REG - Sylvania Platinum - Half-year Report to 31 December 2021
21/02/2022 07:01
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RNS Number : 2572C Sylvania Platinum Limited 21 February 2022
_____________________________________________________________________________________________________________________________
21 February 2022
Sylvania Platinum Limited
("Sylvania", the "Company" or the "Group")
Interim financial results for the six months ended 31 December 2021
Sylvania (AIM: SLP) is pleased to announce the results for the six months ended 31 December 2021. Unless otherwise stated, the consolidated financial information contained in this report is presented in United States Dollars ("USD" or "$").
Operations and finance
* Sylvania Dump Operations ("SDO") delivered 32,376 4E PGM ounces (HY1 FY2021:
36,335 4E PGM ounces);
* Net revenue generated for the period totalled $69.1 million (HY1 FY2021: $84.9
million);
* Average gross PGM basket price of $2,966/oz (HY1 FY2021: $3,184/oz);
* Group EBITDA of $36.2 million (HY1 FY2021: $58.0 million);
* Net profit of $24.4 million (HY1 FY2021: $40.5 million);
* Cash balance at 31 December 2021 of $110.1 million (HY1 FY2021: $67.1
million);
* Amended Sale Agreement signed for the sale of the 74% share held in Grasvally
Chrome Mine (Pty) Ltd to a 100% empowerment company for ZAR100.0 million ($6.7
million);
* Bought back 1,873,430 shares from employees, all transferred to Treasury;
* Final dividend of 4p per Ordinary Share for FY2021 paid in December 2021
(FY2020:1.6p); and
* Windfall Dividend of 2.25p per Ordinary Share declared by the Board, to be
paid in April 2022.
Challenges
* Lower than planned Run of Mine ("ROM") and current arising PGM feed grades at
the Western operations have affected production. Management, in conjunction
with the host mine, continued to explore alternative feed sources and to
implement processes to optimise feed grades and increase recovery efficiency
at the affected operations; and
* The temporary suspension of operations at Lesedi extended through Q1 and,
subsequent to start-up, the plant incurred further downtime related to general
water shortages at the Western operations during Q2 which was further
exacerbated by the temporary tailings deposition strategy. Post period end,
the operation commissioned a new water supply from additionally installed
boreholes and commenced with commissioning of the newly constructed tailings
dam facility that will further mitigate water shortages.
Opportunities
* Lesedi MF2 is on track and expected to commission in March 2022;
* The Tweefontein MF2 project is progressing well and expected to commission
later during this calendar year as planned; and
* The Group remains debt free and continues to generate sufficient cash reserves
to fund capital expansion projects.
Board Update
* Sylvania appointed Adrian Reynolds and Simon Scott as Independent,
Non-executive Directors effective 1 August 2021 and 1 January 2022
respectively; and
* Roger Williams stepped down from his role as Non-executive Director effective
31 December 2021 after serving on the Board of the Company since 2011.
Commenting on the period, Sylvania's CEO Jaco Prinsloo said:
"The SDO has achieved 32,376 ounces of PGM production in the period, with a
solid performance from most operations, especially Tweefontein, which achieved
new record quarterly and six-monthly production performances which helped
mitigate the lower production from Mooinooi and Lesedi during the period.
However, the lower PGM feed grade of Mooinooi ROM material received, the
impact of the temporary production stoppage at Lesedi and subsequent water
shortages, as well as some water supply issues which are being addressed, have
affected production from our Western operations. As a result, we have made a
modest adjustment to our annual PGM production estimate, with a range of
66,000 to 68,000 ounces now targeted by the Company.
"Based on the progress that we are making with the Lesedi MF2, which we plan
to commission in March, as well as the provisional results from targeted
sampling campaigns and investigations to evaluate potential alternative feed
sources to mitigate current low ROM feed grades at Mooinooi, we are expecting
a stronger production performance during HY2 FY2022.
"Through the continuous efforts of our employees and operations that drive
sustainable production, and assisted by the strong PGM basket price, the
Company continues to generate sufficient cash to fund both expansion
requirements and to return value to shareholders. As a result, I am pleased to
announce that, in addition to the annual dividend paid during the period, the
Board has approved the payment of a second Windfall Dividend of 2.25p per
Ordinary Share, payable in early April 2022. As with the first Windfall
Dividend paid in April 2021, this dividend payment is based on excess cashflow
generated from PGM prices achieved above long-term broker consensus prices for
these metals for the 2021 calendar year. Actual achieved production, metal
prices, ZAR exchange rate, as well as our share of mineral royalties,
corporate and dividend withholding taxes have been taken into account in the
determination.
"In addition, the Company will continue to execute further share buy backs as
opportunities arise as part of its commitment to returning value to
shareholders. As the Company already holds sufficient shares in Treasury for
the current bonus share awards and the Employee Dividend Entitlement Plan, any
such shares acquired will be cancelled."
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 ZAR:USD exchange rate was
ZAR15.03:$1 and the spot exchange rate was ZAR15.95:$1.
USD Unit Unaudited Unit ZAR
HY1 2021 HY1 2022 % Change % Change HY1 2022 HY1 2021
Production
1,421,445 1,184,996 -17% T Plant Feed T -17% 1,184,996 1,421,445
1.93 1.91 -1% g/t Feed Head Grade g/t -1% 1.91 1.93
632,079 589,240 -7% T PGM Plant Feed Tons T -7% 589,240 632,079
3.20 3.17 -1% g/t PGM Plant Feed Grade g/t -1% 3.17 3.20
55.66% 53.93% -3% % PGM Plant Recovery % -3% 53.93% 55.66%
36,335 32,376 -11% Oz Total 4E PGMs Oz -11% 32,376 36,335
49,224 41,828 -15% Oz Total 6E PGMs Oz -15% 41,828 49,224
3,184 2,966 -7% $/oz Average gross basket price(1) R/oz -8% 44,574 48,296
Financials(2)
77,250 65,812 -15% $'000 Revenue (4E) R'000 -21% 989,094 1,253,040
3,328 5,628 69% $'000 Revenue (by-products including base metals) R'000 57% 84,585 53,988
4,319 -2,384 -155% $'000 Sales adjustments R'000 -151% -35,842 70,051
84,897 69,056 -19% $'000 Revenue R'000 -25% 1,037,837 1,377,079
23,560 27,644 17% $'000 Operating costs R'000 9% 415,466 382,138
1,119 1,352 21% $'000 General and administrative costs R'000 12% 20,322 18,154
58,026 36,166 -38% $'000 Group EBITDA R'000 -42% 543,532 941,223
574 363 -37% $'000 Net Interest R'000 -42% 5,449 9,316
16,864 10,527 -38% $'000 Taxation R'000 -42% 158,214 273,540
1,203 1,641 36% $'000 Depreciation and amortisation R'000 26% 24,659 19,514
40,534 24,360 -40% $'000 Net profit R'000 -44% 366,108 657,485
2,488 7,414 198% $'000 Capital Expenditure R'000 176% 111,421 40,350
67,095 110,062 64% $'000 Cash Balance R'000 78% 1,755,066 986,406
- - R/$ Ave R/$ rate R/$ -7% 15.03 16.22
- - R/$ Spot R/$ rate R/$ 8% 15.95 14.70
Unit Cost/Efficiencies
616 815 32% $/oz SDO Cash Cost per 4E PGM oz(3) R/oz 23% 12,256 9,996
455 631 39% $/oz SDO Cash Cost per 6E PGM oz(3) R/oz 29% 9,486 7,376
667 881 32% $/oz Group Cash Cost Per 4E PGM oz(3) R/oz 22% 13,247 10,825
493 682 38% $/oz Group Cash Cost Per 6E PGM oz(3) R/oz 28% 10,254 7,991
751 1,025 36% $/oz All-in sustaining cost (4E) R/oz 26% 15,404 12,188
801 1,216 52% $/oz All-in cost (4E) R/oz 41% 18,273 12,988
(1 )The gross basket price in the table is average gross basket for the
period, used for revenue recognition of ounces delivered over HY1 FY2022,
before penalties/smelting costs and applying the contractual payability.
(2 )Revenue (6E) for HY1 FY2022, before adjustments is $71.1 million (6E prill
split is Pt 50%, Pd 18%, Rh 9%, Au 0.3%, Ru 18%, Ir 5%).
(3 )The cash costs include direct operating costs and exclude royalty tax.
A. OPERATIONAL OVERVIEW
Health, safety and environment
During the period under review there were no significant occupational health
or environmental incidents reported. The Doornbosch operation remains
nine-years Lost-time Injury ("LTI") free, while Millsell and Lesedi achieved
the milestones of one-year and two-years LTI-free respectively during the
period. Unfortunately, Mooinooi suffered one LTI during July 2021 when an
employee fractured a finger during maintenance.
Operational performance
The SDO achieved 32,376 ounces for the first half of the 2022 financial year.
Half-year on half-year PGM production decreased 11%, primarily due to lower
treatment volumes at Lesedi. A combination of lower PGM feed grades and
recovery efficiencies associated with ROM material received from the host mine
at Mooinooi and Lannex during the period, also contributed to the decrease.
While all other operations either met or exceeded their planned production
volumes, the 7% decrease in PGM plant feed tons during the period was due to
the tailings dam related production interruption and water shortages at
Lesedi. PGM plant feed grade decreased by 1% during the period, associated
with lower grade dump feed at Millsell and low-grade ROM sources at Mooinooi.
PGM plant recovery decreased 3% when compared to HY1 FY2021, primarily related
to higher ratios of more oxidised ROM material treated at the Lannex and
Mooinooi operations.
An increase of 23% in SDO cash costs per ounce in ZAR terms, impacted by the
lower PGM ounce production, combined with a 7% stronger ZAR:USD exchange rate,
resulted in an increase of 32% in USD terms from $616/oz to $815/oz. A higher
electricity cost due to above inflation rate increases and higher mining cost
due to a host mine subsidy incurred in an attempt to secure higher grade feed
material, also affected the increase in the cash cost. In addition, a rise in
the consumption of consumables to accommodate the higher ratio of ROM material
at Lannex, as well as more oxidised material at Mooinooi and Lesedi, were the
most significant contributors to the higher cash cost. Cost control remains
key and management continues to drive various strategies focussed on
efficiently managing costs.
Operational focus areas
During the period, the SDO continued to engage with the host mines in order to
address the lower PGM grades in ROM and current arising sources, as well as
optimisation of blending activities from surface sources. Various sampling
campaigns and investigations have been performed together with the host mine
to evaluate potential alternative feed sources. It is anticipated that ROM
feed grades should improve during HY2 FY2022.
The remedial action plan to mitigate associated risks relating to the Lesedi
tailings facility, which necessitated a temporary stoppage of operations in
Q1, involved the commencement of hydro-mining of the affected tailings
facility during the period. However, due to the nature of the emergency
tailings deposition facility and difficulty in recovering return-water from
it, combined with general water shortages in the area, the operation had not
been able to ramp up to normal production levels in Q2 as anticipated. Post
period end, the operation commissioned a new water supply from additionally
installed boreholes and has also commenced the commissioning of the newly
constructed tailings facility, which is expected to alleviate water shortages
allowing the commencement of normal operations.
In addition to water constraints, power supply to operations remains a focus
area, as vandalism and cable theft at substations continue, often resulting in
unplanned delays to the operations. Power mitigation strategies have been
developed and are being implemented at the most affected operations.
Capital Projects
Despite the impact of the recent global computer chip shortage which has
affected some timelines for deliverables, the Lesedi MF2 is still expected to
commission next month. In addition, the execution of the Tweefontein MF2
project is progressing well and expected to commission later this calendar
year. The construction of these MF2 modules will improve the upgrading and
recovery of PGM's at the respective operations.
The construction works on the new Lesedi tailings dam facility are nearing
completion, with early commissioning now underway. Construction of the new
Mooinooi and Doornbosch tailings facilities is progressing well. These new and
improved tailings facilities comply with the highest international standards
and are designed to both reduce the impact of mine tailings on the environment
and improve operability.
Capital spend increased during the current period compared to the prior year
corresponding period from $2.5 million to $7.4 million, comprising $6.1
million optimisation and stay in business capital that includes the
abovementioned projects, as well as $1.3 million spend on exploration
projects. All capital projects are fully funded from current cash reserves.
Outlook
With the Lesedi MF2 expected to commission next month together with the
implementation of initiatives to address both the water shortages at the
Western operations and the current low ROM feed grades, we are expecting PGM
ounce production to improve during HY2 FY2022.
While the average 4E PGM basket price for HY1 FY2022 was approximately 30%
lower than HY2 FY2021, we remain cautiously optimistic in terms of the PGM
price outlook. Based on market forecasts for Palladium and Rhodium to remain
in deficit and demand forecast to increase with vehicle sales as the global
chip shortage is resolved, we are expecting PGM prices to remain healthy with
potential modest upside from current levels as the year progresses. While
electric vehicle sales have increased sharply during the past year, especially
as internal combustion engine ("ICE") vehicles sales were impacted by the
global chip shortages, PGM consumption in ICE vehicles is expected to remain
robust for the short to medium term based on the balance of market
fundamentals.
As always, the Company will continue to focus on that which we are able to
control, with our specific focus on improving direct operating costs,
maintaining a safe, stable and efficient production environment, and ensuring
disciplined capital allocation and control.
Impact of COVID-19
The effects of COVID-19 on both employees and operations have remained a key
focus of the Company. South Africa exited from a fourth more transmissible
wave of COVID-19 during the period and the extended effects of the pandemic on
employees and their families have been recognised by management. Although the
Company acknowledges that vaccines are a personal choice, together with
control protocols, the Company believes that vaccination is key in the fight
against the pandemic.
An Employee Assistance Program ("EAP") was launched to assist with the direct
and indirect impacts of the pandemic on the work force. The EAP also provides
emotional counselling for a number of personal life traumas and financial and
legal advice. The service is available to all employees of the Group as well
as their immediate family.
As of 31 December 2021, the Company recorded 138 positive cases of COVID-19
amongst employees since the start of the pandemic. Post period end, one active
case was recorded with the affected employee having returned to work as of the
date of release of this announcement. With the increase in vaccinated
individuals, as well as the natural immunity that has built up in the
population, the South African government has adjusted the Level 1 lockdown
regulations. No further forced closure of operations is anticipated.
B. FINANCIAL OVERVIEW
31 December 2021 31 December 2020
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
For the half year ended 31 December 2021
$ $
Note(s) Reviewed Reviewed
Revenue 1 69,055,528 84,896,812
Cost of sales (29,192,755) (24,709,262)
Royalties tax (3,046,322) (2,595,982)
Gross profit 36,816,451 57,591,568
Other income 38,607 332,350
Other expenses 2 (2,330,331) (1,100,567)
Operating profit before net finance income/costs and income tax expense 34,524,727 56,823,351
Finance income 731,855 888,300
Finance costs (369,302) (313,996)
Profit before income tax expense 34,887,280 57,397,655
Income tax expense 3 (10,527,209) (16,863,716)
Net profit for the period 24,360,071 40,533,939
Other comprehensive income/(loss)
Items that are or may be subsequently reclassified to profit and loss:
Foreign operations - foreign currency translation differences (13,222,604) 20,661,835
Total other comprehensive income/(loss) (net of tax) (13,222,604) 20,661,835
Total comprehensive income for the year 11,137,467 61,195,774
Cents Cents
Earnings per share attributable to the ordinary equity holders of the Company:
Basic earnings per share 8.93 14.90
Diluted earnings per share 8.86 14.56
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 dividend withholding tax
The average gross basket price for the six months to 31 December 2021 was
$2,966/oz compared to $3,184/oz for the six months ended 31 December 2020. The
Group recorded net revenue of $69.1 million for the six months to 31 December
2021, a 19% decrease half-year on half-year, as a result of the lower PGM
ounce production and basket price, as well as a negative sales adjustment for
the period.
The operational cost of sales represents the direct and indirect costs of
producing the PGM concentrate and amounted to ZAR415.5 million for the
reporting period compared to ZAR382.1 million for the six months to 31
December 2020. The main cost contributors being salaries and wages of ZAR144.5
million (HY1 FY2021: ZAR135.0 million), mining costs of ZAR53.2 million (HY1
FY2021: ZAR44.3 million), reagents and milling costs of ZAR33.0 million (HY1
FY2021: ZAR31.0 million), and electricity of ZAR55.8 million (HY1 FY2021:
ZAR49.5 million).
Group cash cost per ounce was ZAR13,247/oz compared to ZAR10,825/oz in the
previous corresponding period impacted mainly by the lower ounce production.
The all-in sustaining cost ("AISC") for the Group amounted to ZAR15,404/oz and
an all-in cost ("AIC") of ZAR18,273/oz for the period to 31 December 2021.
This compares to the AISC and AIC for 31 December 2020 of ZAR12,188/oz and
ZAR12,988/oz respectively.
General and administrative costs were $1.4 million (ZAR20.3 million) for the
six months to 31 December 2021 compared to $1.1 million (ZAR18.2 million) for
the corresponding period in the prior year. These costs are incurred in USD,
GBP and ZAR and relate mainly to share registry costs, regulatory costs,
insurance, advisory and public relations costs, consulting and legal fees and
stock exchange costs.
Interest is earned on surplus cash invested in South Africa at an average
interest rate of 3.9% per annum. Interest was paid on instalment sale
agreements for the purchase of movable plant and vehicles; however, all
instalment sale agreements were settled during the six-month period and no
further cost will be incurred.
Income tax is paid in ZAR on taxable profits generated at the South African
operations at a rate of 28%. The income tax charge for the six months to 31
December 2021 was ZAR136.1 million compared to ZAR264.8 million for the six
months to 31 December 2020 due to the decrease in profit. Deferred tax
movements for the Group relate mainly to unredeemed capital expenditure and
provisions. Dividend withholding tax of $1.3 million was paid on internal
dividends paid from Sylvania Metals for the six-month period.
31 December 2021 31 December 2020
CONSOLIDATED STATEMENT OF CASHFLOWS
For the half year ended 31 December 2021
$ $
Reviewed Reviewed
Net cash inflow from operating activities 4 31,599,803 12,327,520
Net cash outflow from investing activities 5 (8,109,477) (2,593,164)
Net cash (outflow) from financing activities 6 (17,178,177) (7,332,565)
Net increase in cash and cash equivalents 6,312,149 2,401,791
Effect of exchange fluctuations on cash held (2,385,646) 8,816,921
Cash and cash equivalents at the beginning of reporting period 106,135,435 55,876,612
Cash and cash equivalents at the end of the reporting period 110,061,938 67,095,324
Note: This is a condensed cashflow statement. Please refer to the Half Year
Interim Financial Statements for more detail.
4. Net cash inflow from operating
activities includes a net operating cash inflow of $43,062,803, net finance
income of $716,028 and taxation paid of $12,179,028.
5. Net cash outflow from investing
activities includes payments for property, plant and equipment of $6,123,805,
exploration and evaluation assets of $1,289,934, loan to joint operation
$696,237 and cash inflow of $499 from proceeds on disposal of property, plant
and equipment.
6. The net cash outflow from financing
activities consists of the repayment of borrowings of $122,657, payment of
lease liabilities of $56,691, payments for share transactions of $2,399,256
and dividends declared and paid of $14,609,573.
Cash is held in USD and ZAR. As at 31 December 2021, the Company's cash and
cash equivalents balance was $110.1 million. Cash generated from operations
before working capital was $36.4 million for the reporting period, with
working capital contributing an inflow of $6.7 million mainly due to the
movement in trade receivables as a result of the decrease in the gross basket
price received. $10.9 million was paid in provisional income tax and the
Company spent $7.4 million on capital expenditure comprising of $6.1 million
on specific optimisation and stay in business projects, and $1.3 million on
exploration projects. In December 2021, $14.6 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 strengthening ZAR:USD exchange rate
will have a favourable impact on the Group cash balance and a weakening of the
ZAR against the USD will have the opposite effect.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION 31 December 2021 30 June 2021
For the half year ended 31 December 2021
$ $
Note(s) Reviewed Audited
ASSETS
Non-current assets
Exploration and evaluation expenditure 45,762,424 45,351,817
Property, plant and equipment 40,136,010 39,915,437
Other financial assets 7 815,628 298,864
Total non-current assets 86,714,062 85,566,118
Current assets
Cash and cash equivalents 8 110,061,938 106,135,435
Trade and other receivables 9 53,985,850 68,612,119
Other financial assets 7 896,328 885,593
Inventories 10 3,995,753 3,838,147
Current tax asset 5,600,489 4,329,860
174,540,358 183,801,154
Assets held for sale 3,822,067 4,216,190
Total current assets 178,362,425 188,017,344
Total assets 265,076,487 273,583,462
EQUITY AND LIABILITIES
Shareholders' equity
Issued capital 11 2,861,557 2,861,557
Reserves 12 50,152,220 65,314,647
Retained profit 185,527,219 175,776,721
Total equity 238,540,996 243,952,925
Non-current liabilities
Borrowings 13 15,889 70,956
Provisions 14 4,121,754 4,539,937
Deferred tax liability 11,979,442 11,154,515
Total non-current liabilities 16,117,085 15,765,408
Current liabilities
Trade and other payables 10,338,464 13,652,017
Borrowings 13 79,942 212,651
10,418,406 13,864,668
Liabilities directly associated with the assets classified as held for sale - 461
Total current liabilities 10,418,406 13,865,129
Total liabilities 26,535,491 29,630,537
Total liabilities and shareholder's equity 265,076,487 273,583,462
7. Other financial assets mainly
consist of:
o The loan receivable granted to TS Consortium from Sylvania South
Africa (Pty) Ltd, a South African subsidiary of the Group. TS Consortium is a
joint operation research and development project. Sylvania South Africa (Pty)
Ltd increased it's 50% interest in the joint operation to 75% in December
2021.
o Third party loan which is secured over the Grasvally Plant, bears
interest at the Johannesburg Inter-Bank Offer Rate (JIBOR) + 3%, compounded
monthly in arrears.
8. Cash and cash equivalents are held
in ZAR and USD. ZAR denominated balances make up $39,883,440 (ZAR635,987,941)
of the total cash and cash equivalents balance.
9. Trade and other receivables consist
mainly of amounts receivable for the sale of PGMs.
10. Inventory held is spares and
consumables for the SDO.
11. The total number of issued ordinary
shares at 31 December 2021 is 286,155,657 Ordinary Shares of US$0.01 each
(including 13,170,222 shares held in treasury), 1,873,430 shares were bought
back from employees and 2,385,000 bonus shares were exercised.
12. 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, the
non-controlling interests reserve and the equity reserve.
13. Borrowings relate to the right-of-use
lease liability.
14. 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 and opencast mining projects
As announced in the Annual Report FY2021, the Group assesses the value of its
mineral asset development projects on a regular and consistent basis. Various
studies have been initiated in order to determine how best to optimise the
respective projects and consultants were engaged in the prior year to assist
with further research and provide the Board with sufficient data and
information to make decisions on these projects.
Grasvally Chrome Project
An amended Sale Agreement was signed on 3 November 2021 whereby Sylvania sold
its 74% share in Grasvally Chrome Mine (Pty) Ltd to a 100% empowerment
company. Sales proceeds of ZAR100.0 million ($6.7 million), payable in fifteen
equal quarterly instalments, will become payable after completion of certain
conditions precedent being fulfilled, including an application for ministerial
consent for the sale in terms of section 11 of the Mineral and Petroleum
Resources Development Act. This has been submitted to the Department of
Mineral Resources and Energy and the Company awaits the outcome.
Volspruit Platinum Project
The fieldwork for the specialist studies in aid of updating the Environmental
Impact Assessment and Water Use License applications has been completed. The
inclusion of these studies and the already completed detailed design form part
of the overall process to conclude the outstanding mandated authorisations
required on the project.
Based on the findings of the initial mining optimisation phase of the study,
additional metallurgical test work was commissioned, which included tests
aimed at increasing the payability of the PGM concentrate expected to be
produced by the project. The Company expects the report of the current test
work in Q4 FY2022.
Northern Limb Projects
The Company employed specialist consultants to assist in evaluating the
Northern Limb resources and to explore the economic potential of the deposits
on the Hacra and Aurora properties. This study is aimed at improving the
resource classification and updating the resource model and included infill
drilling and additional assaying. The drilling has now been completed on both
areas and the geological logging, sampling and assaying of the drilled core is
currently in progress. The updated resource model will then be subjected to a
scoping level mining study to evaluate a new business case for the area of the
Mining Right with the final study reports expected during Q1 FY2023.
D. CORPORATE ACTIVITIES
Dividend Payment
On 3 December 2021, the Board paid a dividend for FY2021 totalling $14.6
million, equating to 4p per Ordinary Share, to shareholders on the register on
the record date of 29 October 2021.
In addition to the FY2021 dividend paid, the Board has approved a Windfall
Dividend of 2.25p per Ordinary Share for the calendar year 2021, payable on 8
April 2022. Payment of the Windfall Dividend will be made to shareholders on
the register at the close of business on 4 March 2022 and the ex-dividend date
is 3 March 2022.
Transactions in Own Shares
2,385,000 Ordinary Shares were exercised by various persons displaying
management responsibilities ("PDMRs") and employees which vested from bonus
shares awarded to them in August 2018. 1,066,850 of the vested bonus shares
were repurchased to satisfy the tax liabilities of certain PDMRs and
employees, and an additional 806,580 shares were bought back from various
employees. All shares awarded came from Treasury.
Accordingly, at the end of the period the Company's issued share capital was
286,155,657 Ordinary Shares, of which a total of 13,170,222 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 272,985,435.
The Company will continue to evaluate further share buy backs as the
opportunity arises as part of its commitment to returning value to
shareholders. Any shares acquired will be cancelled.
Directorate Changes
Sylvania appointed Adrian Reynolds and Simon Scott as Independent,
Non-executive Directors effective 1 August 2021 and 1 January 2022
respectively. Roger Williams stepped down from his role as Non-executive
Director effective 31 December 2021 after serving on the Board of the Company
since 2011.
As a result of the Directorate changes, and as part of a Board succession
plan, the following changes in committee roles were effected: Eileen Carr was
appointed Chair of the Audit Committee, Adrian Reynolds was appointed Chair of
the Remuneration Committee and Simon Scott has become a member of the Audit
Committee. Eileen Carr's role as Assistant Company Secretary is now being
carried out by a member of the Company's in-house legal staff.
During the period the Company was notified that one of the Company's
Independent, Non-executive Directors, Adrian Reynolds, purchased 20,000
Ordinary Shares, representing 0.007% of the total number of Ordinary Shares
with voting rights in the Company, from the market.
E. ENVIRONMENT, SOCIAL AND GOVERNANCE (ESG)
Based on the UN Sustainable Development Goals ("UNSDGs"), the Company
published its "Pathway to ESG" report in the FY2021 Annual Report. The
following update aligns Sylvania's ESG risks, opportunities and exposure areas
to the Company's values, guiding principles and ESG goals in order to provide
progress and performance feedback. The main driver over the period has been
the Company's adoption of ESG reporting, including defining key performance
indicators ("KPIs)", establishing baselines and determining data gaps.
Environment
Waste and pollution management
The continuous reworking of mineral waste dumps and the re-depositing of
tailings on the same or enhanced storage facilities has an inherent positive
impact on the environment. Not only is the volume of mineral waste reduced
(through the abstraction of Chrome and PGMs) but also the potential pollution
from seepage or tailings spillages from tailings storage facilities ("TSF")
are minimalised. Nevertheless, a Rehabilitation Fund has been established by
the Company which is reviewed periodically and contributions made as required.
The Company is currently busy with the construction of three new and improved
tailings facilities, at Lesedi, Mooinooi and Doornbosch, which comply with the
highest international standards and are designed to both reduce the impact of
the mine tailings on the environment and improve operability.
Non-mineral waste is separated at source in terms of general, scrap and
hazardous waste. Disposal is facilitated through the host mine's waste
management processes. An area for future focus has been identified which will
both improve the quantification of Sylvania's waste footprint and give formal
assurance on legal disposal.
Carbon transition and related risks
The main focus areas pertaining to the Company's carbon transition relate to
opportunities linked to energy optimisation, as well as investigation into
renewable energy. Sylvania's current emissions calculations, which are below
acceptable thresholds, are based on Scope 1 and Scope 2 emission sources from
the national power utility, diesel generation and diesel used. Scope 1 and
Scope 2 sources are 'direct emissions from owned or controlled sources' and
'indirect emissions from the generation of purchased electricity, steam,
heating and cooling consumed by the company' respectively. Scope 3 includes
all other indirect emissions that occur in a company's value chain.
The intention is that strategies focussed on reduction in energy intensity
through optimisation, reduction and replacement of Scope 1 and Scope 2 energy
sources with alternatives will be considered, and finally, the recovery of
emissions will be implemented. During the reporting period, the following
actions towards realisation of emissions reduction include, but are not
limited to:
* Power factor correction installed on 83% of the SDO plants, thereby reducing
KVA feeding from the host mine;
* Newer lighting installations utilising only low-energy LED, with the
systematic replacement of older lighting to this efficient technology; and
* Studies have been initiated at two plants to assess the suitability of
possible photovoltaic (PV) plants to supplement the daily power usage
reverting back to supply from the national power utility.
For the Sylvania Group, greenhouse gases ("GHG") (diesel related only) emitted
in HY1 FY2022 for GHG Protocol Scope 1 emissions are approximately
1,121.45(( 1 )) tCO2e(( 2 )) (tons of carbon dioxide equivalent). These
figures have not been verified independently at the time of release and are
included as a guide.
Regarding the existing energy consumption, projects and initiatives, Sylvania
is in the process of determining the following:
* Average annual greenhouse gas emissions in the form of a carbon equivalent
figure (tC02e);
* Identification of greenhouse gases (e.g.: carbon dioxide, methane, nitrous
oxide, F-gases), and formalisation of reporting of metric tons of carbon
dioxide equivalent (tCO2e) for GHG Protocol Scope 1 and Scope 2 emissions;
* Estimate and report on the appropriate material upstream and downstream (GHG
Protocol Scope 3) emissions;
* GHG Intensity Industry Average (tC02e/ton product); and
* Ensuring that Sylvania proactively understands its carbon footprint and is
aligned with international trends and acceptable standards for carbon related
disclosures (2021 DEFRA Guidelines GHG Conversion Factors for Company
Reporting).
Carbon and energy related aspects:
Indicator FY21 (Total) FY21 (Monthly average) HY1 FY22 (Total) HY1 FY22 (Monthly average) Comments
Diesel consumption in litres by operation of buildings (Generators) 320,000.00 26,667.70 13,515.86 2,252.60 Significant reduction due to Tweefontein and Lannex generators only required
for power failures and not for co-generation.
Electricity purchased from host mine (Buildings Owned or Controlled) in kwh 85,877,892.00 7,156,491.00 43,964,238.00 7,327,373.00 Slight increase to electrical upgrades at Tweefontein and Lannex.
Scope 1: GHG emissions (tC02e) 1,121.45(( 3 )) 93.46 168.87(( 4 )) 28.16
Scope 2: GHG emissions (tC02e) 92, 748.12 (( 5 )) 7, 729.01 47,481.38 7,913.6
Water management
Water management is an ongoing focus area and current monitoring data is being
reworked and developed to include a breakdown into the various sources,
through the installation of additional water monitors to provide more detailed
information. This will aid in the refinement of effective water management
strategies.
Social
Community, customer and stakeholder relationship
Engagement and communication with employees and stakeholders are driven
through the Employment Engagement Forums ("EEFs") as well as the Community
Liaison Officers ("CLOs"). Both mechanisms have been effective in bringing the
Company's attention to the needs and expectations of stakeholders.
Furthermore, funding has been allocated for community learnership programmes
in both the Eastern and Western regions, with 41.5% of this budget already
spent in the period. A portion of the Corporate Social Investment ("CSI")
budget was spent on various community projects, focussing on schools, feeding
schemes, entrepreneurial development, as well as awareness programs within the
community.
Demographics and diversity
The Company supports the strategic drive for Women in Mining and the workplace
profile of women increased 0.6% in the period. Employment of members from
local communities has grown 27% in the six months to 31 December 2021.
Human Capital
Aligned with the commitments of the Annual Training Plan, several training and
development programmes were facilitated by the human resources functions of
the Company. These form part of the development process of individuals and is
reported on as part of the Workplace Skills Plan submitted to the Mining
Qualification Authority annually.
Health and safety performance
During HY1 FY2022, no fatal incidents occurred, and both the Lost Time Injury
Frequency Rate ("LTIFR") and Total Recordable Injury Frequency Rate ("TRIFR")
are given in the table below. Furthermore, no occupational illnesses were
recorded in this reporting period.
Safety, health and environmental incident statistics
Indicators FY21 HY1 FY22
Total Recordable Injury Frequency Rate 1,230 1,064
Lost Time Injury Frequency Rate 0,246 0,213
Fatal Injury Frequency Rate 0,00 0,00
First Aid Cases (FAC) 4 2
Medical treatment cases (MTC) 4 2
Lost time injuries (LTI's) 2 1
Reportable injuries 1 1
Occupational Illness/ disease 1 0
COVID-19
Although the numbers of COVID-19 positive cases reported by the Company
increased to 138 during the period, the impact and severity has reduced with
no COVID-19 related deaths being reported in HY1 FY2022. This is attributed to
vaccination of staff, growing immunity through infection and compliance with
other COVID-19 related controls. Operational disruptions due to the COVID-19
pandemic during the period were minimal.
The Company launched an EAP as part of employee wellness to assist with the
direct and indirect impacts of the COVID-19 pandemic on the work force. The
EAP is detailed in the COVID-19 impacts section of this report.
Governance
Policy and Guidelines
Sylvania is regularly updating and improving its business and strategic
policies. These are aligned with the expectation of stakeholders and are
focussed on legal compliance and the management of business risks, providing
the required teams needed to drive the implementation of the commitments made
within its policies.
In terms of compliance with the Mine Health and Safety Act, 1996, no Section
54 or 55 instructions were issued by the Department of Mineral Resource and
Energy ("DMRE") regarding any non-compliance issues noted at operational
levels.
Economic contribution
Sylvania's economic contribution to society is detailed throughout this Half
Year Report which highlights aspects linked to:
1. Total SA procurement including procurement from local/ host communities
2. Employee and related payments including:
• Salaries and wages
• Contributions and employees' tax paid
• Employee dividend entitlement plan
3. Regulatory payments to South African Revenue Services including:
• Income tax
• Value added tax
• Dividend withholding tax
• Mineral royalty tax
Economic Contributions
HY1 FY2022 (ZAR) HY2 FY2021 (ZAR) HY1 FY2021 (ZAR)
Total local procurement 377,274,770 317,966,910 274,482,322
Employee and related payments 155,033,129 145,677,982 137,697,265
Income tax, mineral royalty tax and other taxes 328,555,342 481,934,682 215,210,996
TOTAL 860,863,241 945,579,574 627,390,583
TOTAL (USD) 53,985,595 59,298,241 39,344,291
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 / Ed Phillips
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 and a chrome prospect in the Northern
Limb of the Bushveld Complex.
For more information visit https://www.sylvaniaplatinum.com/
(https://www.sylvaniaplatinum.com/)
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 engiine
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
1 Based on 414,503.60 litres diesel consumed and 2021 DEFRA Guidelines GHG
Conversion Factors for Diesel.
2 This is based on the diesel consumption of the fleet and diesel generators
for H1-YTD and according to the conversion factor as stipulated by 2021 DEFRA
Guidelines GHG Conversion Factors for Company Reporting - Fuel (Diesel (100%
mineral diesel)
3 Based on 414, 503.60 litres diesel consumed and 2021 DEFRA Guidelines GHG
Conversion Factors for Diesel.
4 Based on 414, 503.60 litres diesel consumed and 2021 DEFRA Guidelines GHG
Conversion Factors for Diesel.
5 Based on a conversion factor of 1.08 based on the Eskom Integrated Report,
2021.
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