TIDMSLP
RNS Number : 9025U
Sylvania Platinum Limited
30 October 2017
Sylvania Platinum Limited
("Sylvania", "the Company" or "the Group")
AIM (SLP)
First Quarter Report to 30 September 2017
"Project Echo progressing well and Company on track to produce
70,000 ounces for the year from existing operations, excluding
future yields from Phoenix."
30 October 2017
Sylvania Platinum Limited, the low cost Platinum Group Metal
("PGM") processor and developer, today announces its results for
the quarter ended 30 September 2017 ("Q1" or the "quarter") from
its PGM production and development operations in the Bushveld
region of South Africa.
SNAPSHOT
-- 16,589 ounces produced by the Sylvania Dump Operations ("SDO");
-- Revenue increased 7% in both US dollar and Rand terms to
$14.1 million (Q4 FY2017: $13.2 million) and R186.1 million (Q4
FY2017: R174.4 million);
-- Group cash balance of $17.4 million, a $2.1 million increase
on the previous quarter's $15.3 million;
-- Group EBITDA improved 9% from $5.0 million to $5.5 million quarter-on-quarter;
-- Agreed to acquire Phoenix Platinum from Pan African Resources
for R89 million ($6.6 million), awaiting final approval from the
South African Competition Commission as last condition precedent to
be met; and
-- Purchased 1,426,686 Ordinary $0.01 Shares at A$0.1619 each
under the Share Buyback Programme ("Programme") offered to small,
non-UK shareholders which will be cancelled on completion of the
Programme.
SYLVANIA OVERVIEW
The SDO has produced 16,589 ounces for the quarter, which is an
8% decrease on the previous quarter's production of 17,954 ounces.
The decrease, which was expected, was due in part to the scheduled
closure of the Steelpoort plant in Q4 FY2017 and annual production
is still expected to meet the FY2018 forecast of 70,000 ounces
outlined in the Annual Report. This excludes any increase in
production from the acquisition of Phoenix Platinum Mining
Proprietary Limited ("Phoenix") should the approval from the South
African Competition Commission ("Commission"), necessary to fulfil
the final conditions precedent to the agreement, be forthcoming. An
extension to the 90-day deadline to 26 November 2017 to obtain such
consent has been agreed to by the Company and Pan African Resources
("PAR") as necessitated by the Commission to return their
decision.
As outlined in the announcement of 31 July 2017, the Company
agreed to acquire Phoenix for a purchase price of R89 million ($6.6
million) and due to the close proximity of Phoenix to Sylvania's
existing operations, as well as the similar process and business
model, certain synergies are expected to be achieved by the
combined operations. The acquisition together with the
commissioning of the Millsell and Doornbosch secondary milling and
flotation ("MF2") modules as part of Project Echo in FY2018 are
expected to increase ounce production in the second half of the
year.
The cash costs for the SDO in Dollar and Rand terms have
increased 18% and 17% respectively from $422/oz (R5,572/oz) in Q4
FY2017 to $496/oz (R6,541/oz), primarily due to the lower PGM ounce
production for the quarter. Revenue increased by 7% in both Dollar
and Rand terms to $14.1 million (Q4 FY2017: $13.2 million) and
R186.1 million (Q4 FY2017: R174.4 million) associated primarily
with a 7% increase in gross PGM price to $1,028/oz (Q4 FY2017:
$963/oz). SDO capital expenditure increased 15% in line with the
project schedule for Project Echo, which is currently in progress
and on schedule to ensure a sustainable PGM production profile
going forward.
The Group cash balance at 30 September 2017 was $17.4 million
(including guarantees), a $2.1 million increase on the previous
quarter's $15.3 million. Cash generated from operations before
working capital movements was $5.5 million with net changes in
working capital amounting to a reduction of $1.5 million. An amount
of $1.7 million was spent on capital, comprising $1.0 million
expenditure on Project Echo and $0.7 million on stay-in-business
capital. $0.1 million was spent on exploration assets and $0.05
paid for the rehabilitation insurance guarantee. The impact of
exchange rate fluctuations on cash held at the quarter end was $0.3
million.
Commenting on the quarter, Sylvania's CEO Terry McConnachie
said:
"I am pleased to note that despite the scheduled closure of our
Steelpoort operation in the fourth quarter of FY2017 and the cost
increase this quarter, the Company has still delivered a sound
result in terms of PGM production and is on track to achieve the
70,000 ounce production profile at or below the cost of R6,500
($507) per PGM ounce as set out in the FY2017 Annual Report. These
figures, however, do not take into account the synergies with
Phoenix and the anticipated ounce production which could be
achieved should the transaction be completed. The 7% increase in
revenue in both Rand and US Dollar terms is welcomed, as is the 7%
increase in the Gross Basket Price, which has continued to improve
since the quarter end.
As the Millsell and Doornbosch MF2 modules are to be
commissioned in Q2 FY2018, I look forward to seeing an increase in
production and recovery efficiencies which will bridge the gap
created by the scheduled Steelpoort plant closure."
GROUP PERFORMANCE
Unaudited - Group Unit September 2017 % Change
Quarter June 2017
Quarter
----------------------- ------ -------------- ----------- ---------
Financials
----------------------- ------ -------------- ----------- ---------
Revenue $'000 14,118 13,202 7%
----------------------- ------ -------------- ----------- ---------
Capital Expenditure(1) $'000 1,823 1,780 2%
----------------------- ------ -------------- ----------- ---------
Ave R/$ rate R/$ 13.18 13.21 0%
----------------------- ------ -------------- ----------- ---------
EBITDA(2) $'000 5,506 5,072 9%
----------------------- ------ -------------- ----------- ---------
Production
----------------------- ------ -------------- ----------- ---------
PGM Plant Feed T 274,377 305,757 -10%
----------------------- ------ -------------- ----------- ---------
Total 3E and Au Oz 16,589 17,954 -8%
----------------------- ------ -------------- ----------- ---------
Group Cash Cost(3)
----------------------- ------ -------------- ----------- ---------
Per 3E & Au oz $/oz 519 446 16%
----------------------- ------ -------------- ----------- ---------
(1) Capital expenditure on SDO and exploration and evaluation
assets.
(2) EBITDA is Earnings before interest, foreign exchange gains
and losses, taxation, depreciation and amortisation.
(3) Group cash costs include plant operating costs and group
general and administration costs, but are exclusive of
depreciation, amortisation, reclamation capital, project
development and administration costs and share-based payments.
A. SYLVANIA DUMP OPERATIONS
Health, safety and environment
There were no significant health or environmental incidents
during the quarter, and Tweefontein and Doornbosch operations
remain Lost Time Injury ("LTI") free for more than five years.
Unfortunately, Mooinooi operation had one LTI during the quarter
where an employee sustained finger fractures during maintenance
activities. Lannex and Millsell both remain more than two years
LTI-free.
Operations
The SDO production of 16,589 PGM ounces, post the scheduled
closure of Steelpoort, is a sound result after a record performance
achieved for FY2017, albeit an 8% decrease on the previous
quarter's performance of 17,954 ounces. As the first two MF2
modules of Project Echo, which are currently under construction at
Millsell and Doornbosch, are commissioned towards the end of the
next quarter, PGM ounces are expected to increase again and
contribute towards the planned production of 70,000 ounces for the
year.
Although the PGM recovery efficiencies increased by 11% due to a
combination of improved flotation efficiency at current operations
and the absence of lower recovery efficient ounces from Steelpoort
in the previous quarter, the PGM feed tons and feed grades were 10%
and 9% lower respectively and impacted negatively on PGM ounce
production. The PGM feed tons will remain lower in the future due
to Steelpoort's closure, but recovery efficiencies are planned to
improve significantly as the Project Echo MF2 flotation modules are
commissioned towards the end of the next quarter.
SDO cash costs in Dollar and Rand terms have increased 18% and
17% respectively from $422/oz (R5,572/oz) in Q4 FY2017 to $496/oz
(R6,541/oz), primarily due to the lower PGM ounce production for
the quarter, but cash costs are expected to return to previous
levels as Project Echo is rolled out.
Operational and Financial Summary
Unaudited - SDO Unit September June 2017 +- % YTD
2017 Quarter Quarter
Quarter on Quarter
---------------------- ----- ----------------------- ----------------------- ------------ ---------------------
Revenue
---------------------- ----- ----------------------- ----------------------- ------------ ---------------------
Revenue $'000 14,118 13,202 7% 14,118
---------------------- ----- ----------------------- ----------------------- ------------ ---------------------
Revenue R'000 186,104 174,380 7% 186,104
---------------------- -----
Gross Basket Price(1) $/oz 1,028 963 7% 1,028
---------------------- ----- ----------------------- ----------------------- ------------ ---------------------
Gross Cash Margin
- SDO % 42% 43% -2% 42%
---------------------- ----- ----------------------- ----------------------- ------------ ---------------------
Capital Expenditure $'000 1,695 1,474 15% 1,695
---------------------- ----- ----------------------- ----------------------- ------------ ---------------------
Capital Expenditure R'000 22,339 19,474 15% 22,339
---------------------- ----- ----------------------- ----------------------- ------------ ---------------------
Ave R/US$ rate(2) R/$ 13.18 13.21 0% 13.18
---------------------- ----- ----------------------- ----------------------- ------------ ---------------------
EBITDA $'000 5,885 5,535 6% 5,885
---------------------- ----- ----------------------- ----------------------- ------------ ---------------------
EBITDA R'000 77,571 73,103 6% 77,571
---------------------- ----- ----------------------- ----------------------- ------------ ---------------------
SDO Cash Cost(3)
---------------------- ----- ----------------------- ----------------------- ------------ ---------------------
Per PGM Feed ton $/t 30 25 20% 30
---------------------- ----- ----------------------- ----------------------- ------------ ---------------------
Per PGM Feed ton R/t 396 327 21% 396
---------------------- ----- ----------------------- ----------------------- ------------ ---------------------
Per 3E & Au oz $/oz 496 422 18% 496
---------------------- ----- ----------------------- ----------------------- ------------ ---------------------
Per 3E & Au oz R/oz 6,541 5,572 17% 6,541
---------------------- ----- ----------------------- ----------------------- ------------ ---------------------
Production
---------------------- ----- ----------------------- ----------------------- ------------ ---------------------
Plant Feed T 524,504 544,281 -4% 524,504
---------------------- ----- ----------------------- ----------------------- ------------ ---------------------
Feed Head Grade g/t 2.38 2.67 -11% 2.38
---------------------- ----- ----------------------- ----------------------- ------------ ---------------------
PGM Plant Feed
Tons T 274,377 305,757 -10% 274,377
---------------------- ----- ----------------------- ----------------------- ------------ ---------------------
PGM Plant Grade g/t 3.64 4.02 -9% 3.64
---------------------- ----- ----------------------- ----------------------- ------------ ---------------------
PGM Plant Recovery % 52.4% 47.2% 11% 52.3%
---------------------- ----- ----------------------- ----------------------- ------------ ---------------------
Total 3E and Au Oz 16,589 17,954 -8% 16,589
---------------------- ----- ----------------------- ----------------------- ------------ ---------------------
(1) The gross basket price reported is the total estimated price
for deliveries made in the quarter and does not include any
penalties or smelting costs. The actual net basket price received
is only determined in the invoicing month which is three months
after the delivery month, prior quarter adjusted for actual prices
received if necessary.
(2) The functional currency for SDO is SA Rand and the exchange
rate shown is the average over the period indicated.
(3) Cash costs include plant operating costs such as mining,
processing, administration, royalties and production taxes, but are
exclusive of depreciation, amortisation, reclamation, capital,
project development and exploration costs.
Project Echo
Project Echo continues to progress well. Both the Millsell and
Doornbosch MF2 modules are under construction as the first phase of
the program and both modules are planned to be commissioned during
the next quarter. This will fill the ounce gap after the scheduled
closure of the Steelpoort operation that reached its end of life
during June 2017.
The MF2 roll-out will lead to improved PGM recovery
efficiencies, lower PGM production unit costs, increased cash
generation, and will enable the SDO to extend its operating life
and to sustain its production profile of around 70,000 ounces going
forward.
Phoenix Acquisition
Sylvania announced on 31 July 2017 that the Company has entered
into a conditional agreement with Pan African Resources Plc ("PAR")
to acquire 100% of the shares in and claims against Phoenix
Platinum Mining Proprietary Limited ("Phoenix") for a purchase
price of R89 million ($6.6 million), (the "Acquisition"), settled
in cash.
The Acquisition was subject to the following conditions
precedent:
- The completion of an internal due diligence review of
Phoenix's operations and taxation compliance by an independent
third party;
- Approval by the Competitions Authorities in accordance with
South African competition legislation;
- the requisite consent or approval of Samancor Chrome and TC
Smelters, on whose mining premises the plant and part of the dumps
are situated, has been obtained in writing for the implementation
of the Sale ; and
- the consent of PAR's Lenders.
All of the above conditions precedent have been met during July
2017, except the final approval by the South African Competition
Commission, which is expected to be finalised during November
2017.
The Acquisition is consistent with Sylvania's strategy to grow
its business in order to enhance and sustain its position as the
largest PGM producer from chrome tailings re-treatment. Various
synergies and opportunities have been identified by Sylvania to
bring Phoenix's operating costs and profitability in line with
other SDO operations, and more detail on this will be shared on
conclusion of the transaction.
The Transaction again increases Sylvania's fully operational
chrome tailings processing complexes from six to seven, after
Steelpoort was successfully de-commissioned in June of this year,
and is expected to increase annual PGM production capacity.
B. EXPLORATION AND OPENCAST MINING PROJECTS
Volspruit Platinum Exploration
The Company still awaits a decision by the Member of the
Executive Council for Economic Development, Environment on the
Company's appeal against the initial refusal of the Environmental
Authorisation ("EA"). Once this is received the next step will be
the submission of Water Use License Application ("WULA"). This
Application has been completed, and has been exposed to the
scrutiny of Public Participation, with only the Civil Design
outstanding.
Grasvally Chrome Exploration
As reported in the previous quarter's report, beneficiation
testing of the initial 6,167 tons of the planned 15,000 tons of Run
of Mine ("ROM") bulk sample continues. A further 9,000 tons has
been blasted but not yet excavated. The Company will proceed with
the completion of phase 1 of the Grasvally Bulk Sample pending
results of the beneficiation testing.
C. CORPORATE UPDATE
Share Buybacks
The Company announced on 21 August 2017 the details of its Share
Buyback Programme offered to small, non-UK based shareholders who,
on the de-listing from the ASX in 2012, may have been prohibited
from the sale of their shares due to the cost and administrative
burden of trading certificated shares outside of the UK. As at the
date of publishing this announcement, the Company had purchased a
total of 1,426,686 Ordinary $0.01 Shares at a price of A$0.1619 per
Ordinary Share which will be cancelled on completion of the
Programme.
Subsequent to the quarter end, separately, the Company further
bought back a total of 3,333,011 Ordinary $0.01 Shares at a price
of 10.25 pence per Ordinary Share which were cancelled
immediately.
CORPORATE INFORMATION
Registered and Sylvania Platinum Limited
postal 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 / Neil
Elliot
Communications
Alma PR Limited +44 (0) 77 8090 1979
Josh Royston / Helena Bogle
/ Hilary Buchanan
This information is provided by RNS
The company news service from the London Stock Exchange
END
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