_____________________________________________________________________________________________________________________________
27 July 2023
Sylvania Platinum Limited
("Sylvania", the "Company" or the "Group")
Fourth Quarter Report to 30 June 2023
Sylvania (AIM: SLP), the platinum group metals ("PGM") producer and developer with assets in South Africa, announces its results for the quarter ended 30 June 2023 ("Q4" 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 19,072 4E (24,383 6E) PGM ounces in Q4 (Q3: 17,926 4E (22,884 6E) PGM ounces);
- SDO produced 75,469 4E (95,965 6E) PGM ounces for FY2023 (FY2022: 67,053 4E PGM ounces; 85,659 6E PGM ounces)
- Exceeded production forecast for the year, which had previously been increased from 72,000 to 74,000 4E PGM ounces;
- Paid first interim dividend of 3 pence per Ordinary Share on 6 April 2023;
- SDO recorded $24.4 million net revenue for the quarter (Q3: $26.5 million);
- Group EBITDA of $7.8 million (Q3: $9.8 million);
- Group cash balance of $125.0 million as at 30 June 2023 (Q3: $144.2 million), the reduction primarily due to periodic tax payments of $13.7 million, dividend payments of $9.9 million and share buybacks of $3.6 million during the quarter;
- Doornbosch achieved 11-years Lost-Time Injury ("LTI") free during June 2023;
- Successful commissioning of Tweefontein MF2 improves metal recoveries;
- Optimisation of blending improved results, especially at the Eastern operations; and
- Pilot-scale work on Pelletizer project completed, the Company is currently engaging potential industry partners to assess the commercial viability of the technology.
Outlook
- Re-mining of Dam 6A at the Mooinooi Plant has commenced with the focus on optimising the blend to ensure the planned grade profile is achieved;
- The commissioning of the Lannex MF2 flotation circuit is expected to commence in Q1 FY2024, which will further improve PGM recovery efficiencies;
- Continuous operational performance improvements relating to the optimisation of feed sources, throughput, recoveries, and cost saving initiatives implemented;
- The updated Mineral Resource Estimate ("MRE") at Volspruit is expected to be completed during Q1 FY2024, and the Preliminary Economic Assessment ("PEA") for the entire project is expected during Q3 FY2024; and
- The Group maintains strong cash reserves to allow funding of expansion and process optimisation capital and upgrading of the Group's exploration and evaluation assets with the potential to return value to shareholders.
Commenting on the Q4 results, Sylvania's CEO, Jaco Prinsloo said:
"I am very pleased with the strong finish to the financial year where the SDO achieved 19,072 ounces for the quarter. This performance was achieved on the back of a solid production effort from all operations, with all plants exceeding production throughput targets, as well as the contribution of the Tweefontein MF2 circuit that also added to our performance.
"The 18% lower PGM basket price received during the quarter impacted both the 4E revenue as well as the sales adjustment for the quarter. Consequently, revenues and profits were lower than in Q3, but still resulted in a strong cash position after the payment of taxes, first interim dividends, and share buybacks during the period.
"On the cost front, SDO cash costs increased 1% in rand and decreased 4% in dollar terms, benefitting from the higher ounces produced and weaker exchange rate, but operations are still navigating higher global cost inflation impacts and thus operating cost focus remains a priority.
"Despite the challenging macro environment, I am pleased with the significantly improved production performance of the SDO for Q4 which resulted in the Company achieving PGM production of 75,469 ounces for FY2023, exceeding our increased guidance for the year."
Disclaimer
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.
| USD | Unit | Unaudited | Unit | ZAR | ||||
| Q3 FY2023 | Q4 FY2023 | % Change | % Change | Q4 FY2023 | Q3 FY2023 | |||
|
|
|
|
| Production |
|
|
|
|
| 575,973 | 702,236 | 22% | T | Plant Feed | T | 22% | 702,236 | 575,973 |
| 1.92 | 1.81 | -6% | g/t | Feed Head Grade | g/t | -6% | 1.81 | 1.92 |
| 322,366 | 359,658 | 12% | T | PGM Plant Feed Tons | T | 12% | 359,658 | 322,366 |
| 2.98 | 2.89 | -3% | g/t | PGM Plant Feed Grade | g/t | -3% | 2.98 | 2.89 |
| 55.58% | 57.01% | 3% | % | PGM Plant Recovery1 | % | 3% | 57.01% | 55.58% |
| 17,926 | 19,072 | 6% | Oz | Total 4E PGMs | Oz | 6% | 19,072 | 17,926 |
| 22,884 | 24,383 | 7% | Oz | Total 6E PGMs | Oz | 7% | 24,383 | 22,884 |
| | |
| | | | | | |
| 1,932 | 1,581 | -18% | $/oz | 4E Gross basket price2 | R/oz | -14% | 29,524 | 34,305 |
| | | | | | | | | |
|
|
|
|
| Financials3 |
|
|
|
|
| 25,034
| 21,826 | -13% | $'000 | Revenue (4E) | R'000 | -8% | 407,707 | 444,488 |
| 3,193 | 3,454 | 8% | $'000 | Revenue (by-products including base metals) | R'000 | 14% | 64,526 | 56,681 |
| (1,717) | (859) | -50% | $'000 | Sales adjustments | R'000 | -47% | (16,056) | (30,486) |
| 26,510
| 24,421 | -8% | $'000 | Net revenue | R'000 | -3% | 456,177 | 470,683 |
| | | | | | | | | |
| 12,337 | 12,577 | 2% | $'000 | Direct operating costs | R'000 | 7% | 234,945 | 219,045 |
| 3,404 | 2,939 | -18% | $'000 | Indirect operating costs | R'000 | -9% | 54,899 | 60,434 |
| 733 | 701 | -4% | $'000 | General and administrative costs | R'000 | 1% | 13,095 | 13,018 |
| 9,784 | 7,806 | -20% | $'000 | Group EBITDA | R'000 | -16% | 145,816 | 173,764 |
| 1,581 | 1,784 | 13% | $'000 | Net Interest | R'000 | 19% | 33,325 | 28,079 |
| 6,112 | 3,136 | -49% | $'000 | Net profit | R'000 | -46% | 58,580 | 108,549 |
| | | | | | | | | |
| 1,864 | 6,185 | 232% | $'000 | Capital Expenditure | R'000 | 249% | 115,537 | 33,106 |
| | | | | | | | | |
| 144,182 | 124,983 | -13% | $'000 | Cash Balance | R'000 | -8% | 2,360,929 | 2,567,881 |
| | | | | | | | | |
| | | | R/$ | Ave R/$ rate | R/$ | 5% | 18.68 | 17.76 |
| | | | R/$ | Spot R/$ rate | R/$ | 6% | 18.89 | 17.81 |
| | | | | | | | | |
| | | |
| Unit Cost/Efficiencies |
| | | |
| 688 | 660 | -4% | $/oz | SDO Cash Cost Per 4E PGM oz4 | R/oz | 1% | 12,319 | 12,219 |
| 539 | 516 | -4% | $/oz | SDO Cash Cost Per 6E PGM oz4 | R/oz | 1% | 9,636 | 9,572 |
| 843 | 824 | -2% | $/oz | Group Cash Cost Per 4E PGM oz4 | R/oz | 3% | 15,392 | 14,972 |
| 660 | 645 | -2% | $/oz | Group Cash Cost Per 6E PGM oz4 | R/oz | 3% | 12,049 | 11,722 |
| 932 | 881 | -5% | $/oz | All-in sustaining cost (4E) | R/oz | -1% | 16,446 | 16,548 |
| 1,007 | 1,159 | 15% | $/oz | All-in cost (4E) | R/oz | 21% | 21,642 | 17,883 |
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 PGM plant recovery is calculated on the production ounces that include the work-in-progress ounces.
2 The gross basket price in the table is the June 2023 gross 4E basket used for revenue recognition of ounces delivered in Q4 FY2023, before penalties/smelting costs and applying the contractual payability.
3 Revenue (6E) for Q4, before adjustments is $25.1 million (6E pill split is Pt 52%, Pd 17%, Rh 9%, Au 0%, Ru 17%, Ir 5%). Revenue excludes profit/loss on foreign exchange.
4 The cash costs include direct operating costs and exclude indirect cost for example royalty tax and Employee Dividend Entitlement Plan ("EDEP") payments.
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. The Doornbosch operation achieved 11 years LTI-free on 26 June 2023, which is a remarkable achievement by industry and global standards, and management are exceptionally proud of the Doornbosch team. Lannex achieved three years LTI free during the period and Millsell and Tweefontein are now both LTI-free for more than a year.
Operational performance
The SDO delivered 19,072 4E PGM ounces for the quarter. This 6% improvement in PGM ounces was enabled by a 12% improvement in PGM feed tons and 3% improvement in PGM recoveries, while the plant feed head grade decreased 6% quarter-on-quarter.
The Tweefontein MF2 circuit has been optimised following commissioning in Q2 FY2023 and continues to contribute to improved recoveries. The commissioning of the Lannex MF2 flotation circuit is expected to commence in Q1 FY2024 with the fine grinding circuit to commence towards the end of Q2 FY2024. Progressive improvement in recoveries is expected at Lannex from Q2 FY2024.
Load curtailment continued to impact the performance of the Lesedi operation contributing to 221 hours downtime during the first two months of the quarter, but fortunately no other operations were materially affected. The procurement, installation and commissioning of the back-up generator for Lesedi is expected to be complete by the end of Q1 FY2024.
SDO operating cash costs per 4E PGM ounce increased 1% in rand terms and decreased 4% in dollar terms to ZAR12,319/ounce and $660/ounce (Q3: ZAR12,219/ounce and $688/ounce) respectively. The average ZAR:USD exchange rate depreciated by 5% during the quarter.
The Group incurred capital expenditure of ZAR115.5 million ($6.2 million), in line with planned capital project schedules. The main contributors were ZAR25.6 million ($1.4 million) spent on Lannex MF2, ZAR24.3 million ($1.3 million) on various Tailings Storage Facilities, and ZAR3.1 million ($0.17 million) on exploration.
Operational focus areas
Overall operational performance has been excellent with production guidance exceeded for the quarter and for the financial year. Management continues to focus on optimisation of feed sources, blending strategy and reagent regimes to further enhance performance. ROM grades received from the host mine remain on target and collaboration is ongoing regarding further improvements in this area.
Water consumption at the Lesedi re-mining operations and the re-mining operation of Dam 6A at the Mooinooi Plant that commenced during the quarter remains a focus area, as well as optimal blending to ensure the planned grade profile is achieved.
Focus also remains on final PGM concentrate quality through optimisation of mass pull, concentrate grade and metal recoveries to contribute positively towards the revenue stream of the Group.
Operational maintenance has improved resulting in higher equipment availabilities and throughput for the quarter, Roll-out of the maintenance system is ongoing.
The decreasing metal prices and resultant impact on margins have reinforced the importance of managing operating costs and prudent capital spend. Operating costs continue to be reviewed on a regular basis.
Operational opportunities
Continuous operational performance improvements relating to the optimisation of feed sources, throughput, recoveries and cost saving initiatives have been identified and are achievable. This includes test work on optimising the reagent regimes on all operations.
Construction of the Lannex MF2 Plant is on target to commence commissioning in the latter part of Q1 FY2024, with commissioning of the fine grinding circuit to follow during Q2 FY2024.
The Company's Pelletizer project, developed in partnership with a 'binding technology' player, has progressed well. Pilot-scale work has been completed and potential industry partners are being engaged to assess the commercial viability of the technology.
B. FINANCIAL OVERVIEW
Financial performance
Revenue (4E) for the quarter decreased by 13% to $21.8 million (Q3: $25.0 million) impacted by the 18% decrease in the basket price recorded in June and applied to calculate revenue for ounces produced and delivered in the quarter. These deliveries are invoiced in the following quarter and revenue will be adjusted in the month of invoice. The average 4E gross basket price for the quarter was $1,581/ounce against $1,932/ounce in Q3, impacted mainly by the drop in rhodium and palladium prices.
Net revenue for the quarter, which includes base metals and by-products and the quarter-on-quarter sales adjustment, was $24.4 million (Q3: $26.5 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 increased by 3% in rand terms from ZAR14,972/ounce to ZAR15,392/ounce. A 2% decrease in dollar terms from $843/ounce in the previous quarter to $824/ounce was due to the 5% depreciation in ZAR/USD average exchange rate quarter on quarter.
General and administrative costs decreased from $0.73 million to $0.70 million. These costs are incurred in USD, GBP and ZAR and are impacted by the exchange rate fluctuations over the reporting period.
Group EBITDA for the quarter was $7.8 million (Q3: $9.8 million) and net profit was $3.1 million (Q3: $6.1 million), the decrease was primarily a result of the lower basket price and higher costs.
The Group cash balance for the quarter was $125.0 million (Q3: $144.2 million). Dividend withholding tax of $1.3 million, provisional income tax of $9.9 million and mineral royalty tax of $2.5 million were paid to the South African Revenue Services during Q4. The Company paid its first cash interim dividend of 3 pence per Ordinary Share amounting to $9.9 million on 6 April 2023 to all shareholders on the register at the close of business on 3 March 2023. A further $3.6 million was spent on the share buyback programme during the quarter. The Group spent $6.2 million on capital during Q4 (Q3: $1.9 million), comprising of $0.2 million on exploration projects and $6.0 million on improvement and stay in business capital. The increase in capital spend is mainly due to the work on tailings dams at various plants as well as the MF2 project at Lannex and was in line with planned capital project schedules.
Cash generated from operations before working capital movement was $7.8 million. Net changes in working capital amounted to $4.1 million, which is mainly due to the decrease in trade debtors of $4.9 million as a result of lower commodity prices in Q4.
The impact of exchange rate fluctuations on cash held at the end of Q4 FY2023 was ZAR37.6 million ($2 million) loss as a result of the 6.1% weakening of the ZAR to USD at 30 June 2023.
C. MINERAL ASSET DEVELOPMENT
The Group holds approved and executed Mining Rights for various mineral asset projects on the Northern Limb of the Bushveld Igneous Complex located in South Africa which are currently in the exploration and optimisation stage. Detailed studies are underway on both the Volspruit and Far Northern Limb PGM project areas to determine how best to optimise the respective projects. Continued progress has been made in understanding the approach of unlocking the mineral potential on these projects to generate value for shareholders.
Volspruit Project
Following the release of the Exploration Results and Resource Statement in October 2022, the scope for the remainder of FY2023 was to optimise the reinterpreted Mineral Resource on the North Body which included a complete relogging programme, metallurgical drilling for recovery test work and sampling for the inclusion of rhodium ("Rh"), ruthenium ("Ru"), and iridium ("Ir"). In addition, further work is being conducted on the South Body resource, which has the potential to increase overall tonnages by up to 40%. All relogging of the existing core over the North and South Body is complete. All required samples have been submitted for 6E PGMs assay with results expected imminently. The updated MRE is expected to be completed during Q1 FY2024, and the PEA for the entire project expected during Q3 FY2024. This marks a slight delay from the previous reporting schedule as further sampling and additional assays were required to validate the existing dataset.
The permitting requirements under the Mining Right as communicated in the interim report continues. The Water-Use Licence, updating of the Environmental Impact Assessment and finalisation of the Social and Labour Plan are all included within these activities. Submission of the application will commence in the first quarter of FY2024 with the process expected to take up to 14 months for finalisation from the relevant authorities.
Far Northern Limb Projects
Optimisation studies to determine the continuation of the newly discovered T-Zone as reported in the Exploration Results and Resource Statement in October 2022 continues. Relogging of historical core from the farms La Pucella, Nonnenwerth and Harriets Wish has been completed confirming the geological re-interpretation along two thirds of the full strike length of the project area. Exploration programmes are currently being designed to maximise the potential of the project area.
MRE studies for the Hacra North underground Target are under review, while the relogging of the near-surface mineralisation located in the south of the property is currently undergoing validation and will be subject to ongoing study during the first half of FY2024.
D. CORPORATE ACTIVITIES
Share Buyback and Cancellation
During the period, the Company conducted a Share Buyback and bought back a total of 3,624,275 Ordinary Shares at an average price of 79.36 pence per share, equating to $3.6 million in aggregate. The purpose of the Share Buyback was to reduce the share capital of the Company.
Additionally, during the period, the Company acquired 116,250 Ordinary Shares of $0.01 each in the Company ("Ordinary Shares") from employees. The Ordinary Shares were purchased at the 30-day VWAP price of 90.4148 pence per Ordinary Share and placed into Treasury.
Post year-end, on 14 July 2023, the Company announced that 3,624,275 Ordinary Shares held in Treasury had been cancelled. Following this share cancellation, the Company's issued share capital is 275,375,725 Ordinary Shares, of which, a total of 12,315,461 Ordinary Shares are held in Treasury. Therefore, the total number of Ordinary Shares with voting rights in Sylvania is 263,060,264 Ordinary Shares.
Notice of Annual Results: Investor presentation
The Company confirms it will announce its Final Results for the year ended 30 June 2023 on Thursday, 7 September 2023.
Sylvania's CEO, Jaco Prinsloo, and CFO, Lewanne Carminati, will host a live investor presentation, via the Investor Meet Company platform, on 7 September 2023 at 12:00 BST.
The presentation is open to all existing and potential shareholders. Questions can be submitted pre-event via your Investor Meet Company dashboard up until 9.00am the day before the meeting or at any time during the live presentation.
Investors can sign up to Investor Meet Company for free and add to meet Sylvania via:
https://www.investormeetcompany.com/sylvania-platinum-limited/register-investor
Investors who already follow Sylvania on the Investor Meet Company platform will automatically be invited.
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 |
|
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 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 |
| EDEP | Employee Dividend Entitlement Plan |
| 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 |
| 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 |
| PGM | Platinum group metals comprising mainly platinum, palladium, rhodium and gold |
| PDMR | Person displaying managerial responsibility |
| PEA | Preliminary Economic Assessment |
| 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 |
| 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 |
| UNSDGs | United Nations Sustainability Development Goals |
| 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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