TIDMSLP
RNS Number : 3348N
Sylvania Platinum Limited
29 January 2021
_____________________________________________________________________________________________________________________________
29 January 2021
Sylvania Platinum Limited
("Sylvania", the "Company" or the "Group")
Second Quarter Report to 31 December 2020
Sylvania (AIM: SLP) is pleased to announce the results for the
quarter ended 31 December 2020 ("Q2" or the "quarter"). Unless
otherwise stated, the consolidated financial information contained
in this report is presented in United States Dollars ("USD").
Achievements
-- Sylvania Dump Operations ("SDO") declared 18,363 4E PGM ounces in Q2 (Q1: 17,972 ounces);
-- SDO recorded $43.7 million net revenue for the quarter (Q1: $41.5 million);
-- EBITDA of $29.1 million (Q1: $28.8 million);
-- Net profit of $20.3 million ( Q1: $20.1 million) ;
-- Cash balance of $67.1 million (Q1: $60.9 million) after
payment of dividends, royalties and income tax.
Challenges
-- The global COVID-19 pandemic, with South Africa at a revised
level 3 lockdown, remains a challenge we continue to monitor;
and
-- Significant power interruptions were experienced at Western
operations related to vandalism of Eskom sub-stations and
electrical cable theft in the area during the past quarter and
management is evaluating the outcomes of a power mitigation study
to determine the possible measures to reduce any impact.
Opportunities
-- Ongoing circuit optimisation at the new Lannex mill and
spiral upgrade is progressing well and will improve processing
efficiencies and profitability based on current feed sources;
-- Mooinooi chrome proprietary processing modifications and
optimisation project remains on track to commission during Q3;
and
-- The Group remains debt free and continues to maintain strong
cash reserves to allow for funding of capital expansion and process
optimisation projects; the safeguarding of our employees during
these times of uncertainty; upgrading our exploration and
evaluation assets and returning value to all stakeholders.
Commenting on the Q2 results, Sylvania's CEO, Jaco Prinsloo
said:
" Operational performance has continued to stabilise from
previous quarters as the operations teams have embraced the 'new
normal' way of production incorporating COVID-19 related protocols
implemented during H2 FY2020 and I am pleased to report that the
Company produced 18,363 ounces for the quarter."
"This solid performance during Q2 was in line with our internal
plan and we therefore remain on track to achieve the estimated
target production of approximately 70,000 ounces of PGMs for the
year. I commend our operations teams in the way they have adapted
and achieved despite the inconsistency in supply received from our
host mines. The benefits of the implementation of Project Echo and
the optimisation projects is evident."
"In light of the global pandemic and as a result of the
increasing contagion of COVID-19 in the country, the Company
continues to refine and enhance safety measures to ensure the
health and safety of all employees and their loved ones. Although
we are fortunate not to have had any production interruption during
this period, the impact on our team has been more significant due
to the physical and emotional burden on our employees who either
fell ill due to the virus, or had to deal with the loss of loved
ones and we continue to offer our support and keep them in our
prayers."
"Financially the Company continued to benefit from the stronger
PGM basket price in recent months and a decision will be taken on
the windfall dividend at the review of the interim accounts at the
forthcoming Board meeting in February 2021."
USD Unit Unaudited Unit ZAR
Q1 FY2021 Q2 FY2021 % Change % Change Q2 FY2021 Q1 FY2021
------------------ --------- --------- ---------------- --------------
Production
------------------ --------- ------ ------------------ ------ --------- ---------------- --------------
680,662 740,783 9% T Plant Feed T 9% 740,783 680,662
------------------ --------- ------ ------------------ ------ --------- ---------------- --------------
1.86 2.01 8% g/t Feed Head Grade g/t 8% 2.01 1.86
------------------ --------- ------ ------------------ ------ --------- ---------------- --------------
PGM Plant Feed
314,391 317,688 1% T Tons T 1% 317,688 314,391
------------------ --------- ------ ------------------ ------ --------- ---------------- --------------
PGM Plant Feed
3.21 3.20 0% g/t Grade g/t 0% 3.20 3.21
------------------ --------- ------ ------------------ ------ --------- ---------------- --------------
PGM Plant
55.09% 56.22% 2% % Recovery % 2% 56.22% 55.09%
------------------ --------- ------ ------------------ ------ --------- ---------------- --------------
17,972 18,363 2% Oz Total 4E PGMs Oz 2% 18,363 17,972
------------------ --------- ------ ------------------ ------ --------- ---------------- --------------
24,324 24,920 2% Oz Total 6E PGMs Oz 2% 24,920 24,324
------------------ --------- ------ ------------------ ------ --------- ---------------- --------------
Gross basket
2,834 3,323 17% $/oz price(1) R/oz 3% 48,707 47,372
------------------ --------- ------ ------------------ ------ --------- ---------------- --------------
Financials
------------------ --------- ------ ------------------ ------ --------- ---------------- --------------
37,314 42,436 14% $'000 Revenue (4E) R'000 5% 661,439 630,911
------------------ --------- ------ ------------------ ------ --------- ---------------- --------------
4,143 1,262 -70% $'000 Sales adjustments R'000 -72% 19,668 70,050
------------------ --------- ------ ------------------ ------ --------- ---------------- --------------
41,457 43,697 5% $'000 Net revenue R'000 -3% 681,107 700,961
------------------ --------- ------ ------------------ ------ --------- ---------------- --------------
Operating
12,173 14,015 15% $'000 costs(2) R'000 6% 218,443 205,817
------------------ --------- ------ ------------------ ------ --------- ---------------- --------------
General and
administrative
512 614 20% $'000 costs R'000 11% 9,568 8,653
------------------ --------- ------ ------------------ ------ --------- ---------------- --------------
28,813 29,111 1% $'000 Group EBITDA(2) R'000 -7% 453,748 487,170
------------------ --------- ------ ------------------ ------ --------- ---------------- --------------
417 420 1% $'000 Net Interest R'000 -7% 6,541 7,054
------------------ --------- ------ ------------------ ------ --------- ---------------- --------------
20,161 20,330 1% $'000 Net profit(2) R'000 -7% 316,887 340,884
------------------ --------- ------ ------------------ ------ --------- ---------------- --------------
Capital
1,018 1,265 24% $'000 Expenditure R'000 15% 19,716 17,206
------------------ --------- ------ ------------------ ------ --------- ---------------- --------------
60,889 67,095 10% $'000 Cash Balance R'000 -3% 986,406 1,013,863
------------------ --------- ------ ------------------ ------ --------- ---------------- --------------
R/$ Ave R/$ rate R/$ -8% 15.59 16.91
------------------ --------- ------ ------------------ ------ --------- ---------------- --------------
R/$ Spot R/$ rate R/$ -12% 14.70 16.65
------------------ --------- ------ ------------------ ------ --------- ---------------- --------------
Unit
Cost/Efficiencies
------------------ --------- ------ ------------------ ------ --------- ---------------- --------------
SDO Cash Cost Per
665 756 14% $/oz 4E PGM oz(2) R/oz 5% 11,779 11,238
------------------ --------- ------ ------------------ ------ --------- ---------------- --------------
SDO Cash Cost Per
491 557 13% $/oz 6E PGM oz(2) R/oz 5% 8,679 8,303
------------------ --------- ------ ------------------ ------ --------- ---------------- --------------
Group Cash Cost
Per
699 780 12% $/oz 4E PGM oz(2) R/oz 3% 12,153 11,818
------------------ --------- ------ ------------------ ------ --------- ---------------- --------------
Group Cash Cost
Per
516 575 11% $/oz 6E PGM oz(2) R/oz 3% 8,956 8,731
------------------ --------- ------ ------------------ ------ --------- ---------------- --------------
All-in sustaining
701 803 15% $/oz cost (4E)(2) R/oz 6% 12,522 11,846
------------------ --------- ------ ------------------ ------ --------- ---------------- --------------
All-in cost
754 848 12% $/oz (4E)(2) R/oz 4% 13,217 12,753
------------------ --------- ------ ------------------ ------ --------- ---------------- --------------
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 (4E) in the table is the December
2020 gross basket used for revenue recognition of ounces delivered
in Q2. The average gross basket price (4E) for ounces invoiced and
the resultant cash inflows in Q2 is $2,903 (Q1: $2,734, before
penalties/smelting costs and applying the contractual
payability.
(2) Operating costs adjusted for mineral 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 both the Tweefontein and Doornbosch operations have
remained at a significant industry milestone of eight and a half
years Lost-time Injury ("LTI") free achieved during the
quarter.
Impact of COVID-19 and South African Government Imposed
Lockdown
Having recommenced operations in Q4 FY2020, management
implemented various initiatives to safeguard employees from the
effects of COVID-19. The new COVID-19 variant which has emerged in
the country, has presented new challenges to the Company with four
positive cases being reported during December 2020, and 20 new
cases reported during January 2021 after not having any infections
during August to November 2020. The total reported infections since
March 2020 to date is 38 of which 31 employees have recovered and
returned to work.
The global COVID-19 pandemic, with SA now at a revised Level 3
status, remains an area of concern and management continue to
sustain and enhance the various measures to ensure both the health
and safety of all employees and to limit the impact on production.
Access to sites has been restricted to employees and essential
services required to sustain operational performance. Sylvania
continues to support the revised Level 3 lockdown measures
announced during December 2020 and implemented by the Government.
At present, all plants are operating at full capacity and in
accordance with all legislated safety and occupational regulations
pertaining to the industry and country as a whole.
Operational performance
SDO produced 18,363 ounces in Q2, a 2% increase compared to
17,972 ounces in Q1 FY2021. PGM plant feed tons and PGM plant feed
grade remained stable quarter-on-quarter and PGM recovery
efficiencies increased marginally by 2% from Q1. Operational
performance has continued to stabilise from previous quarters as
the operations have embraced the "new normal" way of production
post COVID-19 related disruptions experienced during H2 FY2020.
Total SDO cash costs increased in Rand and Dollar terms
quarter-on-quarter by 5% and 14% respectively to ZAR11,779/ounce
and $756/ounce (Q1: ZAR11,238/ounce and $665/ounce) due to a
combination of the higher Rand cost and 8% stronger ZAR/$ exchange
rate. The Rand cost was impacted by higher process consumables and
re-mining costs associated with lower grade opencast ROM sources
treated at some operations as well as the mineral royalty tax that
is calculated on the half year ounces and paid in December 2020.
The Q1 royalty tax expense was adjusted in Q2 and the higher basket
price and lower capital allowance in Q2, as it was fully utilised
in the prior financial year, resulted in a higher royalty tax
percentage over the full period.
SDO incurred capital expenditure of ZAR19.7 million ($1.2
million) during the quarter, a 15% increase which is aligned with
planned capital project schedules.
Operational focus areas
Optimisation of flotation performance and recovery efficiencies
remain a focus area at Western operations where lower grade and
more oxidised open cast ROM material is currently being treated as
a result of the previously announced scale-down at the host
mines.
Optimisation of the new milling and upgraded spiral sections at
Lannex will continue during the next quarter, after being
commissioned during August 2020, enabling the plant to improve
processing efficiencies and profitability on the current suite of
resources. Open cast ROM supply from the host mine was inconsistent
during the past quarter, but ROM feed is expected to stabilise
during Q3.
Although the uncertainty at the national power utility relating
to power supply remains a key focus for the Group, there were no
significant power disruptions or production losses related to
load-shedding by the utility during the past quarter. However,
there has been a significant increase in vandalism and theft of
copper cables at various sub-stations of the utility that affected
power supply and production, especially at Mooinooi and Millsell at
the Western Operations, which had approximately 80 hours and 85
hours downtime respectively. Management is currently evaluating the
outcomes of a power mitigation study that compared various back-up
supply options to determine the best way forward for operations to
mitigate the impact of either potential future load-shedding or
supply interruptions by the utility.
Operational opportunities
The Mooinooi chrome proprietary processing modifications and
optimisation project to improve fines classification and fine
chrome recovery efficiency, as announced earlier, is on track and
is expected to be commissioned towards the end of Q3 FY2021 which
will contribute towards improving PGM feed grades and ounces at the
plant.
The proposed MF2 expansion project at the Lesedi Plant to
construct a new secondary milling and flotation module to improve
the upgrading and recovery of PGMs, similar to successful Project
Echo modules rolled out between 2016 and 2020, has commenced and is
scheduled to commission towards the end of FY2021.
Based on recent results from the Company's specific fine chrome
recovery research and test work initiative that was initiated in
late 2019, a circuit configuration and technology has been
identified to enable the economic recovery of fine chrome from some
existing dumps, that historically was uneconomical to recover. This
latest development could enable the Company to re-treat low PGM
grade tailings resources, that would otherwise have been
sterilised, to extend the operational life of PGM operations at
selected sites while adding value to the host mines through
increased chrome recovery and production.
B. FINANCIAL OVERVIEW
Financial performance
Revenue, after applying the payability and smelter costs, for
the quarter increased 5% from $41.5 million to $43.7 million as a
result of the combination of the 2% increase in 4E PGMs delivered
and the increase in the basket price. The gross basket price for
the quarter increased 17% from $2,834/ounce in Q1 to $3,323/ounce
as a result of the continued increase in the rhodium price during
the past quarter.
General and administrative costs increased quarter-on-quarter
from $0.51 million to $0.61 million which includes the non-cash
share-based payment expense on bonus share awards. 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 increased from $60.9 million to $67.1
million during the quarter. Cash generated during the quarter from
operations before working capital movements was $29.4 million with
net changes in working capital amounting to a decrease of $7.1
million mainly due to the increase in trade and contract debtors as
a result of the increase in the gross basket price. $1.3 million
was spent on capital and 1,448,075 million shares were bought back
at a cost of $1.1 million. $5.9 million was paid out in dividends
and provisional South African income tax for the six months to 31
December 2020 of $15.1 million was paid. The impact of exchange
rate fluctuations on cash held at the quarter end was an increase
of $7.1 million due to the strengthening of the ZAR against the
USD. The Group is obliged to hold a large portion of its cash in
ZAR and will convert this to USD as and when the opportunity
arises.
Group cash costs increased 3% in ZAR from ZAR11,818/ounce
($699/ounce) to ZAR12,153/ounce ($780/ounce), Group EBITDA
increased from $28.8 million to $29.1 million and net profit
increased to $20.3 million from $20.2 million. Provisional income
tax and royalty tax payments made in December 2020 resulted in a
cash outflow of $18.01 million.
D. MINERAL ASSET DEVELOPMENT AND OPENCAST MINING PROJECTS
As previously announced, new studies of the Volspruit and
Northern Limb projects were initiated and continue to assist in
developing the most suitable strategy for these projects in the
changing economic landscape.
Volspruit Platinum Opportunity
Detail design for the Permitting Applications has been
completed. Specialist work for updating the EIA and Water Use
License will commence during Q3 as part of the overall process to
conclude the final project authorisations.
In terms of the new technical study that was announced earlier,
technical consultants have been engaged since mid-2020 to evaluate
and optimise mine designs and evaluate the process design and
update metallurgical performance parameters through additional test
work. Preliminary mining design information has been received
already, but the last metallurgical test work was concluded during
December 2020, with the final test work report expected during H2
FY2021.
Northern Limb Projects
The specialist consultants employed to assist Sylvania in
evaluating the resources and exploring the economic potential of
the respective deposits on the Northern Limb, have completed
initial studies and identified specific higher-grade portions along
the ore body that could potentially be attractive for shallow, low
risk open cast extraction and PGM processing.
In order to confirm initial findings and to improve the current
resource estimate, a concept level mining study for the project has
been scoped, which will include infill drilling and additional
assays, which will start during Q3 and continue until late
2022.
Grasvally
The sale of Grasvally to Forward Africa Mining (Pty) Ltd ("FAM")
to acquire 100% of the shares in and claims against Grasvally
Chrome Mine (Pty) Ltd for a total consideration of ZAR115.0 million
is still ongoing and the Option Agreement as negotiated and
reported in the Company's FY2020 report is still valid.
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
/ Ed Phillips
Communications
Alma PR Limited +44 (0) 20 3405 0208
Justine James / Helena Bogle / sylvania@almapr.co.uk
Faye Calow
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
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/
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 FY2021
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
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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
All-in cost capital expenditure
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ASX Australian Securities Exchange
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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
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EA Environmental Authorisation
---------------------------------------------------------------------
EIA Environmental Impact Assessment
---------------------------------------------------------------------
EIR Effective interest rate
---------------------------------------------------------------------
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
---------------------------------------------------------------------
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
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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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