TIDMSLP
RNS Number : 6701Q
Sylvania Platinum Limited
22 October 2019
_____________________________________________________________________________________________________________________________
22 October 2019
Sylvania Platinum Limited
("Sylvania", "the Company" or "the Group")
AIM (SLP)
First Quarter Report to 30 September 2019
The Directors are pleased to present the results for the quarter
ended 30 September 2019 ("Q1" or the "quarter"). Unless otherwise
stated, the consolidated financial information contained in this
report is presented in USD.
Achievements
-- Net revenue increased 54% to $31.2 million ($20.2 million Q4 FY2019);
-- Group EBITDA improved 106% to $19.2 million ($9.3 million Q4 FY2019);
-- The Company bought back 4.2 million shares during the quarter;
-- Sylvania Dump Operations ("SDO") produced 20,797 4E PGM
ounces in Q1 FY2020 (21,789 4E PGM ounces Q4 FY2019);
-- SDO PGM plant recoveries improved 11% to 59.46%;
-- Millsell achieved five years lost time injury ("LTI") free during September 2019;
-- Commissioning of Lesedi milling and chrome beneficiation plant completed.
Challenges
-- Community protests in the Steelpoort area, related to
community demands and expectations of employment and commercial
opportunities, resulted in disruptions at the Eastern operations
during September 2019;
-- Water management is still a focus area, especially due to
severe drought in most areas at the end of the dry season,
impacting on operations at Lesedi and Tweefontein;
-- Managing cash holding in the face of rising costs of doing
business such as electricity, labour and taxes.
Opportunities
-- Continued optimisation of MF2 modules and Lesedi chrome
section to improve process efficiencies;
-- Current PGM basket price contributing to higher profits and cash balance.
Commenting on the Q1 results, Sylvania's CEO Terry McConnachie
said:
"I am pleased to say that the SDO achieved another solid
production performance in the first quarter of our financial year
towards our annual guidance of 74,000 to 76,000 ounces. Recovery
efficiencies improved well to 59.46% and are attributable to a
combination of the Mooinooi MF2 circuit running for a full quarter,
improved feed stability and circuit configuration at Lesedi and
higher flotation mass pull philosophy at some of the
operations.
This recovery figure will taper off to an expected rate of
around 52% going forward due to a lower flotation mass pull which
will be required to address concentrate quality and payability.
The Company also undertook a share buyback programme during the
quarter whereby a total of 4.2 million shares were purchased from
both the market and employees so as to fulfil the current shortfall
in shares held in Treasury needed to cover the bonus share awards
and options, which vest over the next five years.
We continue to maintain a good cash holding due to Q4's pipeline
and a healthy basket price. However, we are ever mindful of the
payment of tax on revenue which increases in line with our earnings
and because of this, we will continue with tight cost controls to
ensure the Company can meet its tax obligations as well as continue
to internally fund further capital expenditure and the payment of
dividends."
USD Unit Unaudited Unit ZAR
Q4 FY2019 Q1 FY2020 % Change % Change Q1 FY2020 Q4 FY2019
------------------ --------- --------- ----------------- ----------------
Production
------------------ --------- ------ ------------------ ------ --------- ----------------- ----------------
592,511 634,525 7% T Plant Feed T 7% 634,525 592,511
------------------ --------- ------ ------------------ ------ --------- ----------------- ----------------
2.58 2.47 -4% g/t Feed Head Grade g/t -4% 2.47 2.58
------------------ --------- ------ ------------------ ------ --------- ----------------- ----------------
PGM Plant Feed
327,635 307,946 -6% T Tons T -6% 307,946 327,635
------------------ --------- ------ ------------------ ------ --------- ----------------- ----------------
PGM Plant Feed
3.85 3.55 -8% g/t Grade g/t -8% 3.55 3.85
------------------ --------- ------ ------------------ ------ --------- ----------------- ----------------
PGM Plant
53.78% 59.46% 11% % Recovery % 11% 59.46% 53.78%
------------------ --------- ------ ------------------ ------ --------- ----------------- ----------------
21,789 20,797 -5% Oz Total 4E PGMs Oz -5% 20,797 21,789
------------------ --------- ------ ------------------ ------ --------- ----------------- ----------------
29,210 27,633 -5% Oz Total 6E PGMs Oz -5% 27,633 29,210
------------------ --------- ------ ------------------ ------ --------- ----------------- ----------------
Average gross
basket
1,328 1,654 25% $/oz price R/oz 32% 24,557 18,659
------------------ --------- ------ ------------------ ------ --------- ----------------- ----------------
Financials
------------------ --------- ------ ------------------ ------ --------- ----------------- ----------------
17,781 24,631 39% $'000 Revenue (4E) R'000 42% 362,176 255,747
------------------ --------- ------ ------------------ ------ --------- ----------------- ----------------
Revenue (by
1,749 1,827 4% $'000 products) R'000 7% 26,857 25,150
------------------ --------- ------ ------------------ ------ --------- ----------------- ----------------
644 4,694 628% $'000 Sales adjustments R'000 645% 69,027 9,270
------------------ --------- ------ ------------------ ------ --------- ----------------- ----------------
20,174 31,152 54% $'000 Net revenue R'000 58% 458,061 290,167
------------------ --------- ------ ------------------ ------ --------- ----------------- ----------------
10,424 11,435 10% $'000 Operating costs R'000 12% 168,100 149,892
------------------ --------- ------ ------------------ ------ --------- ----------------- ----------------
General and
administrative
475 575 21% $'000 costs R'000 24% 8,445 6,829
------------------ --------- ------ ------------------ ------ --------- ----------------- ----------------
9,309 19,180 106% $'000 Group EBITDA R'000 111% 281,947 133,869
------------------ --------- ------ ------------------ ------ --------- ----------------- ----------------
313 317 1% $'000 Net Interest R'000 4% 4,665 4,502
------------------ --------- ------ ------------------ ------ --------- ----------------- ----------------
4,849 12,534 158% $'000 Net profit R'000 164% 184,246 69,724
------------------ --------- ------ ------------------ ------ --------- ----------------- ----------------
Capital
2,199 1,463 -33% $'000 Expenditure R'000 -32% 21,509 31,625
------------------ --------- ------ ------------------ ------ --------- ----------------- ----------------
R/$ Ave R/$ rate R/$ 2% 14.70 14.38
------------------ --------- ------ ------------------ ------ --------- ----------------- ----------------
21,812 26,627 22% $'000 Cash Balance R'000 25% 391,410 313,650
------------------ --------- ------ ------------------ ------ --------- ----------------- ----------------
Unit
Cost/Efficiencies
------------------ --------- ------ ------------------ ------ --------- ----------------- ----------------
SDO Cash Cost Per
485 550 13% $/oz 4E PGM oz R/oz 16% 8,081 6,969
------------------ --------- ------ ------------------ ------ --------- ----------------- ----------------
SDO Cash Cost Per
361 414 15% $/oz 6E PGM oz R/oz 17% 6,082 5,198
------------------ --------- ------ ------------------ ------ --------- ----------------- ----------------
Group Cash Cost
Per
496 573 16% $/oz 4E PGM oz R/oz 18% 8,420 7,128
------------------ --------- ------ ------------------ ------ --------- ----------------- ----------------
Group Cash Cost
Per
370 431 17% $/oz 6E PGM oz R/oz 19% 6,337 5,317
------------------ --------- ------ ------------------ ------ --------- ----------------- ----------------
All-in sustaining
538 586 9% $/oz cost (4E) R/oz 11% 8,615 7,734
------------------ --------- ------ ------------------ ------ --------- ----------------- ----------------
606 642 6% $/oz All-in cost (4E) R/oz 8% 9,444 8,721
------------------ --------- ------ ------------------ ------ --------- ----------------- ----------------
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
The SDO experienced a good safety quarter, with no LTIs recorded
during the period. The Millsell operation reached the significant
milestone of five years LTI-free during the quarter, Lesedi reached
eight years LTI-free and Tweefontein and Doornbosch operations both
remain LTI-free for seven years.
The Company 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.
Operational performance
The SDO delivered a solid, above guidance, performance of 20,797
ounces for the quarter, the second highest production quarter for
the SDO. Whilst PGM plant feed tons and PGM plant feed grade were
6% and 8% lower respectively, PGM recovery efficiencies increased
11% to mitigate the impact and produce a solid production
performance for the quarter.
Although front-end plant feed improved 7% during the period, the
coarser nature of material being mined from current mining areas
impacted negatively on the proportion of fines reporting to the PGM
plant and hence a 6% reduction in PGM plant feed tons.
PGM feed grade was negatively affected by lower quantities of
higher-grade current arisings received at the Tweefontein
operation, after a production disruption at the host mine. Lower
grade current arisings received at Mooinooi, related to a temporary
change in feed source at the host mine further impacted feed
grade.
The significant improvement in the PGM recovery efficiency can
be attributed to a combination of the Mooinooi MF2 circuit that has
now been running for a full quarter, after being commissioned
during mid-Q4 FY2019, improved feed stability and circuit
configuration at Lesedi, following the commissioning of the new
milling and chrome beneficiation circuit, and higher flotation mass
pull philosophy at some of the operations which also improved
recoveries. Although the new circuits at Mooinooi and Lesedi will
continue to contribute towards recovery efficiencies going forward,
flotation mass pull will have to be lower in the coming quarters to
address concentrate quality and payability, unfortunately at the
expense of recovery. Steady-state PGM recovery efficiency for
FY2020 is planned at approximately 52% to 53% 4E going forward.
The total SDO cash costs for the period were within budget, but
increased by 16% in ZAR terms to ZAR 8,081/ounce and 13% in USD
terms to $550/ounce. Higher re-mining costs associated with
additional feed-screening of coarse dump material at Lesedi, and a
minus ZAR 8.0 million rehabilitation adjustment that was processed
in Q4 FY2019, were some of the most significant contributors to the
increase in operating cost.
Capital expenditure at ZAR 21.5 million was in line with the
Project Echo roll-out and payment schedule and the stay-in-business
capital spend program.
Operational focus areas
As in previous quarters, water constraints were, and remain, a
concern and management continue to both explore technologies to
reduce water losses and consumption, and explore and implement
alternative measures to supplement water supply to the operations.
Additional trial boreholes are being drilled at Lesedi in
consultation with water and environmental experts, in order to
recover seepage from tailings dam facilities that could potentially
be rolled out to other sites if proven to be successful.
Management continues to focus on improving communication and to
engage with mandated and recognised forums from neighbouring
communities in order to identify potential commercial opportunities
and to manage expectations regarding employment and procurement
spend. The relationship with these forums is critical, especially
when their assistance is needed to manage community members that
threaten to interrupt operations, as various neighbouring mines
have experienced during the past year.
Operating costs continue to be a focus area, especially with
re-mining costs and PGM concentrate penalties to be optimised
during coming quarters.
Operational opportunities
Further optimisation of the recently commissioned MF2 module at
Mooinooi and the new milling and chrome beneficiation circuit at
Lesedi should continue to contribute towards higher PGM recoveries
and PGM ounces.
Flotation circuit configuration and optimisation across
operations, especially Doornbosch and Lesedi, to address PGM
concentrate quality, should contribute towards lower smelter
penalties and higher PGM payability in the future.
B. FINANCIAL OVERVIEW
Financial performance
Net revenue for the quarter increased 54% from $20.2 million to
$31.2 million. The increase is due mainly to Q4 FY2019's pipeline
payment and the increase in commodity prices with the resultant
improvement of 25% in the gross basket price quarter-on-quarter
from $1,328/ounce to $1,654/ounce. The sales adjustment of $4.7
million is as a result of the adjustment to sales recognised in Q4
FY2019, but only invoiced in this quarter at the higher basket
price.
The total operating costs, which are incurred in ZAR, increased
12% to ZAR 168.1 million, compared to the ZAR 149.9 million in Q4
FY2019 largely due to employee-related costs. The changes to the
re-mining strategy initially resulted in higher costs and combined
with the increase in feed tons, increased the total mining costs
during the quarter resulting in higher operating costs. Electricity
costs were also higher as the Mooinooi MF2 module was fully
operational during the quarter after commissioning in Q4 FY2019.
General and administrative costs are incurred in USD, GBP and ZAR
and are impacted by exchange rate fluctuations over the reporting
period. These costs increased 21% quarter-on-quarter from $0.5
million to $0.6 million due to annual employee cost increases and
an escalation in travel costs.
Group cash costs increased 18% from ZAR 7,128/ounce to ZAR
8,420/ounce as a result of the increased costs detailed above as
well as the slightly lower ounces this quarter compared to the
previous quarter. In dollar terms the Group cash costs increased
16% from $496/ounce to $573/ounce.
The all-in sustaining cost ("AISC") and all-in cost ("AIC")
increased during the quarter to ZAR 8,615/ounce (Q4 FY2019: ZAR
7,734/ounce) and ZAR 9,444/ounce (Q4 FY2019: ZAR 8,721/ounce)
respectively.
The Group EBITDA increased 106% from $9.3 million to $19.2
million during the quarter and the net profit increased 158% to
$12.5 million as a result of the increase in revenue.
The Group cash balance at 30 September 2019 was $26.6 million
(including guarantees), a $4.8 million increase on the previous
quarter's cash balance of $21.8 million. Cash generated from
operations before working capital movements was $19.3 million with
net changes in working capital amounting to a decrease of $9.7
million due mainly to the increase in trade and contract debtors
recorded at the current basket price. An amount of $1.5 million was
spent on capital during the quarter and 4.2 million shares were
bought back at a cost of $2.2 million. The impact of exchange rate
fluctuations on cash held at the quarter end was a decrease of $1.3
million. The cash balance is before the payment of dividends and SA
income tax on companies at 28% of taxable profits in Q2 FY2020.
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
Following the announcement of 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. At this time there are
no further developments to report.
D. CORPORATE MATTERS
Share buybacks
As announced on 24 and 30 September 2019, the Company bought
back 3.0 million shares ordinary shares of $0.01 ("Ordinary
Shares") in the market and 1.2 million ordinary shares from
employees at the 30-day value weighted average price ("VWAP") of
41.68 pence, as at the close of day on 20 September 2019.
Media Allegations
The Company has become aware of references in the media to the
company and its relationship with Samancor Chrome Limited
("Samancor"). It appears that these allegations have emerged from a
court application by the Association of Mineworkers and
Construction Union ("AMCU") which seeks to compel Samancor to
produce accounting records for a number of transactions entered
into over a period of time.
The Board and Management of Sylvania would like to reassure its
stakeholders that all agreements and share transactions entered
into by Sylvania have been conducted lawfully, and in compliance
with all regulations. Details relating to these transactions were
fully disclosed at the time. Should there be further developments
in this regard, the Board and Management will continue to keep
stakeholders informed.
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) 7580 216 203
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
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ASX Australian Securities Exchange
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Fresh chrome tails from current operating host mines processing
Current risings operations
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DMR Department of Mineral Resources
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EBITDA Earnings before interest, tax, depreciation and amortisation
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EA Environmental Authorisation
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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
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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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London Stock Exchange. RNS is approved by the Financial Conduct
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of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
QRFGLBDGGGDBGCD
(END) Dow Jones Newswires
October 22, 2019 02:02 ET (06:02 GMT)
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