TIDMSLP
RNS Number : 7743I
Sylvania Platinum Limited
09 August 2023
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9 August 2023
Sylvania Platinum Limited
("Sylvania", the "Company" or the "Group")
Chrome Ore and PGM Treatment Joint Venture Agreement
Sylvania (AIM: SLP), the platinum group metals ("PGM") producer
and developer, with assets in South Africa, is pleased to announce
that its wholly owned South African subsidiary, Sylvania Metals
(Pty) Limited ("Sylvania Metals"), has entered into an
unincorporated Joint Venture Agreement ("JV") with Limberg Mining
Company (Pty) Limited ("LMC"), a subsidiary of ChromTech Mining
Company (Pty) Limited ("ChromTech"). The JV will process PGM and
chrome ores from historical tailings dumps and current arisings
("Mining Area") from the Limberg Chrome Mine, located on the
northern part of the Western Limb of the Bushveld Complex, South
Africa . The JV will trade and operate under the name Thaba Joint
Venture ("Thaba JV").
The Thaba JV represents a major step in delivery of Sylvania's
growth strategy and is a significant step forward for Sylvania
Metals in expanding its operations and leveraging its expertise in
the recovery of chrome and PGM concentrates, adding attributable
production of approximately 6,500 4E PGM ounces and introduce
200,000 tons of chromite concentrate to Sylvania Metals' existing
annual production profile.
Highlights
-- Sylvania Metals has entered into a 50:50 JV agreement to recover chromite and PGM concentrates from run-of-mine
ores and historical tailings deposited on the Tailings Storage Facility ("TSF") at the Limberg Chrome Mine;
-- New processing infrastructure will include a new secondary fine chromite and PGM beneficiation plant;
-- Sylvania Metals will share equally in both the PGM and chromite concentrate revenue and it is estimated that the
Thaba JV will produce approximately 13,000 4E PGM ounces (approximately 15,500 6E PGM ounces) and 400,000 tons of
metallurgical grade chromite concentrate per year over the initial 10 years of the JV, which the parties may
negotiate to further extend;
-- The Thaba JV will increase forecast annual production of 4E PGM ounces by approximately 9% and add chrome to the
Company's commodity portfolio;
-- The capital and establishment costs ("Upfront Capex") at the Thaba JV of approximately ZAR600 million ( $32
million) will initially be funded by Sylvania Metals from its existing cash resources. The initial working
capital facility required by the Thaba JV following commissioning will be advanced by Sylvania Metals ( $5
million);
-- Sylvania Metals will manage the Thaba JV on behalf of the partners who will collectively apply their respective
PGM and chrome expertise to maximise recovery efficiencies and production;
-- The project execution phase will be 18-24 months with first production expected in H2 FY2025;
-- Attractive investment return indicated on the Thaba JV, exceeds Company IRR hurdle rate of at least 20% per annum
and with a cash pay back within three years of commissioning, based on current long term consensus pricing, and
-- The first PGM beneficiation facility on primary chrome ore and tailings on the northern part of the Western Limb
of the Bushveld Complex and will be an enabler for further growth opportunities in the region.
Jaco Prinsloo, CEO of Sylvania, said : "The Thaba JV combines
the strengths and expertise of both companies in the mining and
processing industry - Sylvania Metals has a proven track record in
the recovery, sale, and distribution of PGMs, while LMC contributes
ChromTech's extensive experience of chrome operations, with
particular expertise in fine chrome beneficiation. We are looking
forward to collaborating with LMC, who will provide access rights
to the Mining Area and brings its knowledge and skills in mining
and processing operations to ensure the production of low-cost,
high-grade chromite concentrate and PGMs from the Middle Group Reef
on the north of the Western Limb of the Bushveld Complex in South
Africa.
"We are excited about the prospects of the Thaba JV to create
substantial value for our shareholders, and to add chrome to our
portfolio of commodities, whilst strengthening our PGM production.
The Thaba JV will add an attributable production of approximately
6,500 4E PGM ounces and 200,000 tons of chromite concentrate to
Sylvania Metals' existing production profile and offers an
attractive investment return on the project that exceeds our
Company IRR hurdle rate of at least 20%, along with a cash pay back
of less than three years from commissioning, based on current long
term consensus pricing.
"The establishment of the JV holds significant potential for
Sylvania as it aligns with the Company's growth strategy and
enhances its position in the mining and processing industry. The JV
will enable Sylvania Metals to access valuable resources, expand
its production capabilities, and strengthen its distribution
channels for target products, ultimately driving value for the
Group and its stakeholders."
Jono Gay, CEO of LMC, said : "The establishment of the Thaba JV
is a ground-breaking collaboration between industry leading
operators that is anticipated to generate sustainable value for all
stakeholders. LMC eagerly anticipates the formation of this
long-lasting partnership with Sylvania Metals. Both our companies
share a philosophy for unwavering excellence, underpinned by our
collective commitment to Environmental, Social and Governance
principles. With this JV, we are poised to unlock LMC's potential
and position it as a key growth engine within the ChromTech Group.
In light of our continued business diversification into open-cast
chrome and PGM mining, LMC, the most recent acquisition of the
ChromTech Group, represents an essential growth area for our
company."
Figure 1: Location of Thaba JV in comparison to other Sylvania
Platinum assets
Details of the Joint Venture Agreement
The LMC Thaba Chrome Mine is an established open cast chrome
mine on the northern part of the Western Limb of the Bushveld
Complex with approximately two million tons of existing chrome
tailings and an existing Run of Mine ("ROM") chrome beneficiation
plant. LMC has been under voluntary business rescue since late
2020, impacted by COVID-19, lower chrome market prices and illegal
mining activities that have since been fully resolved. The mine is
currently in production and marketing LG6 chrome ore. The mine has
a 30-year mining right which was issued during 2010 for both chrome
and PGMs and all operations will take place under the existing LMC
permits and regulatory approvals.
The Thaba JV will treat a combination of approximately 50,000
tons per month ROM ore and 16,000 tons per month historical chrome
tailings dump material from LMC's Thaba Mine and will produce
approximately 13,000 4E PGM ounces ( 15,500 6E PGM ounces) and
400,000 tons of chromite concentrate per year over the initial 10
years (50% attributable to Sylvania Metals). The addition of 6,500
attributable 4E PGM ounces will increase the Company's estimated
annual production by approximately 9%.
The JV will construct new secondary fine chrome and PGM
beneficiation plants which are anticipated to commence
commissioning within approximately 18 months from 1 September 2023
with first production and sales expected during H2 FY2025. These
beneficiation plants will be similar to those at the Mooinooi
Sylvania Dump Operations in terms of circuit configuration and
technology and therefore the Company is confident it can replicate
its previously established and tested methods and utilise its
expertise to maximise both production and deliver value for all
stakeholders.
The Thaba JV agreement provides for an equal 50% participation
interest for Sylvania Metals and LMC, allowing for a fair
distribution of profits generated from the operations conducted by
the Thaba JV. Both parties will share in the revenue, costs and
ultimately profit generated by the Thaba JV.
The total capital expenditure (inclusive of all engineering
fees, costs, and expenses) required to undertake and complete the
Build Project is provisionally budgeted at ZAR600 million ( $32
million). This will initially be funded by Sylvania Metals from its
existing cash resources and will be spent over the 18-24 months of
the Build Project. Ultimately, the JV partners will contribute
equally to all capital costs except the Upfront Capex, subject to
the final Build Project Budget approved by the JV Board. LMC's 50%
portion of the Upfront Capex will be funded by way of a loan from
Sylvania Metals. The loan will bear interest linked to the South
African Prime Lending rate (currently 11.75%) and will be repaid to
Sylvania Metals in equal quarterly instalments commencing on the
first anniversary of the commissioning of the PGM and chrome
plants. Repayments will be made from LMC's attributable profits of
the JV, and any shortfall will be funded by LMC. In case of an
Event of Default, Sylvania has the right to demand immediate
repayment or claim specific performance from LMC.
The loan advanced to LMC will be secured by means of a Special
Notarial Bond to be registered over the existing two million tons
chrome tailings resources. Additionally, Sylvania Metals shall, on
a revolving credit basis at a similar interest rate, fund the
approximate $5 million working capital and operating expenditure
requirements, together with all other business and operational
costs, of the JV in compliance with the relevant approved budget
and any applicable capital expenditure programmes for a maximum
period of 24 months if required.
LMC will perform all mining activities and will supply both ROM
ore and chrome tailings material to the JV according to a Material
Supply Agreement, while Sylvania Metals is appointed as the JV
Manager and will operate the chrome and PGM plants under a
Management Services Agreement. Marketing of the chromite
concentrate and PGMs will be undertaken by the JV partners and
profits shared equally. The Thaba JV will comprise a Board made up
of an equal number of representatives from each JV partner. While
the initial agreed duration of the JV Agreement is 10 years from
the date of first production, the parties could negotiate in good
faith to further extend the term to benefit from the remaining life
of the Thaba Chrome Mine.
Inside information
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.
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 sylvania@BlytheRay.com
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/
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END
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