Sylvania profits rise as platinum group metals prices improve

Sylvania Platinum declared 17,972 platinum, palladium, rhodium and gold (4E platinum group metals) ounces from its dump operations in its first quarter on Wednesday, rising from 9,055 ounces in the fourth quarter, but falling from 20,797 ounces in the first quarter of the prior year.

The AIM-traded firm said Sylvania Dump Operations recorded $41.5m net revenue for the quarter ended 30 September, up from $13.2m in the prior quarter and $31.2m a year earlier.

Group cash costs per 4E PGM ounce decreased to ZAR 11,021 and $652 quarter-on-quarter.

EBITDA for the period came in at $29.7m, up from $4.2m in the fourth quarter of the 2020 financial year and $19.2m in the prior first quarter.

Net profit was $21m, rising from $2.2m quarter-on-quarter and $12.5m year-on-year, down to the company’s increased production in the quarter.

Cash balances stood at $60.9m at the end of the period, rising from $55.9m in the fourth quarter and $26.6m in the first quarter of 2020.

Looking ahead, Sylvania said the Covid-19 pandemic remained an “area of concern”, with the company sustaining the measures it previously implemented to ensure both the health and safety of all employees and to limit any impact on production.

It said that, although South Africa remained in ‘level 1’ lockdown which did not hinder production, a resurgence of Covid-19 and a subsequent return to previous lockdown restrictions could potentially affect operations.

Sylvania also reported reduced mining operations at some host mines due to the depressed chrome market, resulting in lower volumes of run of mine and current arisings material, resulting in lower platinum group metals feed grades and recoveries.

It did note that the new Lannex mill and spiral upgrade project would improve processing efficiencies and profitability based on current feed sources, which was now commissioned with circuit optimisation ongoing.

The design of the Lesedi secondary milling and flotation module would also improve the upgrading and recovery of platinum group metals, and was said to be “advancing”.

Sylvania said the Mooinooi chrome proprietary processing modifications and optimisation project was in the execution phase, and was expected to commission during the third quarter.

The group remained debt-free, and continued to maintain strong cash reserves to allow for the maintenance of the plants, fund capital expansion and process optimisation projects and the safeguarding of employees, the board said, as well as investing in adding value to its exploration and evaluation assets and paying the forth-coming dividend for the year ended June, as it had previously announced.

“After a steady return to full capacity production following the outbreak of Covid-19 and the government-imposed industry shutdown, I am pleased to report that the Sylvania Dump Operations produced 17,972 ounces for the quarter - a solid performance given the challenges we faced during the period,” said chief executive officer Jaco Prinsloo.

“Whilst all the plants are now running at full capacity after the ramp-up of operations post lockdown and plant efficiencies have normalised, the reduced mining operations of certain host mines continued to impact on feed grades as expected and consequently the first quarter’s platinum group metals production decreased approximately 14% on the corresponding quarter of the 2020 financial year.

“Our management and technical teams continue to explore further opportunities to increase both feed grades and recovery efficiencies across operations that could add value in the near term and also continue to engage with various consultants to evaluate the potential of the longer-term mineral asset projects.”

Prinsloo said that, with a “solid” first quarter performance and operational conditions improving towards normal levels following the impacts associated with Covid-19, the firm’s management teams were now able to increase the focus on optimising efficiencies with its current resources, and would continue to deliver strong operational performances going forward.

He said the company was expecting to reach its estimated production target of around 70,000 ounces of platinum group metals for the year.

“The company continues to enjoy the benefits of the strong platinum group metals price environment and the 31% increase in gross basket price from the fourth quarter has assisted in boosting our financial performance and cash reserves.

“The company remains in a robust financial position with sufficient cash reserves to fund capital projects which will help mitigate any rise in costs and the possible reduction in future cash inflows due to the ongoing uncertainty relating to Covid-19.”

At 1223 GMT, shares in Sylvania Platinum were down 1.72% at 68.6p.