TIDMSLP
RNS Number : 2712W
Sylvania Platinum Limited
31 July 2018
_____________________________________________________________________________________________________________________________
31 July 2018
Sylvania Platinum Limited
("Sylvania", "the Company" or "the Group")
AIM (SLP)
Fourth Quarter Report to 30 June 2018
The Directors are pleased to present the results for the quarter
ended 30 June 2018 ("Q4" or the "quarter"). Unless otherwise
stated, the consolidated financial information contained in this
report is presented in USD.
Achievements
-- Record production of 20,278 4E PGM ounces in Q4, to achieve a
total of 71,026 ounces for FY2018;
-- Net Revenue up 39% to $20.0 million from Q3;
-- SDO cash cost down 5% in ZAR terms and 10% in USD from Q3;
-- Group EBITDA of $8.6 million and Group net profit of $3.9 million for Q4;
-- Cash balance of $14.0 million, after capital spend of $1.4
million and income tax of $2.1 million; and
-- Outstanding safety records achieved by Lesedi with seven
years LTI-free, and Doornbosch and Tweefontein both achieving six
years LTI-free during the quarter.
Challenges
-- The continual drop in Platinum price resulted in the basket
price remaining under pressure with an average of $1,167/ounce for
Q4, despite the stronger rhodium price; and
-- Power supply infrastructure integrity and supply capacity
from the power utility continues to present challenges as the
supply of electricity to the SDO for existing operations and
expansion projects is affected.
Opportunities
-- Project Echo MF2 module for Mooinooi fast-tracked to counter
delays experienced at Tweefontein;
-- Relocation of redundant Steelpoort chrome circuit to Lesedi
identified to improve chrome removal ahead of flotation and to
enable higher PGM feed as per standard SDO operating model; and
-- Company continues to fund capital expansion projects with existing cash resources.
Commenting on the Q4 results, Sylvania's CEO Terry McConnachie
said:
"I am pleased to present the Q4 figures with a record production
of 20,278 4E ounces. Our Operations and Management teams have faced
considerable challenges during the period, the large majority of
them outside of the Company's control. They have risen to the
challenge, shown great resilience and to return record production
figures, whilst ensuring that our staff's safety remains our key
priority, is highly commendable."
USD Unit Unaudited Unit ZAR
------ ------------------ ------ --------- --------------------------
Q3 2018 Q4 2018 % Change % Change Q4 2018 Q3 2018
----------------------------- --------- ------ ------------------ ------ --------- -------------------------- ----------------------------
Production
----------------------------- --------- ------ ------------------ ------ --------- -------------------------- ----------------------------
561,973 643,019 14% T Plant Feed T 14% 643,019 561,973
----------------------------- --------- ------ ------------------ ------ --------- -------------------------- ----------------------------
2.50 2.46 -2% g/t Feed Head Grade g/t -2% 2.46 2.50
----------------------------- --------- ------ ------------------ ------ --------- -------------------------- ----------------------------
PGM Plant Feed
318,808 338,167 6% T Tons T 6% 338,167 318,808
----------------------------- --------- ------ ------------------ ------ --------- -------------------------- ----------------------------
PGM Plant Feed
3.53 3.75 6% g/t Grade g/t 6% 3.75 3.53
----------------------------- --------- ------ ------------------ ------ --------- -------------------------- ----------------------------
PGM Plant
46.53% 49.67% 7% % Recovery % 7% 49.67% 46.53%
----------------------------- --------- ------ ------------------ ------ --------- -------------------------- ----------------------------
16,857 20,278 20% Oz Total 4E PGMs Oz 20% 20,278 16,857
----------------------------- --------- ------ ------------------ ------ --------- -------------------------- ----------------------------
22,017 27,062 23% Oz Total 6E PGMs Oz 23% 27,062 22,017
----------------------------- --------- ------ ------------------ ------ --------- -------------------------- ----------------------------
Average gross
basket
1,141 1,167 2% $/oz price R/oz 15% 15,509 13,503
----------------------------- --------- ------ ------------------ ------ --------- -------------------------- ----------------------------
Financials
----------------------------- --------- ------ ------------------ ------ --------- -------------------------- ----------------------------
12,759 16,243 27% $'000 Revenue (4E) R'000 35% 205,372 152,634
----------------------------- --------- ------ ------------------ ------ --------- -------------------------- ----------------------------
Revenue (by
1,302 1,653 27% $'000 products) R'000 34% 20,905 15,576
----------------------------- --------- ------ ------------------ ------ --------- -------------------------- ----------------------------
407 2,195 439% $'000 Sales adjustments R'000 470% 27,756 4,872
----------------------------- --------- ------ ------------------ ------ --------- -------------------------- ----------------------------
14,468 20,092 39% $'000 Net revenue R'000 47% 254,032 173,082
----------------------------- --------- ------ ------------------ ------ --------- -------------------------- ----------------------------
10,587 11,052 4% $'000 Operating costs R'000 10% 139,732 126,648
----------------------------- --------- ------ ------------------ ------ --------- -------------------------- ----------------------------
3,363 8,600 156% $'000 Group EBITDA R'000 172% 108,682 39,996
----------------------------- --------- ------ ------------------ ------ --------- -------------------------- ----------------------------
143 65 -55% $'000 Net Interest R'000 -52% 820 1,708
----------------------------- --------- ------ ------------------ ------ --------- -------------------------- ----------------------------
1,111 3,914 252% $'000 Net profit R'000 272% 49,489 13,292
----------------------------- --------- ------ ------------------ ------ --------- -------------------------- ----------------------------
Capital
2,016 1,508 -25% $'000 Expenditure R'000 -21% 19,070 24,119
----------------------------- --------- ------ ------------------ ------ --------- -------------------------- ----------------------------
17,431 14,017 -20% $'001 Cash Balance R'000 -15% 177,217 208,522
----------------------------- --------- ------ ------------------ ------ --------- -------------------------- ----------------------------
R/$ Ave R/$ rate R/$ 6% 12.64 11.96
----------------------------- --------- ------ ------------------ ------ --------- -------------------------- ----------------------------
Unit
Cost/Efficiencies
----------------------------- --------- ------ ------------------ ------ --------- -------------------------- ----------------------------
SDO Cash Cost Per
615 553 -10% $/oz 4E PGM oz R/oz -5% 6,996 7,355
----------------------------- --------- ------ ------------------ ------ --------- -------------------------- ----------------------------
SDO Cash Cost Per
471 415 -12% $/oz 6E PGM oz R/oz -7% 5,242 5,631
----------------------------- --------- ------ ------------------ ------ --------- -------------------------- ----------------------------
Group Cash Cost
662 562 -15% $/oz Per 4E PGM oz R/oz -10% 7,101 7,916
----------------------------- --------- ------ ------------------ ------ --------- -------------------------- ----------------------------
Group Cash Cost
507 421 -17% $/oz Per 6E PGM oz R/oz -12% 5,323 6,061
----------------------------- --------- ------ ------------------ ------ --------- -------------------------- ----------------------------
All-in sustaining
682 550 -19% $/oz cost (4E) R/oz -15% 6,953 8,154
----------------------------- --------- ------ ------------------ ------ --------- -------------------------- ----------------------------
781 612 -22% $/oz All-in cost (4E) R/oz -17% 7,740 9,343
----------------------------- --------- ------ ------------------ ------ --------- -------------------------- ----------------------------
1 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
There were no significant health or environmental incidents
during the quarter, with three operations achieving significant
safety milestones by industry standards. The Tweefontein and
Doornbosch plants both achieved six years LTI-free while Lesedi
achieved seven years LTI-free during the quarter. Millsell and
Lannex have remained LTI-free for more than three years.
Operational performance
After the record monthly production achieved during March 2018,
the SDO continued to build on the strong performance and again
delivered new consecutive production records of approximately 6,650
ounces and 7,400 ounces for May and June 2018 respectively.
Ultimately, this performance generated a new record quarterly
production figure of 20,278 ounces for the Group.
While plant feed grade was marginally lower compared to the
previous quarter, higher plant feed tons (up 14%), and improved
chrome yields enabled higher PGM upgrade ratios and feed grades to
the flotation, together with a 7% improvement in recovery
efficiencies contributed to the higher PGM ounce production.
The higher plant feed tons resulted from improved plant
utilisation and stability at Millsell, Mooinooi, Doornbosch and
Tweefontein, with the latter achieving higher PGM feed grades and
recovery efficiencies. Feed grades and recovery efficiencies were
slightly lower at the Lesedi operations during the quarter.
In terms of the first modules of Project Echo commissioned at
Millsell and Doornbosch earlier in the year, the PGM recovery
efficiencies at both these operations improved significantly,
contributing towards overall recovery improvement of 7% for the
Group.
The SDO cash costs for the period in ZAR terms decreased
approximately 5% to ZAR6,996/ounce, assisted by higher PGM ounce
production. In USD terms cash costs decreased by 10% to $553/ounce,
due to the additional impact of a 6% weakening of the ZAR in the
ZAR/USD exchange rate during the period.
Operational focus areas
While the newly commissioned Doornbosch MF2 has been performing
as per design, the Millsell MF2 module experienced some challenges
during the quarter with higher than anticipated wear rates on
equipment associated with the new technology selected, which
impacted on plant stability and recovery. This is currently being
resolved with the supplier and should have a positive contribution
during coming quarters.
Operational opportunities
With the delay in the execution of the Tweefontein MF2 module of
Project Echo, the MF2 module for Mooinooi is being fast-tracked to
counter delays experienced at Tweefontein in order to mitigate any
impact on production and sustain expected Group production
profiles.
The relocation of the redundant Steelpoort chrome circuit to the
Lesedi operation is planned to improve chrome removal ahead of
flotation, which will enable chrome removal ahead of Lesedi's PGM
plant and contribute towards higher PGM feed grades as per the
standard SDO operating model employed at existing operations in the
Group.
B. FINANCIAL OVERVIEW
Financial performance
The gross basket price for PGMs for the quarter was
$1,167/ounce, a 2% improvement on Q3's $1,141/ounce. Although the
Platinum and Palladium prices dropped during the quarter, the
Rhodium price continued its upward trend. With the basket price
remaining fairly flat quarter-on-quarter, the 39% increase in
revenue (net of adjustments) is a direct result of increased
production and movement in the exchange rate.
The total operating costs increased 10% to ZAR140.0 million
compared to the ZAR127.0 million in Q3, mainly due to the increased
ounce production. However, the higher ounces resulted in a decrease
of 5% in SDO cash costs in ZAR terms from ZAR7,355/ounce to
ZAR6,996/ounce and a 10% decrease per ounce in USD. The Group cash
cost decreased 10% from ZAR7,916/ounce to ZAR7,101/ounce.
The all-in sustaining cost for the Group reduced by 15% against
Q3 to ZAR6,953/ounce (Q2: ZAR8,154/ounce) due to lower production
costs per ounce and the lower capital spend in Q4. The Group all-in
cost for Q4 is ZAR7,740/ounce.
The majority of surplus cash is still held in ZAR mainly to fund
the balance of the Project Echo MF2 modules and other strategic
production optimisation projects when identified. An average
interest rate of 7% was earned on surplus cash.
The Group cash balance at 30 June 2018 was $14.0 million
(including guarantees), a $3.4 million decrease on the previous
quarter's $17.4 million. Cash generated from operations before
working capital movements was $8.7 million with net changes in
working capital amounting to a decrease of $7.2 million due mainly
to the increase in trade debtors. An amount of $1.4 million was
spent on capital comprising $0.8 million on Project Echo and $0.6
million on stay-in-business capital. The Group also paid $2.1
million for its second provisional income tax assessment for the
2018 financial year. The impact of exchange rate fluctuations on
cash held at the quarter end was a reduction of $1.3 million.
Financial management
Management continues to focus on the cost controls for both the
operations and corporate general and administration. Surplus cash
reserves are being invested to earn the best possible return, while
capital expenditure is scrutinised carefully to ensure it is in
line with approved projects. The main challenges that are within
management's control remain prudent control of costs and ensuring
that cash reserves are effectively utilised. Both cost controls and
cash management are monitored closely and strict internal controls
are in place to ensure that shareholders receive the best possible
return on their investment.
The Platinum price averaged $875/ounce for Q4, continuing to put
pressure on the basket price. The weakening of the ZAR assisted in
mitigating the impact of the Platinum price in ZAR terms. Although
not under management's control, metal prices and the ZAR/USD
exchange rate continue to be monitored.
C. EXPLORATION AND OPENCAST MINING PROJECTS
Northern Limb Projects
The Company has not pursued its exploration activities during
the quarter, but will continue to defend title as and when this
becomes necessary, until an improvement in market conditions
warrants further development.
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
Neil Elliot / Richard Crawley
Communications
Alma PR Limited +44 (0) 77 8090 1979
Josh Royston / Helena Bogle / Hilary
Buchanan
[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 FY2018
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 capital
All-in cost expenditure
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ASX Australian Securities Exchange
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Bonus Shares Sylvania Platinum Limited Bonus Share Award Plan
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CGU Cash generating unit
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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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Ironveld Ironveld Plc
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IRR Internal Rate of Return
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JV Joint venture
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Limpopo Department of Economic Development, Environment and
LEDET Tourism
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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
---------------------------------------------------------------------
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
---------------------------------------------------------------------
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
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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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END
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