TIDMSLP
RNS Number : 5478B
Sylvania Platinum Limited
31 January 2020
_____________________________________________________________________________________________________________________________
31 January 2020
Sylvania Platinum Limited
("Sylvania", the "Company" or the "Group")
AIM (SLP)
Second Quarter Report to 31 December 2019
The Directors are pleased to present the results for the quarter
ended 31 December 2019 ("Q2" or the "quarter"). Unless otherwise
stated, the consolidated financial information contained in this
report is presented in USD.
Achievements
-- Sylvania Dump Operations ("SDO") declared 19,206 4E PGM
ounces in Q2 (Q1: 20,797 4E PGM ounces) bringing the H1 FY2020
declared ounces to 40,003 ounces, a new half year record;
-- Net revenue of $27.9 million for Q2 (Q1: $31.2 million);
-- SDO and Group cash costs decreased 7% to ZAR 7,485/ounce
($510/ounce) and ZAR 7,808/ounce ($532/ounce) respectively;
-- Cash balance of $33.8 million (Q1: $26.6 million) after
dividends and provisional income tax paid during the quarter.
Challenges
-- Power interruptions due to Eskom loadshedding and quality of
supply resulted in downtime at operations;
-- Water management continues to be a focus area at some
operations, despite intermittent rainfall which provided some
relief during the period;
-- The currently depressed chrome market is putting pressure on
chrome miners and could potentially impact on fresh feed sources at
some operations, but operations are able to substitute feed with
available dump material in order to run plants at capacity.
Opportunities
-- Current PGM basket price contributing to higher than planned profits and cash balance;
-- Post-commissioning evaluation of PGM grade and recovery
optimisation projects, incorporating proprietary processing
modifications, at Millsell, Doornbosch and Tweefontein during the
past year, identified an opportunity to roll this circuit
modification out to the Mooinooi and Lannex plants in order to
improve the upgrading and recovery of PGMs.
Commenting on the Q2 results, Sylvania's CEO Terry McConnachie
said:
"The Group, through the continued diligence of our management
and operations teams, has once again produced a strong result in
spite of challenges relating to water and power which are both
outside of our control. Despite downtime and consequential chokes
to the processing plants, our teams were able to explore and
implement mitigatory measures and produce a solid 19,206 4E PGM
ounces for the quarter. Historically, the second quarter is known
to present challenges in terms of a dip in production due to the
host mines' shutdown over the festive period, however, due to
careful planning and controls, the SDO were able to perform very
well.
The recent communication of potential retrenchments at some of
our host mines has necessitated that we review our feed strategy in
terms of alternative feed sources to compensate for the potential
loss of any current arisings or RoM material to our plants. We have
been in similar situations before and I believe that through
committed engagement with our host mines, and based on flexibility
between current arisings and dump material on our operations, we
will be able to manage the potential change in ratio of feed
sources effectively to minimise or prevent the potential impact of
the host mines downsizing.
The Group has reported a cash balance of $33.8 million,
following the $2.9 million dividend payout in November 2019, which
was aided by an increase in the PGM basket price. The Group
continues to maintain a good cash holding which will enable the
funding of any further capital expenditure. The performance in the
first half of the year has established a robust production base to
build on and sets us on track to deliver on our targets in
2020."
USD Unit Unaudited Unit ZAR
Q1 FY2020 Q2 FY2020 % Change % Change Q2 FY2020 Q1 FY2020
---------- --------- --------- ---------- ----------------
Production
---------- --------- ------ ------------------ ------ --------- ---------- ----------------
634,525 714,244 13% T Plant Feed T 13% 714,244 634,525
---------- --------- ------ ------------------ ------ --------- ---------- ----------------
2.47 2.12 -14% g/t Feed Head Grade g/t -14% 2.12 2.47
---------- --------- ------ ------------------ ------ --------- ---------- ----------------
PGM Plant Feed
307,946 308,034 0% T Tons T 0% 308,034 307,946
---------- --------- ------ ------------------ ------ --------- ---------- ----------------
PGM Plant Feed
3.55 3.53 1% g/t Grade g/t 1% 3.53 3.55
---------- --------- ------ ------------------ ------ --------- ---------- ----------------
PGM Plant
59.46% 54.82% -8% % Recovery % -8% 54.82% 59.46%
---------- --------- ------ ------------------ ------ --------- ---------- ----------------
20,797 19,206 -8% Oz Total 4E PGMs Oz -8% 19,206 20,797
---------- --------- ------ ------------------ ------ --------- ---------- ----------------
27,633 25,429 -8% Oz Total 6E PGMs Oz -8% 25,429 27,633
---------- --------- ------ ------------------ ------ --------- ---------- ----------------
Gross basket
1,654 1,872 13% $/oz price R/oz 13% 27,499 24,314
---------- --------- ------ ------------------ ------ --------- ---------- ----------------
Financials
---------- --------- ------ ------------------ ------ --------- ---------- ----------------
24,631 23,748 -4% $'000 Revenue (4E) R'000 -4% 348,860 362,176
---------- --------- ------ ------------------ ------ --------- ---------- ----------------
Revenue (by
1,827 1,529 -16% $'000 products) R'000 -16% 22,464 26,857
---------- --------- ------ ------------------ ------ --------- ---------- ----------------
4,694 2,602 -45% $'000 Sales adjustments R'000 -45% 38,225 69,027
---------- --------- ------ ------------------ ------ --------- ---------- ----------------
31,152 27,879 -11% $'000 Net revenue R'000 -11% 409,549 458,061
---------- --------- ------ ------------------ ------ --------- ---------- ----------------
11,435 9,904 -13% $'000 Operating costs R'000 -13% 145,489 168,100
---------- --------- ------ ------------------ ------ --------- ---------- ----------------
General and
administrative
575 578 1% $'000 costs R'000 1% 8,491 8,445
---------- --------- ------ ------------------ ------ --------- ---------- ----------------
19,180 17,427 -9% $'000 Group EBITDA R'000 -9% 256,006 281,947
---------- --------- ------ ------------------ ------ --------- ---------- ----------------
317 346 9% $'000 Net Interest R'000 9% 5,088 4,665
---------- --------- ------ ------------------ ------ --------- ---------- ----------------
12,534 11,381 -9% $'000 Net profit R'000 -9% 167,192 184,246
---------- --------- ------ ------------------ ------ --------- ---------- ----------------
Capital
1,463 1,538 5% $'000 Expenditure R'000 5% 22,592 21,509
---------- --------- ------ ------------------ ------ --------- ---------- ----------------
26,627 33,818 27% $'000 Cash Balance R'000 27% 496,781 391,410
---------- --------- ------ ------------------ ------ --------- ---------- ----------------
R/$ Ave R/$ rate R/$ 0% 14.69 14.70
---------- --------- ------ ------------------ ------ --------- ---------- ----------------
R/$ Spot R/$ rate R/$ -8% 14.04 15.28
---------- --------- ------ ------------------ ------ --------- ---------- ----------------
Unit
Cost/Efficiencies
---------- --------- ------ ------------------ ------ --------- ---------- ----------------
SDO Cash Cost Per
550 510 -7% $/oz 4E PGM oz R/oz -7% 7,485 8,081
---------- --------- ------ ------------------ ------ --------- ---------- ----------------
SDO Cash Cost Per
414 385 -7% $/oz 6E PGM oz R/oz -7% 5,653 6,082
---------- --------- ------ ------------------ ------ --------- ---------- ----------------
Group Cash Cost
Per
573 532 -7% $/oz 4E PGM oz R/oz -7% 7,808 8,420
---------- --------- ------ ------------------ ------ --------- ---------- ----------------
Group Cash Cost
Per
431 401 -7% $/oz 6E PGM oz R/oz -7% 5,897 6,337
---------- --------- ------ ------------------ ------ --------- ---------- ----------------
All-in sustaining
586 551 -6% $/oz cost (4E) R/oz -6% 8,095 8,615
---------- --------- ------ ------------------ ------ --------- ---------- ----------------
642 616 -4% $/oz All-in cost (4E) R/oz -4% 9,044 9,444
---------- --------- ------ ------------------ ------ --------- ---------- ----------------
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.
A. OPERATIONAL OVERVIEW
Health, safety and environment
During the quarter there were no significant occupational health
or environmental incidents reported, but in terms of safety, the
SDO did experience one lost time injury ("LTI") where an operator
suffered a leg injury at Lesedi, and unfortunately the operation
lost its record of being LTI-free for more than eight years. This
was the first LTI of the financial year for the Company.
Safety records at most other operations remain on track and
Tweefontein and Doornbosch both remain LTI-free for more than seven
years, while Millsell and Lannex are LTI-free for five years.
The Group continues to focus on health, safety and environmental
compliance and, through the collaborative efforts of management and
all employees across the operations, we strive to maintain high
safety standards and plant conditions at the respective operations.
A new safety campaign was launched in December 2019 at both the
Eastern and Western operations, which has assisted in further
enhancing the culture of a safe working environment.
Operational performance
The SDO delivered 19,206 ounces for the quarter, the third
highest production quarter, and more significantly, the highest Q2
in the history of operations. The Group's production during the
quarter was 8% lower than Q1, but during any financial year, Q2 and
Q3 are historically lower production quarters than Q1 and Q4 due to
the impact of public holidays and our host mines closing their
operations over the holiday period.
PGM plant feed tons and PGM plant feed grade remained stable
quarter-on-quarter. Although PGM recovery efficiencies were higher
than planned for the quarter, recoveries decreased 8% from Q1 due
to a combination of feed characteristics of material treated during
the quarter, reduced concentrate mass pull strategy, and an
increase of work-in-progress ounces at the end of December
2019.
As the volumes of fresh current arisings and RoM fines received
from the host mines decrease at some operations over the December
holiday period, operations compensate for this by processing higher
volumes of lower-grade dump material, which has a lower PGM
recovery potential than the freshly mined sources and hence has an
impact on overall recovery efficiency. Besides the impact of feed
sources that resulted in approximately 3.5% lower recovery for the
quarter, the operations had an increase of work-in-progress PGM
ounces at the end of December 2019, equating to an additional 4.5%
recovery impact for the past quarter.
The total SDO cash costs decreased in both Dollar and Rand terms
by 7% quarter-on-quarter to ZAR 7,485/ounce and $510/ounce (Q1: ZAR
8,081/ounce and $550/ounce respectively) attributable to
maintaining tight cost controls and planning at the operations.
Capital expenditure at ZAR 22.0 million during the quarter was
in line with the capital budget to improve efficiencies at the
plants and the stay-in-business capital spend programme.
Operational focus areas
Water supply issues remain an area of focus for the Group albeit
that there was some reprieve during the quarter where plants
experienced some rainfall. The Lesedi and Tweefontein operations in
particular are most affected by water shortages, but a successful
intervention was implemented at Lesedi towards the end of the
quarter, which assisted in the reduction of overall water losses in
tailings. Management will now focus on implementing similar
measures at Tweefontein during the next quarter. This action should
assist in alleviating production pressures associated with any
shortage of water in the coming quarters.
Power constraints in the form of load-shedding, power cuts due
to maintenance and power interruptions associated with frequent
trips from the utility provider, have impacted operations and led
to downtime during the interruptions and frequent consequential
chokes in the processing plants. The Group continues to investigate
and evaluate alternative long-term solutions to help mitigate this
impact.
As per recent news reports, our host mine has communicated
potential retrenchments and production cuts related to some of
their Eastern and Western operations, which could potentially
result in lower volumes of current arisings and RoM at some plants
during the current depressed chrome market environment. The SDO
operations are able to substitute current arisings and RoM sources
in order to mitigate this impact, albeit at slightly lower PGM feed
grades and recoveries. Management is in continuous engagement with
our host mine to optimise operations as feed splits change.
Operational opportunities
With all Project Echo modules now fully commissioned, barring
the Tweefontein MF2 project that has been delayed pending the
completion of a power supply upgrade by the power utility scheduled
towards the end of 2020, and the new milling and chrome
beneficiation circuit commissioned at Lesedi, management continues
to focus on plant optimisation of the installed infrastructure to
improve PGM recoveries and concentrate quality.
Following the successful commissioning of PGM grade and recovery
optimisation projects, incorporating proprietary processing
modifications at Millsell, Doornbosch and Tweefontein during the
past year, the opportunity has been identified to roll this circuit
modification out to Mooinooi and Lannex plants. This process
circuit modification utilises enhanced fine screening technology
for more efficient upgrading and recovery of PGMs.
Commissioning of the new Lannex mill, as part of the Lannex
plant life-extension project initiated in 2019, is scheduled for
April / May 2020, which will enable the plant to improve processing
efficiencies and profitability based on the current feed sources
and further enable the plant to accommodate alternative coarser
feed sources, such as RoM fines from underground or open cast
operations, which will contribute to extend the life of this
operation.
B. FINANCIAL OVERVIEW
Financial performance
Net revenue for the quarter decreased 11% from $31.2 million to
$27.9 million as a result of lower production compared to Q1. This
was partly mitigated by the 13% increase in the gross basket price
from $1,654/ounce to $1,872/ounce.
The total operating costs, which are incurred in ZAR, decreased
13% to ZAR 145.5 million ($9.9 million), compared to the ZAR 168.1
million ($11.4 million) in Q1 and is attributable in part to
continued cost controls and planning at the operations.
The general and administrative costs increased 1%
quarter-on-quarter from $0.57 million to $0.58 million. These costs
are incurred in USD, GBP and ZAR and are impacted by exchange rate
fluctuations over the reporting period.
Group cash costs were down 7% in both ZAR and USD from ZAR
8,420/ounce ($573/ounce) to ZAR 7,808/ounce ($532/ounce) despite
the lower ounce production.
The all-in sustaining cost ("AISC") and all-in cost ("AIC")
decreased during the quarter to ZAR 8,095/ounce (Q1: ZAR
8,615/ounce) and ZAR 9,044/ounce (Q1: ZAR 9,444/ounce)
respectively.
The Group EBITDA decreased 9% from $19.2 million to $17.4
million during the quarter and net profit decreased 9% to $11.4
million from $12.5 million as a result of the lower revenue in
Q2.
The Group cash balance at 31 December 2019 was $33.8 million
(including guarantees), a $7.2 million increase on the previous
quarter's cash balance of $26.6 million. Cash generated from
operations before working capital movements was $17.5 million with
net changes in working capital amounting to a decrease of $1.0
million due mainly to the decrease in trade and contract debtors.
$1.5 million was spent on capital during the quarter and dividends
of $2.9 million were paid to shareholders in November 2019.
Provisional income tax of $6.8 million was also paid in South
Africa in Q2.
C. MINERAL ASSET DEVELOPMENT AND OPENCAST MINING PROJECTS
The Company has continued to maintain the value of its mineral
asset development activities during the quarter, so as to be able
to continue to defend title, however, there are no further
developments to report for the quarter.
Grasvally Chrome Exploration
At this time, there is nothing further to report on the
conditional cash sale of Grasvally Chrome Mine (Pty) Ltd
("Grasvally") to Forward Africa Mining (Pty) Ltd ("FAM") - the
parties are still within the eight-month period from the date of
acceptance of the offer to fulfill the standard conditions
precedent. The Company will continue to keep shareholders updated
on developments.
CORPORATE INFORMATION
Registered and postal Sylvania Platinum Limited
address:
Clarendon House
2 Church Street
Hamilton HM 11
Bermuda
SA Operations postal PO Box 976
address:
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 / Ed Phillips
Communications
Alma PR Limited +44 (0) 20 3405 0208
Josh Royston / Helena Bogle
This announcement is released by Sylvania Platinum Limited and
contains inside information for the purposes of Article 7 of the
Market Abuse Regulation (EU) 596/2014 ("MAR"), and is disclosed in
accordance with the Company's obligations under Article 17 of
MAR.
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 Terence McConnachie.
ANNEXURE
GLOSSARY OF TERMS FY2019
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
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AGM Annual General Meeting
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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.
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All-in sustaining cost plus non-sustaining and expansion capital
All-in cost expenditure
---------------------------------------------------------------------
ASX Australian Securities Exchange
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Fresh chrome tails from current operating host mines processing
Current risings operations
---------------------------------------------------------------------
DMR Department of Mineral Resources
---------------------------------------------------------------------
EBITDA Earnings before interest, tax, depreciation and amortisation
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EA Environmental Authorisation
---------------------------------------------------------------------
EIA Environmental Impact Assessment
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EIR Effective interest rate
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EMPR Environmental Management Programme Report
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GBP Great British Pound
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IASB International Accounting Standards Board
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IFRIC International Financial Reporting Interpretation Committee
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IFRS International Financial Reporting Standards
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I&APs Interested and Affected Parties
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Phoenix Platinum Mining Proprietary Limited, renamed Sylvania
Lesedi Lesedi
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LSE London Stock Exchange
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LTI Lost time injury
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MF2 Milling and flotation technology
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MPRDA Mineral and Petroleum Resources Development Act
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MRA Mining Right Application
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MTO Mining Titles Office
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NOMR New Order Mining Right
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NWA National Water Act 36 of 1998
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Option Plan Sylvania Platinum Limited Share Option Plan
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Platinum group metals comprising mainly platinum, palladium,
PGM rhodium and gold
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PAR Pan African Resources Plc
---------------------------------------------------------------------
Phoenix Platinum Mining Proprietary Limited, renamed Sylvania
Phoenix Lesedi
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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
---------------------------------------------------------------------
Programme Sylvania Platinum Share Buyback Programme
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Project Echo Secondary PGM Milling and Flotation (MF2) program announced
in FY2017 to design and install additional new additional
fine grinding mills and flotation circuits at Millsell, Doornbosch,
Tweefontein and Mooinooi.
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Revenue (by
products) Revenue earned on Ruthenium, Iridium, Nickel and Copper
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RoM Run of mine
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SDO Sylvania dump operations
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Shares Common shares
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Sylvania Sylvania Platinum Limited, a company incorporated in Bermuda
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USD United States Dollar
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WIP Work in progress
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WULA Water Use Licence Application
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UK United Kingdom of Great Britain and Northern Ireland
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ZAR South African Rand
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END
MSCGUGDBRSXDGGB
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