TIDMSLP
RNS Number : 3279H
Sylvania Platinum Limited
31 July 2019
_____________________________________________________________________________________________________________________________
31 July 2019
Sylvania Platinum Limited
("Sylvania", "the Company" or "the Group")
AIM (SLP)
Fourth Quarter Report to 30 June 2019
The Directors are pleased to present the results for the quarter
ended 30 June 2019 ("Q4" or the "quarter"). Unless otherwise
stated, the consolidated financial information contained in this
report is presented in USD.
Achievements
-- Record ounce production of 21,789 4E PGM ounces in Q4, to
achieve a record of 72,090 ounces for FY2019;
-- SDO PGM plant recoveries improved 12% to 54%, boosting ounce production;
-- Net revenue increased 10% to $20.2 million;
-- Group EBITDA improved 14% to $9.3 million in Q4;
-- Group cash costs decreased 21% to $496/ounce;
-- Third MF2 module of Project Echo commissioned at Mooinooi in Q4;
-- Commissioning of Lesedi chrome section commenced in Q4; and
-- Significant safety milestones achieved at Lesedi, reaching
eight years Lost Time Injury (LTI) free, and Tweefontein and
Doornbosch operations both reaching seven years LTI-free during the
quarter.
Challenges
-- Although minimal disruptions were experienced during Q4,
power supply infrastructure constraints and water availability at
certain operations remain focus areas and management continue to
explore alternatives to minimise disruptions and mitigate impact on
operations; and
-- Fluctuations in the average gross basket price and exchange
rates impact the earnings and profitability of the Group and are
continually monitored even though they remain outside of the
Company's control.
Opportunities
-- An optimised re-mining strategy, utilising a hybrid
mechanical-hydro mining approach, has been developed and is being
rolled-out in order to enable more efficient blending, grade
control and feed stability; and
-- Optimisation of recently commissioned projects at Mooinooi
and Lesedi to contribute towards improved process efficiencies.
Commenting on the Q4 results, Sylvania's CEO Terry McConnachie
said:
"In April 2019 we set out to achieve a record target for Q4. I
am pleased to report that the SDO did not only reach this quarterly
production record, but also achieved the annual guidance revised at
the Half Year, resulting in an annual Company production record of
72,090 ounces for the financial year ending 30 June 2019.
Following a challenging start to the year, there was significant
operational improvement during the quarter and I would like to
thank the operations teams and management for their continued
dedication and hard work.
The Company concluded the financial year with cash of $21.8
million following the payment of $5.3 million in tax during the
quarter as well as the MF2 capital spend and maintains a good cash
holding which will enable us to continue to internally fund any
further capital expenditure. We are also beginning to see the
results from the MF2 and capital project roll-out and these are
expected to be sustainable in the coming financial years.
Due to the four-month payment agreement with our off-taker, this
quarter's solid performance will contribute to an increase in our
cash on hand during FY2020 which, combined with the decreased
production costs, means we are in a strong financial position
moving forward. I am optimistic about what the next quarter and new
financial year will bring for the Company and Shareholders."
USD Unit Unaudited Unit ZAR
Q3 FY2019 Q4 FY2019 % Change % Change Q4 FY2019 Q3 FY2019
---------- ---------- --------- --------- ---------- ----------
Production
---------- --------- ------ ------------------------- ------ --------- ---------- ----------
527,693 592,511 12% T Plant Feed T 12% 592,511 527,693
---------- --------- ------ ------------------------- ------ --------- ---------- ----------
2.40 2.58 7% g/t Feed Head Grade g/t 7% 2.58 2.40
---------- --------- ------ ------------------------- ------ --------- ---------- ----------
297,489 327,635 10% T PGM Plant Feed Tons T 10% 327,635 297,489
---------- --------- ------ ------------------------- ------ --------- ---------- ----------
3.54 3.85 9% g/t PGM Plant Feed Grade g/t 9% 3.85 3.54
---------- --------- ------ ------------------------- ------ --------- ---------- ----------
48.00% 53.78% 12% % PGM Plant Recovery % 12% 53.78% 48.00%
---------- --------- ------ ------------------------- ------ --------- ---------- ----------
16,256 21,789 34% Oz Total 4E PGMs Oz 34% 21,789 16,256
---------- --------- ------ ------------------------- ------ --------- ---------- ----------
22,224 29,210 31% Oz Total 6E PGMs Oz 31% 29,210 22,224
---------- --------- ------ ------------------------- ------ --------- ---------- ----------
Average gross basket
1,383 1,328 -4% $/oz price R/oz -6% 18,659 19,868
---------- --------- ------ ------------------------- ------ --------- ---------- ----------
Financials
---------- --------- ------ ------------------------- ------ --------- ---------- ----------
15,739 17,781 13% $'000 Revenue (4E) R'000 17% 255,747 219,425
---------- --------- ------ ------------------------- ------ --------- ---------- ----------
1,726 1,749 1% $'000 Revenue (by products) R'000 5% 25,150 24,061
---------- --------- ------ ------------------------- ------ --------- ---------- ----------
882 644 -27% $'000 Sales adjustments R'000 -25% 9,270 12,295
---------- --------- ------ ------------------------- ------ --------- ---------- ----------
18,347 20,174 10% $'000 Net revenue R'000 13% 290,167 255,781
---------- --------- ------ ------------------------- ------ --------- ---------- ----------
9,774 10,424 7% $'000 Operating costs R'000 10% 149,892 136,262
---------- --------- ------ ------------------------- ------ --------- ---------- ----------
434 475 9% $'000 General & administration R'000 13% 6,829 6,052
---------- --------- ------ ------------------------- ------ --------- ---------- ----------
8,172 9,309 14% $'000 Group EBITDA R'000 17% 133,869 113,933
---------- --------- ------ ------------------------- ------ --------- ---------- ----------
260 313 20% $'000 Net Interest R'000 24% 4,502 3,629
---------- --------- ------ ------------------------- ------ --------- ---------- ----------
4,960 4,849 -2% $'000 Net profit R'000 1% 69,724 69,145
---------- --------- ------ ------------------------- ------ --------- ---------- ----------
2,119 2,199 4% $'000 Capital Expenditure R'000 7% 31,625 29,548
---------- --------- ------ ------------------------- ------ --------- ---------- ----------
23,725 21,812 -8% $'000 Cash Balance R'000 -5% 313,650 330,753
---------- --------- ------ ------------------------- ------ --------- ---------- ----------
R/$ Ave R/$ rate R/$ 3% 14.38 13.94
---------- --------- ------ ------------------------- ------ --------- ---------- ----------
Unit Cost/Efficiencies
---------- --------- ------ ------------------------- ------ --------- ---------- ----------
SDO Cash Cost Per
599 485 -19% $/oz 4E PGM oz R/oz -17% 6,969 8,353
---------- --------- ------ ------------------------- ------ --------- ---------- ----------
SDO Cash Cost Per
438 361 -18% $/oz 6E PGM oz R/oz -15% 5,198 6,110
---------- --------- ------ ------------------------- ------ --------- ---------- ----------
Group Cash Cost
624 496 -21% $/oz Per 4E PGM oz R/oz -18% 7,128 8,699
---------- --------- ------ ------------------------- ------ --------- ---------- ----------
Group Cash Cost
456 370 -19% $/oz Per 6E PGM oz R/oz -16% 5,317 6,363
---------- --------- ------ ------------------------- ------ --------- ---------- ----------
All-in sustaining
644 538 -17% $/oz cost (4E) R/oz -14% 7,734 8,981
---------- --------- ------ ------------------------- ------ --------- ---------- ----------
756 606 -20% $/oz All-in cost (4E) R/oz -17% 8,721 10,536
---------- --------- ------ ------------------------- ------ --------- ---------- ----------
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
In terms of safety, three of our operations reached significant
milestones during the quarter, with Lesedi achieving eight years
LTI-free and both Tweefontein and Doornbosch operations achieving
seven years LTI-free. Unfortunately, Mooinooi suffered one LTI in
June 2019, when an artisan experienced a laceration to his upper
leg caused by a sharp edge of a structure during a lifting
operation.
The Company continues to focus on health, safety and
environmental compliance and, through the collaborative efforts of
management and all employees across the operations, we strive to
maintain high safety standards and plant conditions at the
respective operations.
Operational performance
The SDO delivered a Company record of 21,789 ounces for the
quarter, a 34% increase on Q3's 16,256 ounces. The increased
production was due to a combination of a 10% improvement in PGM
feed tons and a 12% improvement in recovery efficiencies, as well
as a 9% increase in PGM feed grade.
Improved running times at Lesedi, which experienced less water
shortages than in the previous quarter, and increased and more
stable re-mining performance at Doornbosch in particular, assisted
to increase the PGM feed tons for the period. PGM feed grade was
assisted by improved current arisings and ROM fines at operations,
which increased approximately 12% compared to Q3, when fresh feed
sources had been impacted by the host mines' operating schedule
after the Christmas break. Higher grade feed material was also
treated at both Lannex and Lesedi during the quarter.
The significant improvement in the PGM recovery efficiency can
be attributed to a combination of more stable feed into operations
at Lesedi and Doornbosch in particular, as well as the improved
efficiencies associated with the commissioning of the MF2 module at
Mooinooi during May and June 2019, as well as better-quality feed
material being treated at Lannex since May 2019. The improved
stability associated with the change in re-mining philosophy and
operation, with the ability to have more efficient blending of dump
material, as well as an increase in the fresh current arisings
received from the host mine, assisted to boost recovery
particularly at Doornbosch. Recovery efficiency at Lannex again
improved based on higher quality 1st Pass dump material being
treated from the neighbouring Tweefontein operation since May 2019,
compared to the final batch of historic 2nd Pass dump material from
Lannex treated during Q3. Finally, the Mooinooi operation's
recovery efficiency improved significantly due to a combination of
improved plant stability and the commissioning of the MF2 during
May and June 2019, which should continue to add value into the
future.
The total SDO cash costs for the period decreased 17% in ZAR
terms to ZAR 6,969/ounce and decreased 19% in USD terms to
$485/ounce. The capital expenditure was ZAR 31.6 million for the
quarter, a 7% increase quarter-on-quarter and is aligned with the
planned and forecast Project Echo roll-out and project
schedule.
Operational focus areas
Based on the challenges experienced with the water shortages at
Lesedi during the past financial year and re-mining challenges at
Doornbosch where the current dump reached its end of life during
Q2/Q3, significant management focus went into exploring and
implementing alternative measures to supplement water to operations
and to optimise the current re-mining strategy for historical
dumps.
Although minimal disruptions were experienced during Q4 due to
water shortages, water availability at certain operations remain a
concern and an ongoing focus area. While the water supply system to
Lesedi has already been upgraded, more boreholes are being drilled
in consultation with water and environmental experts and process
options are being explored to minimise consumption which could
mitigate the impact of availability.
In order to address challenges with re-mining of dumps,
especially those that are close to end of life at certain
operations, an optimised re-mining strategy, utilising a hybrid
mechanical-hydro mining approach, has been developed and is being
rolled-out in order to enable more efficient blending, grade
control and feed stability to plants. The hybrid system deviates
slightly from a pure hydro-mining approach where water guns are
required to be moved constantly on the dumps to maintain acceptable
grade blends and consistent production rates. We now utilise a
central hydro-mining sump and pump station, mechanically delivering
the dump material to this sump to be pulped and pumped to the plant
with improved stability but at a similar cost.
Operational opportunities
With the third project Echo MF2 module now commissioned at
Mooinooi and the new chrome beneficiation circuit commissioned at
Lesedi the respective management teams will now focus on optimising
these circuits to unlock the full potential of these projects going
forward.
The Mooinooi MF2 module will assist to further improve PGM
recovery efficiencies on the operation, while the Lesedi chrome
plant project, utilising the dismantled and relocated redundant
chrome circuit from the old Steelpoort operation, will enable
chrome removal at Lesedi's PGM plant, in line with the standard SDO
operating model employed at the Group's existing operations. This
circuit will enable the operation to have more flexibility in terms
of types and quality of feed material that can be treated in the
plant and will contribute towards higher PGM feed grades and ounce
production at the operation.
B. FINANCIAL OVERVIEW
Financial performance
Revenue for the quarter increased 10% to $20.2 million from Q3's
$18.3 million. The increase is due mainly to the increase in ounces
produced at the SDO, however this was negatively impacted by the 4%
drop in the gross basket price from $1,383/ounce to
$1,328/ounce.
The total operating costs, which are incurred in ZAR, increased
10% to ZAR 149.9 million, compared to the ZAR 136.2 million in Q3.
The increase was not unexpected and falls within the Q4 forecast
costs. Higher production in Q4 resulted in higher lab costs and
concentrate transport costs. Transport costs at the Lannex plant
increased due to the change in feed source and the annual
electricity increase which was effective as of April 2019. All four
of these cost increases combined contributed to the increase in
operating costs. General and administrative costs are incurred in
USD, GBP and ZAR and are impacted by exchange rate fluctuations
over the reporting period. These costs increased 9%
quarter-on-quarter from $0.434 million to $0.493 million.
Group cash costs decreased 18% from ZAR 8,699/ounce to ZAR
7,128/ounce as a direct result of the higher ounce production. In
dollar terms the Group cash costs decreased 21% from $624/ounce to
$496/ounce.
The all-in sustaining cost ("AISC") and all-in cost ("AIC") also
decreased during the quarter to ZAR 7,734/ounce (Q3: ZAR
8,981/ounce) and ZAR 8,721/ounce (Q3: ZAR 10,536/ounce)
respectively. This decrease can also be attributed to the higher
ounce production in Q4.
The Group EBITDA increased 14% from $8.1 million to $9.3 million
in Q4, however the net profit decreased 2% to $4.8 million as a
result of the $5.3 million (ZAR76.2 million) paid in income tax in
South Africa.
The Group cash balance at 30 June 2019 was $21.8 million
(including guarantees), a $1.9 million decrease on the previous
quarter's cash balance of $23.7 million. Cash generated from
operations before working capital movements was $9.2 million with
net changes in working capital amounting to a decrease of $3.8
million due mainly to the increase in trade and contract debtors
which have a four-month payment pipeline resulting in the cash
inflows from the production in Q4 only being received in the new
financial year. An amount of $2.2 million was spent on capital and
income tax of $5.3 million was paid in South Africa. The impact of
exchange rate fluctuations on cash held at the quarter end was an
increase of $0.01 million.
The Company remains committed to funding all planned capital
projects and expansion from internal cash reserves.
C. MINERAL ASSET DEVELOPMENT AND OPENCAST MINING PROJECTS
The Company has continued to maintain the value of its mineral
asset development activities during the quarter, so as to be able
to continue to defend title. However, until an improvement in
market conditions occurs, this will result in very limited spend.
As such, there are no further developments to report for the
quarter.
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
Richard Crawley / Ed Phillips
Communications
Alma PR Limited +44 (0) 7580 216 203
Josh Royston / Helena Bogle
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 FY2019
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
---------------------------------------------------------------------
AIM Alternative Investment Market of the London Stock Exchange
---------------------------------------------------------------------
All-in sustaining Production costs plus all costs relating to sustaining current
cost production and sustaining capital expenditure.
---------------------------------------------------------------------
All-in sustaining cost plus non-sustaining and expansion capital
All-in cost expenditure
---------------------------------------------------------------------
ASX Australian Securities Exchange
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Fresh chrome tails from current operating host mines processing
Current risings operations
---------------------------------------------------------------------
DMR Department of Mineral Resources
---------------------------------------------------------------------
EBITDA Earnings before interest, tax, depreciation and amortisation
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EA Environmental Authorisation
---------------------------------------------------------------------
EIA Environmental Impact Assessment
---------------------------------------------------------------------
EIR Effective interest rate
---------------------------------------------------------------------
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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Phoenix Platinum Mining Proprietary Limited, renamed Sylvania
Lesedi Lesedi
---------------------------------------------------------------------
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
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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.
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Revenue (by
products) Revenue earned on Ruthenium, Iridium, Nickel and Copper
---------------------------------------------------------------------
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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contact rns@lseg.com or visit www.rns.com.
END
DRLLIFIRDSILVIA
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