipated to be completed by
Q1 FY2024;
* Focus remains on operational cost controls and reagent optimisation at all SDO
to explore improved efficiencies; and
* The Group maintains strong cash reserves to: allow funding of capital
expansion and process optimisation projects; upgrade the Group's exploration
and evaluation assets; and return value to shareholders.
Commenting on the Q2 results, Sylvania's CEO, Jaco Prinsloo said:
"I am pleased with the strong quarterly production of 19,276 4E PGM ounces
achieved by the SDO, delivering higher than planned ounces benefiting from
higher PGM feed grades and improved recovery efficiencies at the Lannex and
Mooinooi operations. Following a good start to the year, with excellent Q1 and
Q2 production performances, the Board has decided to revise the annual
production target to 70,000 to 72,000 4E PGM ounces for the 2023 financial
year.
"During the period, the Company paid the FY2022 dividend of 8 pence per
Ordinary Share, as well as provisional income and royalty taxes. At 31
December 2022, the Group remains in a strong cash position allowing it to fund
existing capital projects and growth opportunities and to return value to
shareholders.
"During October 2022, the Company announced results of the initial
optimisation studies for the Northern Limb Mineral Assets and progress
continues to be made on the optimisation of value from these exploration
assets. I look forward to receiving the results from our next phase of work
and communicating them to the market as we pursue these future value drivers
as part of the Company's growth strategy.
"Sylvania's interim financial results will be released on Tuesday, 21 February
2023 and I, and the Group CFO, Lewanne Carminati, will be hosting investor
webinars and shareholder meetings over the course of the week of release. I
look forward to engaging with our valued stakeholders during this time."
USD Unit Unaudited Unit ZAR
Q1 FY2023 Q2 FY2023 % Change % Change Q2 FY2023 Q1 FY2023
Production
691,953 645,832 -7% T Plant Feed T -7% 645,832 691,953
1.89 1.94 3% g/t Feed Head Grade g/t 3% 1.94 1.89
349,384 341,528 -2% T PGM Plant Feed Tons T -2% 341,528 349,384
3.15 3.22 2% g/t PGM Plant Feed Grade g/t 2% 3.22 3.15
54.26% 57.78% 6% % PGM Plant Recovery(1) % 6% 57.78% 54.26%
19,194 19,276 0% Oz Total 4E PGMs Oz 0% 19,276 19,194
24,067 24,630 2% Oz Total 6E PGMs Oz 2% 24,630 24,067
2,650 2,432 -8% $/oz 4E Gross basket price(2) R/oz -5% 42,859 45,161
Financials(3)
36,905 33,113 -10% $'000 Revenue (4E) R'000 -7% 583,437 628,830
3,382 3,587 6% $'000 Revenue (by-products including base metals) R'000 10% 63,210 57,626
2,634 357 -86% $'000 Sales adjustments R'000 -86% 6,283 44,879
42,921 37,057 -14% $'000 Net revenue R'000 -11% 652,930 731,335
11,789 11,382 -3% $'000 Direct operating costs R'000 0% 200,542 200,876
4,032 4,208 4% $'000 Indirect operating costs R'000 8% 74,137 68,703
690 788 14% $'000 General and administrative costs R'000 18% 13,887 11,756
26,423 20,005 -24% $'000 Group EBITDA(5) R'000 -22% 352,486 450,242
830 990 19% $'000 Net Interest R'000 23% 17,439 14,147
18,621 13,647 -27% $'000 Net profit(5) R'000 -24% 240,468 317,303
2,554 3,621 42% $'000 Capital Expenditure R'000 47% 63,802 43,520
138,629 123,895 -11% $'000 Cash Balance R'000 -16% 2,112,416 2,509,178
R/$ Ave R/$ rate R/$ 3% 17.62 17.04
R/$ Spot R/$ rate R/$ -6% 17.05 18.10
Unit Cost/Efficiencies
614 590 -4% $/oz SDO Cash Cost Per 4E PGM oz(4) R/oz -1% 10,404 10,465
490 462 -6% $/oz SDO Cash Cost Per 6E PGM oz(4) R/oz -2% 8,142 8,347
737 751 2% $/oz Group Cash Cost Per 4E PGM oz(4) R/oz 5% 13,237 12,563
588 588 0% $/oz Group Cash Cost Per 6E PGM oz(4) R/oz 3% 10,360 10,019
873 867 -1% $/oz All-in sustaining cost (4E) R/oz 3% 15,279 14,876
987 1,010 2% $/oz All-in cost (4E) R/oz 6% 17,803 16,823
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 of approximately 1,500 ounces delivered in
January 2023.
(2 ) The gross basket price in the table is the December 2022 gross 4E
basket used for revenue recognition of ounces delivered in Q2 FY2023, before
penalties/smelting costs and applying the contractual payability.
(3 ) Revenue (6E) for Q2, before adjustments is $36.7 million (6E prill
split is Pt 51%, Pd 17%, Rh 9%, Au 0%, Ru 16%, Ir 4%). Revenue excludes
profit/loss on foreign exchange.
(4) ( ) The cash costs include direct operating costs and exclude
indirect cost for example royalty tax and EDEP payments.
(5) The net profit and Group EBITDA excludes the profit on the sale of
Grasvally Chrome Mine (≈$1.4 million) previously held as an asset held for
sale.
A. OPERATIONAL OVERVIEW
Health, safety and environment
Health, safety and environment remains a focus area on all operations and the
Company is pleased to report that no significant occupational health or
environmental incidents occurred during the quarter and that all plants were
LTI-free for the period. The Doornbosch operation remains at 10 years
LTI-free, Lesedi achieved 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 delivered 19,276 4E PGM ounces for the quarter. The overall SDO PGM
recovery increased by 6%, and plant feed head grade increased 3%
quarter-on-quarter. PGM ounces were only marginally higher due to higher
concentrate work-in-progress inventory at the end of December 2022, which was
delivered in January 2023.
Lannex in particular achieved a step change improvement in recovery, following
the implementation of a new flotation reagent regime, whilst Mooinooi achieved
significantly improved recovery efficiencies due to better quality Run of Mine
("ROM") material received from the host mine during the period.
Despite South Africa experiencing significant Eskom loadshedding during recent
months, production was only impacted to a minor extent at Lesedi and Millsell,
which experienced total downtimes of five and two days respectively.
SDO operating cash costs per 4E PGM ounce decreased 1% in rand terms and
decreased 4% in dollar terms to ZAR10,404/ounce and $590/ounce (Q1:
ZAR10,465/ounce and $614/ounce) respectively. The average ZAR:USD exchange
rate depreciated by 3% during the quarter.
The Group incurred capital expenditure of ZAR63.8 million ($3.6 million), in
line with planned capital project schedules.
Operational focus areas
The successful implementation of the formal planned maintenance system at
Millsell is expected to improve plant availabilities and runtime, leading to
improved process stability and increased efficiencies. The roll out of the
system at selected priority operations is underway.
The Mooinooi operation continues to focus on communication with the host mine
in relation to the preferred source of ROM and associated grades. ROM grades
have increased significantly, and continued efforts are being made to sustain
this.
Operational opportunities
Continuous focus on improving availabilities, runtime and associated stability
has improved performance, resulting in an increase in metal recoveries during
the quarter. Reagent optimisation continues at all plants to explore improved
efficiencies.
Tweefontein MF2 construction is complete, and commissioning commenced during
December 2022. Improved performance is expected during the current quarter
with a steady increase in recoveries at the operation as the new flotation
circuit is optimised. Full optimisation is planned to be reached during Q3
FY2023. The Lannex MF2 project is under construction and scheduled for
commissioning towards the end of Q4 FY2023.
Cost management on all operations remains a focus area and costs have been
well controlled during the quarter. Continuous efforts are being made
throughout the SDO to further reduce costs.
B. FINANCIAL OVERVIEW
Financial performance
Revenue (4E) for the quarter decreased by 10% to $33.1 million (Q1: $36.9
million) impacted by the 8% decrease in the basket price recorded in December
and applied to calculate revenue for ounces produced and delivered in the
quarter but only invoiced in Q3, as well as the impact of the average USD to
ZAR exchange rate changes. The average 4E gross basket price for the quarter
was $2,432/ounce against $2,650/ounce in Q1. Net revenue for the quarter,
which includes base metals and by-products, and the quarter-on-quarter sales
adjustment was $37.1 million (Q1: $42.9 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 increased by 5% in rand terms from
ZAR12,563/ounce to ZAR13,237/ounce and increased 2% in dollar terms from
$737/ounce in the previous quarter to $751/ounce.
General and administrative costs increased from $0.69 million to $0.79
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 $20.0 million (Q1: $26.4 million) and net
profit was $13.6 million (Q1: $18.6 million), the decrease was primarily a
result of the lower basket price and slightly higher costs.
The Group cash balance was $123.9 million at the quarter end (Q1: $138.6
million). The cash dividend for FY2022 of 8 pence per Ordinary Share,
amounting to $25.6 million, was paid in December 2022 as well as the payment
of provisional income and royalty taxes of $10.8 million (ZAR189.7 million)
and $2.7 million (ZAR47.9 million) respectively.
Cash generated from operations before working capital movement was $19.9
million, with net changes in working capital amounting to $2.2 million, which
is mainly due to the changes in trade debtors and trade creditors. As trade
debtors arise from the concentrate delivered in the quarter but paid for in
the following quarter per the off-take agreement, the decrease in basket price
during Q2 resulted in a lower trade debtors balance quarter-on-quarter.
The Group spent $3.6 million on capital for the quarter compared to $2.6
million in the previous quarter.
The impact of exchange rate fluctuations on cash held at the end of Q2 FY2023
was $2.2 million profit due to the spot ZAR to USD exchange rate at 31
December 2022 appreciating by 6%.
C. MINERAL ASSET DEVELOPMENT
Volspruit Project
During October 2022, the Company announced results of the initial Scoping
Study for the Volspruit exploration asset located on the northern limb of the
Bushveld complex and which focussed on the North Body of the project area.
The North Body constitutes approximately 58% of the total project area and
indicated a positive investment return based on a conservative set of
assumptions used at the time. While the initial Volspruit Scoping Study
economics for the North Body do not meet the Company's internal investment
criteria and would not currently support a formal investment decision, the
inclusion of the rhodium resource, which was excluded in the initial study due
to classification of available data at the time, and the inclusion of
additional ore from the South Body material could contribute upside potential.
In the first quarter of the current financial year the studies continued on
the basis of including the South Body and rhodium resource in an updated
Scoping Study. The relogging of the Volspruit South Body commenced and is near
completion and the sampling of the historical core will be undertaken during
the third quarter to provide a full PGM assay (6E), which includes platinum,
palladium, rhodium, gold, ruthenium and iridium grades. The logging and
sampling data will be subject to a MRE during the fourth quarter, with the
results thereof becoming available during Q1 FY2024. Upon completion of these
studies an updated MRE which includes a rhodium resource, and a Preliminary
Economic Assessment ("PEA") across both the North and South Bodies will be
published.
We continue to meet the investment and workstream requirements relating to the
permits under the existing Mining Right, with specialist technical teams
currently working on the authorisations. These authorisations include the
Water Use Licence for the mining and on-site processing of the ore, updating
of the Environmental Impact Assessment ("EIA") and the finalisation of the
amended Social and Labour Plan ("SLP") which will update the Local Economic
Development
("LED") project that is included in the Mining Right held by the Company.
Far Northern Limb Projects
Following the declaration of an updated JORC compliant Mineral Resource over
the La Pucella exploration asset, an initial target area of the Aurora
Project, and the exciting discovery of the presence of the attractive near
surface T-Zone, as announced during October 2022, further resource
optimisation work continues to ensure future value can be captured from these
assets.
A concept level mining study over the JORC compliant Mineral Resource at La
Pucella is currently in progress with initial results identifying the
potential to improve the project valuation by increasing the volume of the
Mineral Resource. The relogging of boreholes in the strike extension
immediately north of La Pucella, into the Nonnenworth area, was completed
during the quarter. A new geological interpretation will now be completed
with the aim of increasing the mineral resource. An infill drilling programme
is planned to start during Q3 FY2023 on the approximately 2km of the
Nonnenwerth area to provide the required samples to subject the increased area
to an MRE. This will then allow for approximately 25% of the strike length
held in Mining Rights by the Company to be subject to an updated PEA rather
than initial 12% for La Pucella only. This is expected to be completed during
Q2 in FY2024.
A re-assay programme will run concurrently with the infill drilling programme
to improve the analytical confidence for the rhodium, copper and nickel
deposits over the La Pucella study area. The re-assay programme will further
include the analysis of iridium and ruthenium to ensure that a full range of
metals is considered.
The previous reported exploration results subjected to an MRE has been
completed for the Hacra Project where a maiden Inferred Resource has been
declared on the deep underground study area. A relogging project of historical
core commenced during Q2 FY2023 and will be completed during Q3 FY2023. The
relogged data will be subject to an MRE during Q3 and Q4 FY2023 and will
provide an updated MRE for the Hacra Project including the maiden deep level
Inferred Resource completed and the near surface Mineral Resource located in
the south of the project area at the financial year end.
D. CORPORATE ACTIVITIES
Cancellation of Ordinary Shares
The Company announced on 16 December 2022 that it had cancelled 1,155,657
ordinary shares of $0.01 each ("Ordinary Shares") held in treasury.
Following the cancellation, the Company's issued share capital is 279,000,000
Ordinary Shares, of which a total of 12,199,212 Ordinary Shares are held in
treasury. Therefore, the total number of Ordinary Shares with voting rights in
Sylvania is 266,800,788 Ordinary Shares.
Interim financial results announcement
The Company will announce its interim results for the six months ended 31
December 2022 on Tuesday 21 February 2023.
Analyst presentation
The Company will be hosting a webinar for analysts on the day of release of
its interim results. To register your interest, please email
sylvania@BlytheRay.com.
Online investor presentation
Sylvania's CEO, Jaco Prinsloo, and CFO, Lewanne Carminati, will host a live
investor presentation, via the Investor Meet Company platform, on Wednesday 22
February 2023 at 12:00 GMT.
The Company is committed to ensuring that there are appropriate communication
channels for all elements of its shareholder base so that its strategy,
business model and performance are clearly understood.
The presentation is open to all existing and potential shareholders. Questions
can be submitted pre-event via the Investor Meet Company dashboard up until
09.00 GMT the day before the meeting or at any time during the live
presentation.
Investors can sign up to Investor Meet Company for free and include Sylvania
Platinum Limited via
https://www.investormeetcompany.com/sylvania-platinum-limited/register-investor
(https://www.investormeetcompany.com/sylvania-platinum-limited/register-investor)
Investors who have already registered and elected to meet the Company, will be
automatically 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 / 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/)
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 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
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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