TIDMSLP
RNS Number : 2823D
Sylvania Platinum Limited
26 April 2017
Sylvania Platinum Limited
("Sylvania", "the Company" or "the Group")
AIM (SLP)
Third Quarter Report to 31 March 2017
"Strong production for the quarter once again, producing 17,096
ounces."
26 April 2017
Sylvania Platinum Limited, the low cost Platinum Group Metal
("PGM") processor and developer, today announces its results for
the quarter ended 31 March 2017 ("Q3" or the "quarter") from its
PGM production and development operations in the Bushveld region of
South Africa.
SNAPSHOT
-- Another strong quarter with 17,096 ounces produced by the
Sylvania Dump Operations ("SDO"); following two preceding record
quarters;
-- Gross basket price increased 8% to $951/oz from $881/oz for the previous quarter;
-- Revenue increased 10% in US dollar terms to $12.8 million
(Q2: $11.6 million) and increased 5% in Rand terms to R168.8
million (Q2: R161.4 million);
-- Group EBITDA improved 13% from $3.6 million to $4.1 million quarter-on-quarter;
-- No Lost-Time Injuries ("LTI's") during the quarter.
SYLVANIA OVERVIEW
The SDO has once again achieved strong production for the
quarter, producing 17,096 ounces (although this is 8% lower than
last quarter's company record production of 18,562 ounces) making
it the third highest quarterly production achieved by the Company,
surpassed only by the last two quarters. FY2017 thus far has been
an excellent year in terms of production aided by slightly higher
PGM feed grades, improved PGM recovery efficiencies and stable PGM
feed. As a result of the excellent performance, the SDO is well
positioned to meet, and possibly exceed, the upper end of the
revised guidance range of between 63,000 ounces to 65,000 ounces
announced in the half year report published in February 2017.
The cash costs for the SDO in Rand terms have increased 11% from
R5,603/oz in Q2 to R6,236/oz, due to a combination of lower PGM
ounce production and slightly higher maintenance costs during the
period. The strengthening of the Rand against the US Dollar
exchange rate by 5% over the period, also impacted the 17% increase
in cash costs in US dollar terms from $402/oz to $471/oz. Revenue
however increased 10% in US dollar terms to $12.8 million (Q2:
$11.6 million) as well as 5% in Rand terms to R168.8 million (Q2:
R161.4 million). This increase in revenue is partly a result of the
increase in basket price, which increased 8% to $951/oz (Q2:
$881/oz), as well as the impact of a positive price adjustment for
Q2. Capital expenditure increased 144% primarily as a result of the
rollout of Project Echo, previously communicated in the 2016 Annual
Report, to ensure a sustainable PGM production profile.
The Group cash balance at 31 March 2017 was $16.6 million
(including guarantees), a $3.9 million increase on the previous
quarter's $12.7 million, securing the Company's ability to
internally fund Project Echo. Cash generated from operations before
working capital movements was $4.4 million with net changes in
working capital amounting to an increase of $1.1 million. An amount
of $1.5 million was spent on the stay-in-business capital for the
SDO plants, $0.05 million expenditure on exploration assets, $0.05
million paid for the rehabilitation insurance guarantee, $0.2
million spent on an investment in a Joint Venture R&D project
and the impact of exchange rate fluctuations on cash held at the
quarter end was $0.2 million.
Commenting on the quarter, Sylvania's CEO Terry McConnachie
said:
"The Company continues to exceed its production targets and I am
again pleased to report that during the period we produced 17,096
ounces, which follows the two preceding record quarters. As a
result, the Company is on track to meet or possibly exceed the top
end of the revised guidance of between 63,000 and 65,000 ounces,
announced in the Interim Results in February.
Despite the ongoing capital expenditure requirements of Project
Echo, the Group remains cash generative. It is pleasing to see the
basket price increase 8% from $881 to $951. This has seen revenues
increase by 10% and with continued cost vigilance, the operation
will continue to generate positive cash flows.
Project Echo continues to progress and remains on track to
deliver on the PGM production profile of between 55,000 and 60,000
ounces for many years to come.
These results are testament to our dedicated employees and we
are confident in delivering further positive results during the
next quarter and beyond."
GROUP PERFORMANCE
Unaudited - Group Unit % Change
March 2017 December 2016
Quarter Quarter
----------------------- ------ ------------ --------------- ---------
Financials
----------------------- ------ ------------ --------------- ---------
Revenue $'000 12,754 11,577 10%
----------------------- ------ ------------ --------------- ---------
Capital Expenditure(1) $'000 1,599 684 134%
----------------------- ------ ------------ --------------- ---------
Ave R/$ rate R/$ 13.23 13.94 -5%
----------------------- ------ ------------ --------------- ---------
EBITDA(2) $'000 4,141 3,665 13%
----------------------- ------ ------------ --------------- ---------
Production
----------------------- ------ ------------ --------------- ---------
PGM Plant Feed T 288,359 290,832 -1%
----------------------- ------ ------------ --------------- ---------
Total 3E and Au Oz 17,096 18,562 -8%
----------------------- ------ ------------ --------------- ---------
Group Cash Cost(3)
----------------------- ------ ------------ --------------- ---------
Per 3E & Au oz $/oz 501 417 20%
----------------------- ------ ------------ --------------- ---------
(1) Capital expenditure on SDO and exploration and evaluation
assets.
(2) EBITDA is Earnings before interest, foreign exchange gains
and losses, taxation, depreciation and amortisation.
(3) Group cash costs include plant operating costs and group
general and administration costs, but are exclusive of
depreciation, amortisation, reclamation capital, project
development and administration costs and share-based payments.
A. SYLVANIA DUMP OPERATIONS
Health, safety and environment
There were no significant safety, health or environmental
incidents during the quarter and the SDO operations are maintaining
excellent safety standards and levels of performance. During the
quarter Lannex and the combined Eastern operations achieved two
years LTI-free, while Steelpoort remains more than nine years
LTI-free. Tweefontein remains more than four years LTI-free, and
Doornbosch and Millsell more than three and two years LTI-free
respectively.
Through the continued focus and dedication of the operational
management teams and employees, the Company is able to remain
compliant in terms of health, safety and environmental systems and
legislation, which is a key-priority for the Company.
Operations
The Directors are once again very pleased with the quarter's SDO
production of 17,096 PGM ounces, (although an 8% decrease on the
previous quarter's Company record performance of 18,562 ounces)
which represents the third highest quarterly production for the
Company.
Whilst production for the quarter exceeded forecast, ounces
produced were lower than Q2 due to lower PGM recovery efficiencies.
Comparatively, PGM feed tons were stable and feed grades slightly
higher. The PGM recovery efficiencies were primarily lower at
Tweefontein and Doornbosch operations due partly to a lower ratio
of fresh current arisings feed material from host mines during
January 2017, which have better recovery potential than historic
dump sources. A further factor which contributed to the reduced
recovery efficiencies at these plants was the lower flotation feed
stability and efficiency that has since been resolved. However,
overall the SDO is performing better than forecast and is well on
the way to achieve, or possibly exceed the upper end of the revised
forecast figures.
Cash cost of production increased for the quarter to $471/oz
(R6,236/oz) from the $402/oz (R5,603/oz) recorded in the previous
quarter. The 17% US dollar unit cost increase is primarily as a
result of the decrease in PGM ounce production during the quarter,
a strengthening of the Rand against the US dollar of 5%, and
slightly higher maintenance cost during the period.
Operational and Financial Summary
Unaudited - SDO Unit March 2017 December +- % 9 months
Quarter 2016 Quarter to March
Quarter on Quarter 2017
---------------------- ----- ---------- --------- ------------ -----------
Revenue
---------------------- ----- ---------- --------- ------------ -----------
Revenue $'000 12,754 11,577 10% 37,303
---------------------- ----- ---------- --------- ------------ -----------
Revenue R'000 168,776 161,428 5% 512,944
---------------------- ----- ---------- --------- ------------ -----------
Gross Basket Price(1) $/oz 951 881 8% 892
---------------------- ----- ---------- --------- ------------ -----------
Gross Cash Margin
- SDO % 37% 36% 3% 40%
---------------------- ----- ---------- --------- ------------ -----------
Capital Expenditure $'000 1,545 633 144% 2,340
---------------------- ----- ---------- --------- ------------ -----------
Capital Expenditure R'000 20,447 8,830 132% 32,174
---------------------- ----- ---------- --------- ------------ -----------
Ave R/US$ rate(2) R/$ 13.23 13.94 -5% 13.75
---------------------- ----- ---------- --------- ------------ -----------
EBITDA $'000 4,628 4,003 16% 14,578
---------------------- ----- ---------- --------- ------------ -----------
EBITDA R'000 61,249 55,820 10% 200,458
---------------------- ----- ---------- --------- ------------ -----------
SDO Cash Cost(3)
---------------------- ----- ---------- --------- ------------ -----------
Per PGM Feed ton $/t 28 26 8% 26
---------------------- ----- ---------- --------- ------------ -----------
Per PGM Feed ton R/t 370 358 3% 359
---------------------- ----- ---------- --------- ------------ -----------
Per 3E & Au oz $/oz 471 402 17% 426
---------------------- ----- ---------- --------- ------------ -----------
Per 3E & Au oz R/oz 6,236 5,603 11% 5,858
---------------------- ----- ---------- --------- ------------ -----------
Production
---------------------- ----- ---------- --------- ------------ -----------
Plant Feed T 529,576 545,598 -3% 1,592,726
---------------------- ----- ---------- --------- ------------ -----------
Feed Head Grade g/t 2.83 2.62 8% 2.40
---------------------- ----- ---------- --------- ------------ -----------
PGM Plant Feed
Tons T 288,359 290,832 -1% 863,155
---------------------- ----- ---------- --------- ------------ -----------
PGM Plant Grade g/t 4.12 4.12 0% 4.07
---------------------- ----- ---------- --------- ------------ -----------
PGM Plant Recovery % 43.7% 46.2% -5% 45.7%
---------------------- ----- ---------- --------- ------------ -----------
Total 3E and Au Oz 17,096 18,562 -8% 52,915
---------------------- ----- ---------- --------- ------------ -----------
(1) (2) The functional currency for SDO is SA Rand and the exchange rate shown is the average over the period indicated. (3) Cash costs include plant operating costs such as mining, processing, administration, royalties and production taxes, but are exclusive of depreciation, amortisation, reclamation, capital, project development and exploration costs.
Project Echo
Project Echo, the secondary milling and flotation project being
rolled out at various operations, is well underway and the Company
remains on track to deliver on the PGM production profile as
communicated earlier.
This secondary milling and flotation technology ("MF2") roll-out
will lead to improved PGM recovery efficiencies, lower PGM
production unit costs, increased cash generation, and enable the
SDO to extend its operating life and to sustain its production
profile at 55,000oz to 60,000oz going forward.
The budget for the project remains $12 million and thus far a
total of $1.4 million has been spent with a further $2.4 million
already committed.
B. EXPLORATION AND OPENCAST MINING PROJECTS
Volspruit Platinum Exploration
The Company continues to await a decision by the Member of the
Executive Council for Economic Development, Environment and Tourism
whether to accept the Company's Appeal and set aside the initial
refusal of the Environmental Authorisation ("EA") for the project.
Any update will be reported as soon as it is received.
Grasvally Chrome Exploration
The Company has commenced with extraction of a Chrome Bulk
Sample pursuant to consent granted by the Department of Mineral
Resources ("DMR") in terms of section 20 of the Mineral and
Petroleum Resources Development Act ("MPRDA"). Approval of the
Water Use License under section 29 of the National Water Act, for
processing the waste rock dumps, is awaited from the Department of
Water and Sanitation.
All documents necessary to finalise the Appeal against the
granting of the EA, lodged by interested and affected parties
("I&AP's), have been filed by the Applicants and the Company,
and the Company now awaits the decision of the DMR whether to
uphold the Appeal or set it aside.
Nonnenworth, La Pucella and Altona Platinum Exploration
Sylvania is pleased to report that the rights to mine copper,
gold, nickel and PGMs as well as heavy minerals, iron and vanadium
were granted by the DMR on 31 March 2017. The next step is to
formally execute the mining rights at the offices of the DMR, after
which it will be submitted to the Mining Titles Office for
registration. Application will be made to the DMR for consent in
terms of section 11 of the MPRDA to transfer the right to mine
heavy minerals, iron and vanadium to a subsidiary of Ironveld Plc.
This will be the final transfer of rights to fulfil the transaction
between Sylvania and Ironveld as announced in July and August
2012.
C. CORPORATE
Joint Venture
During the quarter, a Joint Venture was formed to pursue a
chrome beneficiation project which was brought to the Company by a
director who holds an interest in the project. To date an amount of
$0.2million has been contributed to on-going research.
CORPORATE INFORMATION
Registered Sylvania Platinum Limited
office:
Clarendon House
2 Church Street
Hamilton HM 11
Bermuda
Postal address: PO Box 976
Florida Hills, 1716
South Africa
Sylvania Website: www.sylvaniaplatinum.com
CONTACT DETAILS
For further information,
please contact:
Terence McConnachie (Chief
Executive Officer) +44 777 533 7175
Nominated Advisor and Broker
Liberum Capital Limited +44 (0) 20 3100 2000
Richard Crawley / Neil
Elliot
Communications
Alma PR Limited +44 (0) 77 8090 1979
Josh Royston / Helena Bogle
/ Hilary Buchanan
This information is provided by RNS
The company news service from the London Stock Exchange
END
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