REG - Sylvania Platinum - Second Quarter Report to 31 December 2021
31/01/2022 07:05
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RNS Number : 1129A Sylvania Platinum Limited 31 January 2022
_____________________________________________________________________________________________________________________________
31 January 2022
Sylvania Platinum Limited
("Sylvania", the "Company" or the "Group")
Second Quarter Report to 31 December 2021
Sylvania (AIM: SLP) is pleased to announce the results for the quarter ended 31 December 2021 ("Q2" or the "quarter"). Unless otherwise stated, the consolidated financial information contained in this report is presented in United States Dollars ("USD" or "$").
Achievements
· Sylvania Dump Operations ("SDO") achieved 16,605 4E PGM ounces in
Q2 (Q1: 15,771 ounces);
· SDO recorded $37.9 million net revenue for the quarter
(Q1: $29.8 million);
· SDO cash costs per 4E PGM ounce decreased to $772/ounce (Q1:
$862/ounce);
· Group EBITDA of $22.3 million (Q1: $13.6 million);
· Net profit of $15.5 million (Q1: $8.6 million); and
· Group cash balance of $110.1 million (Q1: $132.7 million)
Challenges
* The Western operations have faced continuing challenges due to water shortages
at the plant;
* Water shortages at Lesedi were exacerbated by the temporary tailings
deposition strategy;
* PGM feed grades in ROM material remain low at Mooinooi operation, but the
Company continues to explore alternative feed sources, in conjunction with the
host mine, and to implement processes to optimise ROM feed grades and increase
recovery efficiency at the operation; and
* A modest adjustment in PGM production estimate, with 66,000 to 68,000 ounces
now targeted by the Company for the full year.
Opportunities
* The secondary milling and flotation ("MF2") projects at Lesedi and Tweefontein
are on track to start contributing towards production during H2 FY2022 and H1
FY2023 respectively; and
* The Group maintains strong cash reserves to allow funding of capital expansion
and process optimisation projects, upgrading the Group's exploration and
evaluation assets and returning value to all stakeholders.
Commenting on the Q2 results, Sylvania's CEO, Jaco Prinsloo said:
"I am pleased to report that the operations achieved a solid 16,605 ounces for
the quarter notwithstanding the impacts associated with the temporary
suspension of operations at Lesedi during Q1 and continued low grade ROM
resources at our Western operations. The majority of our operations performed
well and as a result we managed to achieve 5% higher PGM recovery efficiency
for the period, which is commendable. Cost controls remain a focus for the
SDO and Group as a whole.
"Net revenue increased 27% to $37.9 million and net profit increased 80% to
$15.5 million, with the PGM basket price realised from our smelters of
$2,892/ounce remaining at similar levels as Q1. Our capital projects remain
fully funded from current cash reserves and we are making significant progress
in terms of access to additional chrome tailings resources at both the Eastern
and Western Operations.
"The impact of the temporary suspension of the Lesedi operation, together with
the subsequent water shortages at our Western operations and the lower than
planned PGM feed grade of Mooinooi ROM material is such that we are now
targeting an estimated PGM production of 66,000 to 68,000 ounces for
FY2022."
USD Unit Unaudited Unit ZAR
Q1 FY2022 Q2 FY2022 % Change % Change Q2 FY2022 Q1 FY2022
Production
600,376 584,620 -3% T Plant Feed T -3% 584,620 600,376
1.90 1.94 2% g/t Feed Head Grade g/t 2% 1.94 1.90
294,229 295,011 0% T PGM Plant Feed Tons T 0% 295,011 294,229
3.17 3.17 0% g/t PGM Plant Feed Grade g/t 0% 3.17 3.17
52.66% 55.20% 5% % PGM Plant Recovery % 5% 55.20% 52.66%
15,771 16,605 5% Oz Total 4E PGMs Oz 5% 16,605 15,771
20,397 21,431 5% Oz Total 6E PGMs Oz 5% 21,431 20,397
2,897 2,892 0% $/oz Gross basket price(1) R/oz 5% 44,656 42,417
Financials(2)
29,321 32,199 10% $'000 Revenue (4E) R'000 16% 497,126 429,267
2,968 2,759 -7% $'000 Revenue (by-products including base metals) R'000 -2% 42,596 43,451
-2,448 2,984 222% $'000 Sales adjustments R'000 229% 46,073 -35,842
29,841 37,942 27% $'000 Net revenue R'000 34% 585,795 436,876
14,288 13,364 -6% $'000 Direct operating costs R'000 -1% 206,331 209,175
615 735 20% $'000 General and administrative costs R'000 26% 11,348 9,004
13,577 22,331 64% $'000 Group EBITDA R'000 73% 344,769 198,774
360 12 -97% $'000 Net Interest R'000 -97% 184 5,265
8,607 15,518 80% $'000 Net profit R'000 90% 239,581 126,002
3,103 4,274 38% $'000 Capital Expenditure R'000 45% 65,993 45,428
132,715 110,062 -17% $'000 Cash Balance R'000 -12% 1,755,066 1,988,597
R/$ Ave R/$ rate R/$ 5% 15.44 14.64
R/$ Spot R/$ rate R/$ 6% 15.95 14.98
Unit Cost/Efficiencies
862 772 -10% $/oz SDO Cash Cost Per 4E PGM oz(3) R/oz -6% 11,915 12,615
666 598 -10% $/oz SDO Cash Cost Per 6E PGM oz(3) R/oz -5% 9,231 9,754
934 832 -11% $/oz Group Cash Cost Per 4E PGM oz(3) R/oz -6% 12,844 13,674
722 645 -11% $/oz Group Cash Cost Per 6E PGM oz(3) R/oz -6% 9,951 10,573
1,085 968 -11% $/oz All-in sustaining cost (4E) R/oz -6% 14,942 15,880
1,239 1,192 -4% $/oz All-in cost (4E) R/oz 1% 18,397 18,135
The Sylvania cash generating subsidiaries are incorporated in South Africa
with the functional currency of these operations being ZAR. Revenues from
the sale of PGMs are incurred in USD and then converted into ZAR. The
Group's reporting currency is USD as the parent company is incorporated in
Bermuda. Corporate and general and administration costs are incurred in USD,
GBP and ZAR.
(1 )The gross basket price in the table is the December 2021 gross
basket used for revenue recognition of ounces delivered in Q2 FY2022, before
penalties/smelting costs and applying the contractual payability.
(2 )Revenue (6E) for Q2, before adjustments is $35.0 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
The Company is pleased to report that no significant occupational health or
environmental incidents occurred during the quarter and the Doornbosch
operation remains nine-years Lost-time Injury ("LTI") free, while Lesedi
achieved two-years LTI-free during November. The Mooinooi and Lannex
operations remain one-year LTI-free.
Operational performance
The SDO delivered a solid quarterly performance of 16,605 4E PGM ounces for
the quarter, which equates to a 5% increase quarter-on-quarter.
While the plant feed head grades increased marginally compared with the
previous quarter, the PGM plant feed grade and PGM plant feed tons remained
consistent quarter-on-quarter. A 5% increase in PGM recovery efficiency, as
flotation stability improved during the period, contributed towards the 5%
higher PGM ounce production for the period.
Direct operating cash costs per 4E PGM ounce decreased in rand and dollar
terms quarter-on-quarter by 6% and 10% respectively to ZAR11,915/ounce and
$772/ounce (Q1: ZAR12,615/ounce and $862/ounce) and the average ZAR:USD
exchange rate depreciated by 5% during the quarter.
The Group incurred capital expenditure of ZAR66.0 million ($4.3 million),
which is aligned with planned capital project schedules and includes the new
Lesedi tailings facility, the Doornbosch tailings facility and the roll out of
the Lesedi MF2 circuit.
Operational focus areas
In order to safeguard the facility, reduce the water level and load, and
resume partial production at the operation, Lesedi commenced with hydro-mining
of the affected tailings dam facility during the period. However, due to the
nature of the temporary emergency tailings deposition facility and the
difficulty in recovering return-water from it, combined with general water
shortages in the area, the operation has not been able to ramp up to normal
production levels as yet. Consequently, Lesedi produced approximately 1,500
ounces lower than anticipated for the period. The commissioning of a new water
supply during this January, from additionally installed boreholes, will
mitigate water shortages, whilst the operation will remain under pressure
until the commissioning of the new tailings deposition facility, expected
during the latter part of Q3 FY2022.
Low PGM grades in ROM material from the host mine at the Mooinooi operation
remained a challenge during the period and various sampling campaigns and
investigations have been performed during the past quarter, in conjunction
with the host mine, to evaluate potential alternative feed sources in an
attempt to mitigate the effect on operations. It is anticipated that ROM feed
grades should improve during H2 FY2022.
Operational opportunities
Despite the significant impact of recent global chip shortages on the
availability and delivery of some process control units and plant equipment,
the Lesedi MF2 at the Western operations is still expected to commission
towards the end of March 2022. In addition, the execution of the Tweefontein
MF2 project at the Eastern operations is progressing well and expected to
commission later this calendar year.
Impact of COVID-19 and South African Government imposed lockdown regulations
South Africa entered the fourth wave of COVID-19 infections in December 2021
and the Company reported 23 active cases during the period. Post period end,
the Company has reported one active case and overall COVID-19 cases totalled
138 since the start of the pandemic.
Sylvania believes that vaccines are key in the fight against the pandemic,
together with other control protocols. Although we acknowledge that vaccines
are a personal choice, we do encourage our employees to be vaccinated against
COVID-19 with the intent to limit the impact and spread of the virus.
Management continues to monitor the situation and to implement measures for
both the corporate office and operations to limit interaction and exposure
where possible.
The COVID-19 pandemic and its effects have exerted a toll on people's general
mental wellbeing and the Company recognises the need for health and mental
wellbeing support for its employees. We understand that employees have their
own individual needs and we are committed to make a difference and improve
lives where possible to develop healthier and happier employees.
The Company has thus taken steps to implement an Employee Assistance Program
("EAP") for all its employees, immediate family members as well as those
living in the same household. This program will allow not only a focus on
treatment and prevention, but also enable continuous management and
measurement to reduce risk and ultimately create more resilient employees. We
believe that this program will enhance the corporate culture of caring and
wellness amongst our staff.
B. FINANCIAL OVERVIEW
Financial performance
Revenue (4E) for the quarter increased 10% to $32.2 million (Q1: $29.3
million) as a result of the 5% increase in ounce production and the 5%
depreciation in the ZAR/USD exchange rate. Net revenue for the quarter,
which includes base metals and by-products, and the quarter-on-quarter sales
adjustment increased 27%. The average gross basket price for Q2 is
$2,892/ounce against $2,897/ounce in Q1, but significantly lower than the
$4,576/ounce and $4,059/ounce prices for Q3 and Q4 of FY2021 respectively,
consequently resulting in a lower than originally planned basket price for the
calendar year.
Group cash costs per 4E PGM ounce decreased by 6% in ZAR from ZAR13,674/ounce
to ZAR12,844/ounce and decreased 11% in dollar terms from $934/ounce in the
previous quarter to $832/ounce during Q2. Group EBITDA increased from $13.6
million to $22.3 million and net profit increased from $8.6 million to $15.5
million as a result of the increase in ounces produced.
General and administrative costs increased quarter-on-quarter from $0.62
million to $0.74 million. These costs are incurred in USD, GBP and ZAR and are
impacted by the exchange rate fluctuations over the reporting period.
The Group cash balance decreased 17% from $132.7 million to $110.1 million
during the quarter. Contributing factors to the decrease in cash
quarter-on-quarter include the impact of the lower Q1 ounces paid by the
smelter in Q2. The Company paid the annual dividend ($14.6 million),
provisional income and royalty taxes of ZAR163.3 million ($10.2 million) and
ZAR42.6 million ($2.7 million) respectively, during the quarter.
Cash generated from operations before working capital movements was $22.3
million with net changes in working capital amounting to $11.3 million, which
is mainly due to the change in trade debtors. The higher ounces produced
during Q2 compared to Q1 contributed to the increase in trade debtors. Trade
debtors arise from the concentrate delivered in the quarter but paid for in
the following quarter as per the concentrate off take agreements.
The Group spent $4.3 million on capital for the quarter which included the new
Lesedi and Doornbosch tailings disposal facilities and the Lesedi MF2
projects.
C. MINERAL ASSET DEVELOPMENT AND OPENCAST MINING PROJECTS
Volspruit Platinum Opportunity
The fieldwork for the specialist studies in aid of updating the Environmental
Impact Assessment and Water Use License applications have been completed and
the final submission is due imminently. 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 projects.
The additional metallurgical test work commissioned, following the test work
completed in FY2021, is ongoing and includes tests aimed at increasing the
payability of the PGM concentrate expected to be produced by the project. The
sample preparation for this test work was completed in Q2 FY2022 and the
samples will be shipped to an offshore specialist testing facility. The
Company expects the report of the current test work in Q4 FY2022.
Northern Limb Projects
The drilling has been completed on the northern limb projects without incident
and within the budgeted drilling metres. The geological logging and sampling
of the drilled core continues, with reporting on the project expected in July
2022. Results of the exploratory drilling will be released to the market when
they become available.
Grasvally
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, 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.
D. CORPORATE ACTIVITIES
Directorate changes
During the period, the Company announced the appointment of Simon Scott as
Independent Non-executive Director, with effect from 1 January 2022, while
Roger Williams, who has served on the Board of the Company since 2011, stepped
down from his role as a Non-executive Director on Simon Scott's appointment.
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 is
now Chair of the Audit Committee, Adrian Reynolds is now 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.
Payment of Annual Dividend
On 3 December 2021, the Board paid a final dividend totalling $14.6 million,
equating to 4p per ordinary share, to shareholders on the register on the
record date of 29 October 2021.
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 / Faye Calow 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/)
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse regulation
(EU) no.596/2014 as amended by the Market Abuse (Amendment) (EU Exit)
Regulations 2019.
For the purposes of MAR and Article 2 of Commission Implementing Regulation
(EU) 2016/1055, this announcement is being made on behalf of the Company by
Jaco Prinsloo.
ANNEXURE
GLOSSARY OF TERMS FY2022
The following definitions apply throughout the period:
4E PGMs 4E PGM ounces include the precious metal elements Platinum, Palladium, Rhodium
and Gold
6E PGMs 6E ounces include the 4E elements plus additional Iridium and Ruthenium
AGM Annual General Meeting
AIM Alternative Investment Market of the London Stock Exchange
All-in sustaining cost Production costs plus all costs relating to sustaining current production
and sustaining capital expenditure.
All-in cost All-in sustaining cost plus non-sustaining and expansion capital expenditure
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
EIA Environmental Impact Assessment
EIR Effective interest rate
EMPR Environmental Management Programme Report
GBP Pounds Sterling
IASB International Accounting Standards Board
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
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
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
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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