Quarterly Report: 30 June 2018

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

           318,808

                  338,167

6%

T

PGM Plant Feed Tons

T

6%

                338,167

                  318,808

                 3.53

                        3.75

6%

g/t

PGM Plant Feed Grade

g/t

6%

                      3.75

                        3.53

46.53%

49.67%

7%

%

PGM Plant 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










               1,141

                      1,167

2%

$/oz

Average gross basket price

R/oz

15%

                  15,509

                    13,503














Financials





             12,759

                    16,243

27%

$'000

Revenue (4E)

R'000

35%

                205,372

                  152,634

               1,302

                      1,653

27%

$'000

Revenue (by 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









               2,016

                      1,508

-25%

$'000

Capital 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





                  615

                         553

-10%

$/oz

SDO Cash Cost Per 4E PGM oz

R/oz

-5%

                    6,996

                      7,355

                  471

                         415

-12%

$/oz

SDO Cash Cost Per 6E PGM oz

R/oz

-7%

                    5,242

                      5,631

                  662

                         562

-15%

$/oz

Group Cash Cost Per 4E PGM oz

R/oz

-10%

                    7,101

                      7,916

                  507

                         421

-17%

$/oz

Group Cash Cost Per 6E PGM oz

R/oz

-12%

                    5,323

                      6,061

                  682

                         550

-19%

$/oz

All-in sustaining 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 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

 

 

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 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

Bonus Shares

Sylvania Platinum Limited Bonus Share Award Plan

CGU

Cash generating unit

Current risings

Fresh chrome tails from current operating host mines processing operations

DMR

Department of Mineral Resources

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

Ironveld

Ironveld Plc

IRR

Internal Rate of Return

JV

Joint venture

LEDET

Limpopo Department of Economic Development, Environment and Tourism

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

 


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