- Title:
Fourth Quarter Report to 30 June 2021 - Time:
07:00:02 - Date:
27 Jul 2021 - Category:
Miscellaneous - ID:
5748G
_____________________________________________________________________________________________________________________________
27 July 2021
Sylvania Platinum Limited
("Sylvania", the "Company" or the "Group")
Fourth Quarter Report to 30 June 2021
Achievements
Challenges
Opportunities
Commenting on the Q4 results, Sylvania's CEO, Jaco Prinsloo said:
"Reflecting back on the past year, I am incredibly proud of our team for achieving the annual production of 70,043 4E PGM ounces for the financial year. Whilst PGM production in Q4 was slightly lower than the previous quarter, production of 16,289 4E PGM ounces was in line with management projections and was a robust contribution to our full year production.
"Whilst the record profits realised in Q3 were boosted by the spike in the price of rhodium and its effect on our basket price, we have seen quite a pull-back in the rhodium price in recent months which has inevitably impacted the Group's revenue and profit for Q4. Noting that our full annual financial statements are due to be published in September, an annual dividend will be considered by the Board at its August meeting."
"In terms of COVID-19, the Company continues its efforts to moderate the effects of the virus on our employees and I am proud of the continued individual and collective efforts to ensure both the health and safety of all our employees and to limit the impact on production. Our thoughts are with all those that have lost loved ones or have been impacted by this pandemic.
"Finally, the Board acknowledges that the recent spate of civil unrest experienced in two of the country's provinces in the second week of July may have been unsettling for investors, as it has been for most South Africans. Fortunately, none of our operations were impacted by this unrest and although the earlier protests were not in the provinces where our operations are located, management still continues to monitor the situation closely, particularly from a supply chain point of view and to ensure that all potential risks are assessed and mitigated in this regard."
| USD |
Unit |
Unaudited |
Unit |
ZAR |
||||
| Q3 FY2021 |
Q4 FY2021 |
% Change |
% Change |
Q4 FY2021 |
Q3 FY2021 |
|||
|
|
|
|
|
Production |
|
|
|
|
| 644,087 |
635,153 |
-1% |
T |
Plant Feed |
T |
-1% |
635,153 |
644,087 |
| 2.14 |
1.95 |
-9% |
g/t |
Feed Head Grade |
g/t |
-9% |
1.95 |
2.14 |
| 317,883 |
323,012 |
2% |
T |
PGM Plant Feed Tons |
T |
2% |
323,012 |
317,883 |
| 3.21 |
3.07 |
-4% |
g/t |
PGM Plant Feed Grade |
g/t |
-4% |
3.07 |
3.21 |
| 53.05% |
51.22% |
-3% |
% |
PGM Plant Recovery |
% |
-3% |
51.22% |
53.05% |
| 17,420 |
16,289 |
-6% |
Oz |
Total 4E PGMs |
Oz |
-6% |
16,289 |
17,420 |
| 23,618 |
21,180 |
-10% |
Oz |
Total 6E PGMs |
Oz |
-10% |
21,180 |
23,618 |
|
|
|
|
|
|
|
|
|
|
| 4,576 |
4,059 |
-11% |
$/oz |
Gross basket price1 |
R/oz |
-17% |
56,420 |
67,874 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financials2 |
|
|
|
|
| 55,310 |
44,112 |
-20% |
$'000 |
Revenue (4E) |
R'000 |
-25% |
623,635 |
828,149 |
| 3,899 |
4,088 |
5% |
$'000 |
Revenue (by-products including base metals) |
R'000 |
-1% |
57,792 |
58,381 |
| 15,031 |
246 |
-98% |
$'000 |
Sales adjustments |
R'000 |
-98% |
3,476 |
225,056 |
| 74,240 |
48,446 |
-35% |
$'000 |
Net revenue |
R'000 |
-38% |
684,903 |
1,111,586 |
|
|
|
|
|
|
|
|
|
|
| 13,078 |
14,929 |
14% |
$'000 |
Direct operating costs |
R'000 |
8% |
211,057 |
195,821 |
| 573 |
636 |
11% |
$'000 |
General and administrative costs |
R'000 |
5% |
8,996 |
8,574 |
| 58,736 |
28,741 |
-51% |
$'000 |
Group EBITDA |
R'000 |
-54% |
406,320 |
879,453 |
| 382 |
395 |
3% |
$'000 |
Net Interest |
R'000 |
-2% |
5,585 |
5,716 |
| 41,316 |
14,739 |
-64% |
$'000 |
Net profit |
R'000 |
-66% |
208,373 |
618,637 |
|
|
|
|
|
|
|
|
|
|
| 1,627 |
2,382 |
46% |
$'000 |
Capital Expenditure |
R'000 |
38% |
33,680 |
24,363 |
|
|
|
|
|
|
|
|
|
|
| 102,118 |
101,123 |
-1% |
$'000 |
Cash Balance |
R'000 |
-3% |
1,452,377 |
1,502,247 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R/$ |
Ave R/$ rate |
R/$ |
-6% |
14.14 |
14.97 |
|
|
|
|
R/$ |
Spot R/$ rate |
R/$ |
-2% |
14.36 |
14.71 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unit Cost/Efficiencies |
|
|
|
|
| 745 |
912 |
22% |
$/oz |
SDO Cash Cost Per 4E PGM oz3 |
R/oz |
16% |
12,892 |
11,161 |
| 550 |
701 |
27% |
$/oz |
SDO Cash Cost Per 6E PGM oz3 |
R/oz |
20% |
9,915 |
8,232 |
| 773 |
941 |
22% |
$/oz |
Group Cash Cost Per 4E PGM oz3 |
R/oz |
15% |
13,302 |
11,571 |
| 570 |
724 |
27% |
$/oz |
Group Cash Cost Per 6E PGM oz3 |
R/oz |
20% |
10,231 |
8,534 |
| 923 |
1,239 |
34% |
$/oz |
All-in sustaining cost (4E) |
R/oz |
27% |
17,510 |
13,815 |
| 1,027 |
1,339 |
30% |
$/oz |
All-in cost (4E) |
R/oz |
23% |
18,935 |
15,375 |
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 in the table is the June 2021 gross basket used for revenue recognition of ounces delivered in Q4, before penalties/smelting costs and applying the contractual payability.
2 Revenue (6E) for Q4, before adjustments is $48.1 million (6E prill split is Pt 50%, Pd 18%, Rh 9%, Au 0.3%, Ru 18%, Ir 5%).
3 The cash costs include direct operating costs and exclude 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 the Doornbosch operation achieved the significant industry milestone of nine years Lost-time Injury ("LTI") free during June 2021.
Impact of COVID-19 and South African Government imposed lockdown regulations
The final quarter of the financial year saw the emergence of a third, more transmissible, wave of COVID-19 infections in the country during May 2021. The Company's overall COVID-19 cases increased to 103 since the start of the pandemic, of which 85 employees have now returned to work. Unfortunately, we sadly lost a colleague from our Western operations, due to COVID-19 related complications. Our thoughts and prayers go out to his family and friends, as well as those that worked closely with him at the plant.
The Level 4 lockdown restrictions announced by the South African President on 27 June 2021 have not had any direct impact on our operations but management continues to monitor the situation and to implement measures for both the corporate office and operations to limit interaction and exposure where possible. Currently, all plants continue to operate 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 16,289 ounces in Q4, which whilst a slight decrease compared to 17,420 ounces in Q3 FY2021 was in line with management's projections for the quarter, enabling the SDO to deliver 70,043 PGM ounces for the financial year, being a little over our expected target.
The PGM feed tons increased by 2% quarter on quarter with a solid performance from operations with most plants achieving higher than planned treatment rates during the period. The treatment of RoM material increased by approximately 55% as the supply to both the Mooinooi and Lannex operations by the host mines have improved significantly during the past quarter.
Both the 4% decrease in PGM feed grade and the 3% decrease in PGM Recovery efficiency compared to the previous quarter were largely associated with the significant increase in open cast RoM material treated at Mooinooi and Lannex, with open cast material typically being more oxidised and having a lower PGM grade and recovery potential than current dump sources. Based on the current plant feed sources, management's philosophy is to ensure that operations balance PGM recoveries versus mass pull and concentrate quality, with PGM recovery expected to remain in the 52% to 54% range during the next financial year.
Total SDO cash costs increased in rand and dollar terms quarter-on-quarter by 16% and 22% respectively to ZAR12,892/ounce and $912/ounce (Q3: ZAR11,161/ounce and $745/ounce). The ZAR:USD exchange rate strengthened 6% during the quarter, which impacted the dollar cost increase, and the lower quarter-on-quarter PGM ounces which impacted unit costs in both rand and dollar. Combined, the effect was approximately $110/ounce increase in SDO cash cost per ounce.
As reported in the previous period, the higher costs associated with mitigating the impact of initial lower RoM and current arisings tonnages at some of the host mines, and to secure additional RoM sources at Mooinooi, impacted negatively on operating costs and is expected to remain a factor up to the end of the calendar year. The 15% electricity tariff increase became effective in April 2021, further impacting cash costs.
SDO incurred capital expenditure of ZAR33.7 million ($2.4 million) during the quarter, which is aligned with planned capital project schedules.
Operational focus areas
In light of the higher cash costs in Q3 and Q4, management remains focused on initiatives to optimise mining costs and associated equipment hire for blending of feed sources. While the host mine RoM production remains affected at selected sites, management continues to balance the impact of higher operating costs in the short to medium terms against the impact on life of mine of operations, while ensuring stable PGM ounce production at operations.
After experiencing some post-commissioning challenges with instability and chokes on the new Mooinooi fines classification and fine chrome recovery circuit, the plant team has been optimising the circuit and has made significant improvements during recent months with operations expected to stabilise and start to realise benefits during H1 FY2022.
In terms of improving the stability of power supply to operations and to minimise resultant intermittent operational downtime experienced at some operations, specific power mitigation strategies have been developed with conceptual designs completed during recent months for those operations most significantly affected and roll-out is anticipated to commence during the next financial year.
Operational opportunities
The execution of the MF2 project at Lesedi to improve the upgrading and recovery of PGMs is progressing well and the project remains on track to start contributing towards production from early 2022.
In addition, the Tweefontein MF2 project at the Eastern operations is also now progressing with the project anticipated to commission during the second half of the 2022 calendar year.
B. FINANCIAL OVERVIEW
Financial performance
Revenue (4E) for the quarter decreased 20% from $55.3 million to $44.1 million as a result of both the moderately lower ounce production and the significant reduction in the realised basket price quarter-on-quarter. The gross basket price for the quarter decreased 11% from $4,576/ounce in Q3 to $4,059/ounce in Q4 due mainly to the 19% and 5% drop in rhodium and platinum prices received respectively.
General and administrative costs increased quarter-on-quarter from $0.57 million to $0.64 million. 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 decreased slightly from $102.1 million to $101.1 million during the quarter. Cash generated from operations before working capital movements was $29.0 million with net changes in working capital amounting to $14.7 million, which is mainly due to the change in trade debtors. Trade debtors arise from the concentrate delivered in the quarter but only paid for in the following quarter as per the concentrate off take agreements. The decrease in basket price and lower ounce production resulted in a lower trade debtors balance quarter-on-quarter.
The second provisional income tax payment for the six months to 30 June 2021 of $29.1 million, and the second provisional Mineral Royalty tax for the same period of $6.2 million were paid in June 2021. Furthermore, dividend withholding tax of $0.53 million was paid to the authorities with an additional $1.0 million dividend withholding tax payable at the end of July 2021. The Company also paid a Windfall Dividend of $14.3 million to shareholders during the current quarter.
The Group spent $2.4 million on capital for the quarter.
Group cash costs per 4E PGM ounce increased 15% in ZAR from ZAR11,571/ounce ($773/ounce) to ZAR13,302/ounce ($941/ounce), Group EBITDA decreased from $58.7 million to $28.7 million and net profit decreased from $41.3 million to $14.7 million as a result of the lower ounces produced and the lower basket price achieved.
C. MINERAL ASSET DEVELOPMENT AND OPENCAST MINING PROJECTS
Volspruit Platinum Opportunity
Detail design for the Permitting Applications has been completed and specialist studies in terms of updating the EIA and Water Use License applications, as part of the overall process to conclude the final project authorisations, are in progress.
Based on the preliminary mining design information and results from additional metallurgical test work generated as part of the recent specialist study that was initiated in mid-2020, various processing and off-take options are being evaluated to guide the future strategy in terms of this project.
Northern Limb Projects
As detailed in earlier announcements, further exploratory drilling is in progress and this study will continue until late 2022 and updates will be released to the market when new information becomes available.
Grasvally
The Grasvally asset remains an asset for sale and the Option Agreement as negotiated and reported in the Company's FY2020 report is still valid in terms of the potential sale of 100% of the shares in Grasvally and claims against Grasvally Chrome Mine (Pty) Ltd to Forward Africa Mining (Pty) Ltd .
D. CORPORATE ACTIVITIES
Civil unrest in Gauteng and Kwa-Zulu Natal
The Company notes enquiries made by some shareholders pertaining to the recent spate of civil unrest experienced in two of the country's provinces and any potential impact to Sylvania's operations. Where the Board acknowledges the devastating effects the unrest has had on the communities affected, the Directors wish to assure shareholders that there have been no impacts to operations to date. SDO are located in the provinces of Mpumalanga and North West where no protest action or riots have occurred and, as such, operations continue unabated. However, management continues to monitor the situation and to evaluate potential risks to operations, particularly from a supply chain point of view and to ensure that any potential risks are mitigated.
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 0205 |
| Justine James / Harriet Jackson / Faye Calow |
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 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 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 |
| ASX |
Australian Securities Exchange |
| 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 |
| EA |
Environmental Authorisation |
| EIA |
Environmental Impact Assessment |
| EIR |
Effective interest rate |
| EMPR |
Environmental Management Programme Report |
| GBP |
Great British Pound |
| IASB |
International Accounting Standards Board |
| IFRIC |
International Financial Reporting Interpretation Committee |
| IFRS |
International Financial Reporting Standards |
| I&APs |
Interested and Affected Parties |
| Lesedi |
Phoenix Platinum Mining Proprietary Limited, renamed Sylvania Lesedi |
| LSE |
London Stock Exchange |
| LTI |
Lost time injury |
| MF2 |
Milling and flotation technology |
| MPRDA |
Mineral and Petroleum Resources Development Act |
| MRA |
Mining Right Application |
| MTO |
Mining Titles Office |
| NOMR |
New Order Mining Right |
| NWA |
National Water Act 36 of 1998 |
| Option Plan |
Sylvania Platinum Limited Share Option Plan |
| PGM |
Platinum group metals comprising mainly platinum, palladium, rhodium and gold |
| PAR |
Pan African Resources Plc |
| Phoenix |
Phoenix Platinum Mining Proprietary Limited, renamed Sylvania Lesedi |
| 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 |
| Programme |
Sylvania Platinum Share Buyback Programme |
| 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. |
| Revenue (by products) |
Revenue earned on Ruthenium, Iridium, Nickel and Copper |
| RoM |
Run of mine |
| SDO |
Sylvania dump operations |
| Shares |
Common shares |
| Sylvania |
Sylvania Platinum Limited, a company incorporated in Bermuda |
| USD |
United States Dollar |
| WIP |
Work in progress |
| WULA |
Water Use Licence Application |
| UK |
United Kingdom of Great Britain and Northern Ireland |
| ZAR |
South African Rand |
Fourth Quarter Report to 30 June 202107:00:0227 Jul 2021Miscellaneous5748G