Sylvania Platinum confident despite revenue slide

South Africa-focussed platinum group metals (PGM) producer Sylvania Platinum announced first-half net revenue of $40.8m on Thursday, a decrease from $79.9m in the first half of the 2023 financial year, which it attributed to a drop in basket price in dollar terms.

The AIM-traded firm said group EBITDA stood at $7.3m, compared to $45.6m in the prior period, reflecting the impact of the decrease in basket price.

Net profit totalled $3.1m, down from $32.6m in the first half of the 2023 financial year, while earnings per share were reported at 1.17 US cents for the six-month period.

Cash balances at the end of December totalled $107.2m, down from $123.9m year-on-year.

The company bought back 684,750 ordinary shares from employees and managers in the period, transferring all to treasury.

An interim dividend for the first half of 1p per ordinary share was declared.

On the operational front, Sylvania Dump Operations (SDO) delivered 38,405 4E PGM ounces, consistent with the prior period.

The company reported that improved PGM recovery efficiencies and a reduction of work-in-progress stock helped maintain PGM ounce production, despite lower PGM feed grades.

It announced the final signed-off updated mineral resource estimates for both the Volspruit North and South ore bodies, adding that assessment of the Aurora Project exploration data was ongoing to determine the best approach to unlock its value under current market conditions.

Looking ahead, Sylvania said its 2024 financial year production guidance remained at 74,000 to 75,000 4E PGM ounces.

It said commissioning of the Lannex secondary milling and fine grinding circuit began during the second quarter, with optimisation to follow in the third quarter.

The Thaba Joint Venture execution phase was expected to take 18 to 24 months, with first production anticipated in the second half of the 2025 financial year, with the company currently on track to meet that timeframe.

Sylvania said it was debt-free and maintained sufficient cash reserves to fund capital expansion projects, process optimisation projects, and upgrade exploration and evaluation assets to unlock shareholder value.

“While many platinum group metals producers in the industry are faced with challenges relating to the current market environment, revenue and net profit for the company remain respectable despite the significantly lower PGM basket price,” said chief executive officer Jaco Prinsloo.

“Additionally, the SDO is well positioned within the industry due to a stable production base, improving PGM recovery efficiencies and low operating costs - with the company placed in the lowest quartile of the industry cost curve.

“Sylvania's low-cost strategy has ensured that the SDO remains cash generative even at lower basket prices.”

Prinsloo said that, enabled by its cash-generating operations and disciplined operating cost and capital control, the company had sufficient cash reserves to continue to fund capital and optimisation projects, as well as advancing its exploration projects and returning value to shareholders.

“Looking ahead to the second half of the financial year, our operations and management teams are committed to achieving the full-year production guidance of 74,000 to 75,000 4E PGM ounces, and I anticipate continued robust results with the optimisation of the Lannex fine grinding circuit in progress.

“We are also undertaking continuous operational performance improvements including the optimisation of feed sources, throughput, recoveries, and cost saving initiatives.

“Additionally, we expect to provide further clarity on the significant potential of our exploration projects as we continue our studies and increase our resources.”

At 1325 GMT, shares in Sylvania Platinum were down 4.15% at 50.8p.

Reporting by Josh White for Sharecast.com.