TIDMSLP
RNS Number : 6970E
Sylvania Platinum Limited
31 October 2022
_____________________________________________________________________________________________________________________________
31 October 2022
Sylvania Platinum Limited
("Sylvania", the "Company" or the "Group")
First Quarter Report to 30 September 2022
Sylvania (AIM: SLP), the platinum group metals ("PGM") producer
and developer with assets in South Africa, announces its results
for the quarter ended 30 September 2022 ("Q1" 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 19,194 4E PGM ounces in Q1 (Q4 FY2022: 18,837 ounces);
-- SDO recorded $42.9 million net revenue for the quarter (Q4 FY2022: $34.9 million);
-- Group EBITDA of $26.4 million (Q4 FY2022: $ 16.8 million), with the benefit of increased production and the
higher basket price realised in the quarter ;
-- Group cash balance of $138.6 million (Q4 FY2022: $121.3 million);
-- Zero Lost-time Injury ("LTI") across all SDO;
-- Improved performance at the Lesedi operation with the MF2 plant fully commissioned and optimisation of the fine
grinding MF2 unit and flotation circuit underway;
-- A n updated Mineral Resource Estimate ("MRE") and Scoping Study on the Volspruit North Body was produced and
based on these reports t he Company has taken the decision to progress to a Pre-Feasibility Study ("PFS") during
the year; and
-- An MRE is complete for the La Pucella study area and a concept-level mining study, using the Mineral Resource,
will be completed later in Q2 to provide the Preliminary Economic Assessment ("PEA") for the project area.
Outlook
-- Tweefontein MF2 is scheduled to commence commissioning in Q2 FY2023 and is expected to start contributing to
additional ounces from Q3 FY2023 ;
-- The Lannex MF2 project is under construction and scheduled for commissioning towards the end of Q4 FY2023;
-- ROM PGM feed grade from the host mine at Mooinooi is being managed to ensure a consistent grade is maintained,
with focus on continued improvement of recoveries through stability and blending opportunities ;
-- Focus remains on operational cost controls, which have been managed well during the quarter, and reagent
optimisation continues at all SDO to explore improved efficiencies; 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 to return value to shareholders.
Commenting on the Q1 results, Sylvania's CEO, Jaco Prinsloo
said:
"I am pleased to report that the first quarter of the FY2023
year has yielded strong results in line with our expectations with
19,194 4E PGM ounces achieved by the SDO, which is our best
quarterly production since the COVID-lockdowns in early 2020. This
increase in production ounces and the 2% higher PGM basket price
recorded in the quarter, resulted in stronger profits.
"Higher global cost inflation remains an area of focus, however,
the optimisation of reagents to explore improved efficiencies at
all SDO is ongoing. In the quarter, it was encouraging to see
performance improve at the Lesedi operation following the
commissioning of the MF2 plant. At Mooinooi, the management team
continue to work diligently with the host mine to explore blending
opportunities as a means of stabilising recoveries and improving
the feed grade and this has already yielded positive results during
recent quarters.
"The Company remains in a strong cash position allowing it to
fund carefully selected growth opportunities and return value to
shareholders.
"Post quarter end the Company released results of its extensive
optimisation studies at the Northern Limb Mineral Assets including
detailed Mineral Resource Estimates and a Scoping Study. All
results demonstrate attractive projects with significant upside
potential across our entire Northern Limb asset portfolio. While
the Company continues to focus on delivering value and growing its
existing cash generating dump reprocessing operations, the
optimisation of value from the exploration assets remains one of
the important pillars of Sylvania Platinum's growth strategy and a
future value driver."
USD Unit Unaudited Unit ZAR
Q4 FY2022 Q1 FY2023 % Change % Change Q1 FY2023 Q4 FY2022
---------- --------- --------- ---------- ----------
Production
---------- --------- ------ --------------------------- ------ --------- ---------- ----------
647,249 691,953 7% T Plant Feed T 7% 691,953 647,249
---------- --------- ------ --------------------------- ------ --------- ---------- ----------
2.04 1.89 -7% g/t Feed Head Grade g/t -7% 1.89 2.04
---------- --------- ------ --------------------------- ------ --------- ---------- ----------
331,578 349,384 5% T PGM Plant Feed Tons T 5% 349,384 331,578
---------- --------- ------ --------------------------- ------ --------- ---------- ----------
3.30 3.15 -5% g/t PGM Plant Feed Grade g/t -5% 3.15 3.30
---------- --------- ------ --------------------------- ------ --------- ---------- ----------
53.49% 54.26% 1% % PGM Plant Recovery % 1% 54.26% 53.49%
---------- --------- ------ --------------------------- ------ --------- ---------- ----------
18,837 19,194 2% Oz Total 4E PGMs Oz 2% 19,194 18,837
---------- --------- ------ --------------------------- ------ --------- ---------- ----------
23,751 24,067 1% Oz Total 6E PGMs Oz 1% 24,067 23,751
---------- --------- ------ --------------------------- ------ --------- ---------- ----------
2,589 2,650 2% $/oz 4E Gross basket price(1) R/oz 12% 45,161 40,361
---------- --------- ------ --------------------------- ------ --------- ---------- ----------
Financials(2)
---------- --------- ------ --------------------------- ------ --------- ---------- ----------
34,397 36,905 7% $'000 Revenue (4E) R'000 17% 628,830 536,161
---------- --------- ------ --------------------------- ------ --------- ---------- ----------
Revenue (by-products
3,232 3,382 5% $'000 including base metals) R'000 14% 57,626 50,381
---------- --------- ------ --------------------------- ------ --------- ---------- ----------
-2,683 2,634 198% $'000 Sales adjustments R'000 207% 44,879 -41,825
---------- --------- ------ --------------------------- ------ --------- ---------- ----------
34,946 42,921 23% $'000 Net revenue R'000 34% 731,335 544,717
---------- --------- ------ --------------------------- ------ --------- ---------- ----------
Direct operating
12,175 11,789 -3% $'000 costs R'000 6% 200,876 189,782
---------- --------- ------ --------------------------- ------ --------- ---------- ----------
Indirect operating
3,600 4,032 12% $'000 costs R'000 22% 68,703 56,107
---------- --------- ------ --------------------------- ------ --------- ---------- ----------
General and administrative
758 690 -9% $'000 costs R'000 -1% 11,756 11,816
---------- --------- ------ --------------------------- ------ --------- ---------- ----------
16,787 26,423 57% $'000 Group EBITDA(4) R'000 72% 450,242 261,678
---------- --------- ------ --------------------------- ------ --------- ---------- ----------
499 830 66% $'000 Net Interest R'000 82% 14,147 7,781
---------- --------- ------ --------------------------- ------ --------- ---------- ----------
13,817 18,621 35% $'000 Net profit(4) R'000 47% 317,303 215,384
---------- --------- ------ --------------------------- ------ --------- ---------- ----------
4,350 2,554 -41% $'000 Capital Expenditure R'000 -36% 43,520 67,810
---------- --------- ------ --------------------------- ------ --------- ---------- ----------
121,268 138,629 14% $'000 Cash Balance R'000 26% 2,509,178 1,985,958
---------- --------- ------ --------------------------- ------ --------- ---------- ----------
R/$ Ave R/$ rate R/$ 9% 17.04 15.59
---------- --------- ------ --------------------------- ------ --------- ---------- ----------
R/$ Spot R/$ rate R/$ 11% 18.10 16.38
---------- --------- ------ --------------------------- ------ --------- ---------- ----------
Unit Cost/Efficiencies
---------- --------- ------ --------------------------- ------ --------- ---------- ----------
SDO Cash Cost Per
646 614 -5% $/oz 4E PGM oz(3) R/oz 4% 10,465 10,075
---------- --------- ------ --------------------------- ------ --------- ---------- ----------
SDO Cash Cost Per
513 490 -4% $/oz 6E PGM oz(3) R/oz 4% 8,347 7,990
---------- --------- ------ --------------------------- ------ --------- ---------- ----------
Group Cash Cost Per
794 737 -7% $/oz 4E PGM oz(3) R/oz 1% 12,563 12,390
---------- --------- ------ --------------------------- ------ --------- ---------- ----------
Group Cash Cost Per
630 588 -7% $/oz 6E PGM oz(3) R/oz 2% 10,019 9,826
---------- --------- ------ --------------------------- ------ --------- ---------- ----------
All-in sustaining
911 873 -4% $/oz cost (4E) R/oz 5% 14,876 14,205
---------- --------- ------ --------------------------- ------ --------- ---------- ----------
1,108 987 -11% $/oz All-in cost (4E) R/oz -3% 16,823 17,269
---------- --------- ------ --------------------------- ------ --------- ---------- ----------
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 September 2022 gross 4E basket used for revenue recognition of ounces
delivered in Q1 FY2023, before penalties/smelting costs and applying the contractual payability.
2. Revenue (6E) for Q1, before adjustments is $40.1 million (6E prill split is Pt 53%, Pd 18%, Rh 9%, Au 0%, Ru 16%,
Ir 4%). Revenue excludes profit/loss on foreign exchange.
3. The cash costs include direct operating costs and exclude indirect cost for example royalty tax and EDEP
payments.
4. The net profit and Group EBITDA excludes the profit on the sale of Grasvally Chrome Mine (.APPROX.$2.1 million)
previously held as an asset held for sale.
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 that all plants were LTI-free for the period. The
Doornbosch operation remains at 10 years LTI-free, Lesedi and
Lannex have exceeded two-years LTI-free, and Mooinooi and
Tweefontein have each exceeded one-year LTI-free . In addition, the
combined Eastern operations have achieved six months all-injury
free at the end of September, which is a truly commendable
achievement.
Operational performance
The SDO delivered 19,194 4E PGM ounces for the quarter, a 2%
increase quarter-on-quarter. The overall SDO PGM recovery has
increased by 1.4%, which together with a 5% increase in throughput,
resulted in the increased ounces. ROM feed from the host mine at
Mooinooi has increased by 18%, while feed grades have increased and
stabilised resulting in improved performance for the period. The
Lesedi MF2 plant has been fully commissioned with optimisation of
the fine grinding and flotation circuit resulting in improved
performance, which, together with improved feed stability and
flotation performance at Mooinooi, has contributed towards the
overall improved recovery performance. Focus has remained on
increasing runtime and improving operational stability and has also
contributed to improved efficiencies at all sites.
SDO operating cash costs per 4E PGM ounce increased 4% in rand
terms and decreased 5% in dollar terms quarter-on-quarter to
ZAR10,465/ounce and $614/ounce (Q4 FY2022: ZAR10,075/ounce and
$646/ounce) respectively. The higher ounce production had a
positive influence on unit costs while reagent price increases,
transport costs and fuel price increases continued to impact on
operating costs. The average ZAR:USD exchange rate depreciated by
9% during the quarter.
The Group incurred capital expenditure of ZAR43.5 million ($2.6
million), in line with planned capital project schedules.
Operational focus areas
The development of a new formal planned maintenance system has
been successfully implemented at Millsell and anticipated to be
rolled out to selected priority operations during FY2023. This is
expected to improve plant availabilities and runtime, resulting in
improved process stability and increased efficiencies.
Focus and communication with the host mine on the preferred
source of ROM and associated grades remains a priority for the
Mooinooi operation and is producing positive results. The declining
feed grades of the surface sources are being managed to ensure a
consistent grade is maintained, with focus on improving recoveries
through stability and blending opportunities.
Significant focus continues to be placed on the operational
aspects of the SDO tailings facilities by the operations teams, the
engineer on record, relevant expert advisers, and associated
service providers.
Operational opportunities
Continuous focus on improving availabilities, runtime and
associated stability has resulted in improved performance and
further improvements are expected. Reagent optimisation continues
at all SDO to explore improved efficiencies.
Tweefontein MF2 is scheduled for commissioning in Q2 and is
expected to contribute to additional ounces reaching stability
during early Q3. The Lannex MF2 project is under construction and
scheduled for commissioning towards the end of Q4 FY2023.
Focus remains on the control of operational costs, which have
been well controlled during the period.
Impact of COVID-19 and South African Government imposed lockdown
regulations
The Company reported one active case of COVID-19 during the
quarter with a total of 143 infections reported since the start of
the pandemic. While all regulations have been lifted, Sylvania
continues to encourage responsible behaviour amongst employees and
will continue to monitor the situation and to implement measures
for both the corporate office and operations to limit interaction
and exposure where possible.
B. FINANCIAL OVERVIEW
Financial performance
Revenue (4E) for the quarter increased by 7% to $36.9 million
(Q4 FY2022: $34.4 million) mainly on account of the increased
ounces but also due to the 2% increase in the basket price recorded
in September and applied to calculate revenue for ounces produced
and delivered in the quarter but only invoiced in Q2 as well as the
impact of the average USD to ZAR exchange rate changes. The average
4E gross basket price for the quarter was $2,650/ounce against
$2,589/ounce in Q4 FY2022. Net revenue for the quarter, which
includes base metals and by-products, and the quarter-on-quarter
sales adjustment increased 23% to $42.9 million (Q4 FY2022: $34.9
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 during Q1 increased by 1% in
rand terms from ZAR12,390/ounce to ZAR12,563/ounce and decreased 7%
in dollar terms from $794/ounce in the previous quarter to
$737/ounce as a result of the stronger dollar.
General and administrative costs decreased 9% quarter-on-quarter
from $0.76 million to $0.69 million. These costs are incurred in
USD, GBP and ZAR and are impacted by the exchange rate fluctuations
over the reporting period.
Group EBITDA increased 57% from $16.8 million to $26.4 million
and net profit increased from $13.8 million to $18.6 million,
primarily as a result of the 2% increase in both ounces produced
and the basket price received.
The Group cash balance increased 14% from $121.3 million to
$138.6 million during the quarter. Cash generated from operations
before working capital movements was $26.4 million with net changes
in working capital amounting to $6.0 million, which is mainly due
to the change in trade debtors and trade creditors. The increase in
basket price and higher ounce production during Q1 resulted in a
higher trade debtors balance quarter-on-quarter. Trade debtors
arise from the concentrate delivered in the quarter but only paid
for in the following quarter as per the concentrate off-take
agreements.
Provisional payments for both royalty tax and income tax are
payable in December 2022 in line with the South African tax
authority timelines, at an anticipated rate of 7% for royalty tax
on applicable ounces, and a rate of 27% for income tax. A cash
dividend for FY2022 of 8 pence per Ordinary Share was declared and
is payable on 2 December 2022 to all shareholders on the register
at the close of business on 28 October 2022.
The Group spent $2.6 million on capital for the quarter mainly
on the Project Echo MF2 modules at both Tweefontein and Lannex.
The impact of exchange rate fluctuations on cash held at the end
of Q1 was a $3.3 million loss due to the spot ZAR to USD exchange
rate depreciating by 11%.
C. MINERAL ASSET DEVELOPMENT
Volspruit Project
Post quarter end, the Company released an update to its
Volspruit project, including an updated MRE and Scoping Study which
focused solely on the Volspruit North Body, with the Volspruit
South Body still to be completed during FY2023. The Scoping Study
was produced on conservative assumptions and does not yet include a
JORC compliant rhodium ("Rh") resource, although it does illustrate
the project's promising potential based on conservative
assumptions, particularly when considering the inclusion of
potential Rh revenue and additional material from the South Body
which could be treated through already capitalised infrastructure
in the future. The Company has accordingly taken the decision to
progress to a PFS during the year on the entire Volspruit
asset.
Far Northern Limb Projects
The MRE using new geological interpretation and covering an
estimated 12% of the deposit strike length, is complete for the La
Pucella target area. A concept-level mining study, using the
reported JORC compliant Mineral Resource, will be completed later
in Q2 to provide the PEA for the La Pucella target area. Future
studies are aimed at applying the new geological interpretation
along the strike length to increase the Mineral Resource volume and
improve analytical confidence to include Rh and base metals in the
MRE that are currently at inferred level. The Exploration Results
previously reported on the Hacra Project will be subject to a MRE
and is anticipated to provide a maiden Mineral Resource early in
the 2023 calendar year.
D. CORPORATE ACTIVITIES
Exercise of vested bonus shares and buyback
During the period, the Company announced that a total of
1,755,000 Ordinary Shares in the capital of the Company had been
exercised by employees and PDMRs of the Company, following the
vesting of deferred share awards granted under the Sylvania
Platinum Limited Deferred Share Award Scheme. Of the 1,755,000
shares that were exercised, 465,000 related to PDMRs.
The Company agreed to repurchase 702,300 Ordinary Shares at the
vesting price of 96.5 pence in order to satisfy the tax liabilities
of the employees and PDMRs and a further 382,700 Ordinary Shares
were repurchased at the 30-day VWAP of 90.91 pence at the request
of certain employees and PDMRs under the terms of the Deferred
Share Award Rules.
Following the above transaction, the Company's issued share
capital amounted to 280,155,657 Ordinary Shares of which a total of
13,354,869 Ordinary Shares are held in Treasury. Therefore, the
total number of Ordinary Shares with voting rights in Sylvania is
266,800,788 Ordinary Shares.
CONTACT DETAILS
For further information, please
contact:
Jaco Prinsloo CEO
Lewanne Carminati CFO +27 11 673 1171
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 sylvania@BlytheRay.com
Brooks
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
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/
ANNEXURE
GLOSSARY OF TERMS FY2023
The following definitions apply throughout the period:
4E PGM ounces include the precious metal elements Platinum,
4E PGMs Palladium, Rhodium and Gold
6E ounces include the 4E elements plus additional Iridium
6E PGMs and Ruthenium
--------------------------------------------------------------------
AGM Annual General Meeting
--------------------------------------------------------------------
AIM Alternative Investment Market of the London Stock Exchange
--------------------------------------------------------------------
All-in sustaining Production costs plus all costs relating to sustaining current
cost production and sustaining capital expenditure.
--------------------------------------------------------------------
All-in sustaining cost plus non-sustaining and expansion
All-in cost capital expenditure
--------------------------------------------------------------------
Fresh chrome tails from current operating host mines processing
Current risings 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
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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
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Platinum group metals comprising mainly platinum, palladium,
PGM rhodium and gold
--------------------------------------------------------------------
PDMR Person displaying managerial responsibility
--------------------------------------------------------------------
PEA Preliminary Economic Assessment
--------------------------------------------------------------------
Pipeline ounces 6E ounces delivered but not invoiced
--------------------------------------------------------------------
Revenue recognised for ounces delivered, but not yet invoiced
Pipeline revenue based on contractual timelines
--------------------------------------------------------------------
Pipeline sales Adjustments to pipeline revenues based on the basket price
adjustment 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
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UNSDGs United Nations Sustainability Development Goals
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USD United States Dollar
--------------------------------------------------------------------
WULA Water Use Licence Application
--------------------------------------------------------------------
UK United Kingdom of Great Britain and Northern Ireland
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ZAR South African Rand
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END
QRFGLBDGIXXDGDB
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October 31, 2022 03:00 ET (07:00 GMT)
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