TIDMSLP
RNS Number : 8072K
Sylvania Platinum Limited
06 September 2021
_____________________________________________________________________________________________________________________________
6 September 2021
Sylvania Platinum Limited
("Sylvania", the "Company" or the "Group")
Final Results to 30 June 2021
Sylvania (AIM: SLP) is pleased to announce its final results for
the year ended 30 June 2021. Unless otherwise stated, the
consolidated financial information contained in this report is
presented in United States Dollars ("USD").
Achievements
-- Sylvania Dump Operations ("SDO") achieved target production of 70,043 4E PGM ounces for the year (FY2020: 69,026
4E PGM ounces);
-- Net revenue increased 79% to $206.1 million (FY2020: $115.1 million);
-- Adjusted Group EBITDA increased 108% to $144.9 million (FY2020: $69.6 million);
-- Group net profit increased 143% to $99.8 million (FY2020: $41.0 million);
-- Basic earnings per share ("EPS") increased 151% to 36.65 US cents per share (FY2020: 14.62 US cents per share);
-- Cash dividend of 4p per Ordinary Share DECLARED by the Board of Directors; and
-- Positive Group cash balance of $106.1 million with no debt and no pipeline financing.
Challenges
-- Effects of the global COVID-19 pandemic on employees and operatio ns ; and
-- Lower PGM feed grades and recovery potential associated with the significant increase in open cast ROM sources
which led to associated higher costs.
Opportunities
-- Lesedi secondary milling and flotation ("MF2") project progressing well and on track to start contributing
towards production from early H2 FY2022;
-- Development of the Tweefontein MF2 project has commenced with commissioning anticipated during H1 FY2023;
-- Additional chrome tails current arisings from an existing Eastern Limb 3rd party chrome operation have been
secured during the period with the potential to add approximately 2,000 to 3,000 ounces of PGMs per annum;
-- The Group continues to maintain strong cash reserves to allow funding of capital expansion and process
optimisation projects; the safeguarding of employees during these times of uncertainty; upgrading the Group's
exploration and evaluation assets; and returning value to all stakeholders; and
-- R&D efforts have identified potential that would enable the Company to re-treat low PGM grade tailings at
selected sites that would otherwise be sterilised, thereby extending the operational life of these operations.
Post Period End
-- Post-period end, operations have been temporarily suspended at Lesedi as a precautionary safety measure due to
inadequate water drainage and increasing phreatic water levels at the tailings dam.
Commenting on the period, Sylvania's CEO Jaco Prinsloo said:
"I am proud to report on our strong performance in FY2021, a
year in which we achieved our production target of delivering
70,043 4E PGM ounces, testament to the strength of our management
team who achieved this whilst navigating the unchartered territory
of a global pandemic. Further to this, we successfully managed to
maintain our excellent standards in terms of health, safety and the
environment, whilst ensuring our staff were well supported."
"With all operations back to normalised capacity and
efficiencies during the year, the implementation of our process
optimisation initiatives such as Project Echo modules and improved
fines classification technology further contributed to the solid
results throughout the period and enabled us to meet our stated
production target for the year. However, as expected, the reduced
mining operations of certain host mines has continued to impact on
feed grades. Our management and technical teams continue to explore
further opportunities to improve both feed grades and recovery
efficiencies across operations that could add value in the near
term, whilst we also continue to engage with various consultants to
evaluate the potential of our existing longer-term mineral asset
projects."
"The Company continues to benefit from the strong PGM price
environment, which combined with strong operational performance,
will continue to generate extremely healthy profits. Consequently,
the Company was able to pay a windfall dividend of 3.75p per
ordinary share ($14.3 million) in April 2021 and I am glad to
report that the Board has declared an annual cash dividend of 4p
per Ordinary Share for the period, which is a 150% increase on
FY2020, payable on 3 December 2021. Should PGM prices remain
favourable, the possibility of another windfall dividend for CY2021
will be evaluated by the Board during February 2022. We remain in a
robust financial position with sufficient cash reserves to finance
capital projects, fund future growth and enable us to mitigate any
potential adverse impacts due to the ongoing uncertainty relating
to COVID-19."
"I would like to thank our management and operations teams for
their continued innovation and efforts in the face of some trying
circumstances, enabling us to maintain production and performance.
It is this dedication I believe that will put us on a strong
platform for achieving the expected annual production target of
approximately 70,000 4E PGM ounces for the 2022 financial
year."
Disclaimer
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 .
The Sylvania cash generating subsidiaries are incorporated in
South Africa with the functional currency of these operations being
South African Rand ("ZAR"). Revenues from the sale of PGMs are
received 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,
Pounds Sterling ("GBP") and ZAR.
For the twelve months under review, the average ZAR:USD exchange
rate was ZAR15.34:$1 and the spot exchange rate was
ZAR14.36:$1.
USD Unit Unaudited Unit ZAR
FY 2020 FY 2021 % Change % Change FY 2021 FY 2020
---------- --------- --------- ---------- -----------
Production
2,341,452 2,700,685 15% T Plant Feed T 15% 2,700,685 2,341,452
---------- --------- ------ ----------------------------- ------ --------- ---------- -----------
2.00 1.88 -6% g/t Feed Head Grade g/t -6% 1.88 2.00
---------- --------- ------ ----------------------------- ------ --------- ---------- -----------
1,092,630 1,272,974 17% T PGM Plant Feed Tons T 17% 1,272,974 1,092,630
---------- --------- ------ ----------------------------- ------ --------- ---------- -----------
3.44 3.17 -8% g/t PGM Plant Feed Grade g/t -8% 3.17 3.44
---------- --------- ------ ----------------------------- ------ --------- ---------- -----------
56.90% 53.99% -5% % PGM Plant Recovery % -5% 53.99% 56.90%
---------- --------- ------ ----------------------------- ------ --------- ---------- -----------
69,026 70,043 1% Oz Total 4E PGMs Oz 1% 70,043 69,026
---------- --------- ------ ----------------------------- ------ --------- ---------- -----------
92,105 94,041 2% Oz Total 6E PGMs Oz 2% 94,041 92,105
---------- --------- ------ ----------------------------- ------ --------- ---------- -----------
Average gross basket price
2,015 3,690 83% $/oz (1) R/oz 81% 58,157 32,202
---------- --------- ------ ----------------------------- ------ --------- ---------- -----------
Financials (2)
104,424 188,293 80% $'000 Revenue (4E) R'000 78% 2,888,758 1,625,244
---------- --------- ------ ----------------------------- ------ --------- ---------- -----------
Revenue (by-products
6,236 13,253 113% $'000 including base metals) R'000 109% 203,326 97,064
---------- --------- ------ ----------------------------- ------ --------- ---------- -----------
4,435 4,566 3% $'000 Sales adjustments R'000 1% 70,051 69,027
---------- --------- ------ ----------------------------- ------ --------- ---------- -----------
115,095 206,112 79% $'000 Net Revenue R'000 77% 3,162,135 1,791,335
---------- --------- ------ ----------------------------- ------ --------- ---------- -----------
41,456 51,394 24% $'000 Operating costs R'000 22% 788,471 645,225
---------- --------- ------ ----------------------------- ------ --------- ---------- -----------
General and administrative
2,169 2,375 9% $'000 costs R'000 8% 36,429 33,764
---------- --------- ------ ----------------------------- ------ --------- ---------- -----------
69,589 144,860 108% $'000 Adjusted EBITDA R'000 105% 2,222,416 1,083,086
---------- --------- ------ ----------------------------- ------ --------- ---------- -----------
1,608 1,332 -17% $'000 Net Interest R'000 -18% 20,437 25,034
---------- --------- ------ ----------------------------- ------ --------- ---------- -----------
14,952 43,407 190% $'000 Taxation R'000 186% 665,934 232,705
---------- --------- ------ ----------------------------- ------ --------- ---------- -----------
Depreciation and
5,746 2,980 -48% $'000 amortisation R'000 -49% 45,715 89,429
---------- --------- ------ ----------------------------- ------ --------- ---------- -----------
40,995 99,806 143% $'000 Net profit R'000 140% 1,531,204 638,053
---------- --------- ------ ----------------------------- ------ --------- ---------- -----------
5,412 7,519 39% $'000 Capital Expenditure R'000 37% 115,356 84,238
---------- --------- ------ ----------------------------- ------ --------- ---------- -----------
55,877 106,135 90% $'000 Cash Balance R'000 59% 1,524,365 961,434
---------- --------- ------ ----------------------------- ------ --------- ---------- -----------
Ave R/$ rate R/$ -1% 15.34 15.56
---------- --------- ------ ----------------------------- ------ --------- ---------- -----------
Spot R/$ rate R/$ -17% 14.36 17.20
---------- --------- ------ ----------------------------- ------ --------- ---------- -----------
Unit Cost/Efficiencies
SDO Cash Cost per 4E PGM oz
615 729 19% $/oz (3) R/oz 17% 11,189 9,577
---------- --------- ------ ----------------------------- ------ --------- ---------- -----------
SDO Cash Cost per 6E PGM oz
461 543 18% $/oz (3) R/oz 16% 8,334 7,177
---------- --------- ------ ----------------------------- ------ --------- ---------- -----------
Group Cash Cost Per 4E PGM
622 755 21% $/oz oz (3) R/oz 20% 11,590 9,683
---------- --------- ------ ----------------------------- ------ --------- ---------- -----------
Group Cash Cost Per 6E PGM
466 563 21% $/oz oz (3) R/oz 19% 8,632 7,256
---------- --------- ------ ----------------------------- ------ --------- ---------- -----------
654 907 39% $/oz All-in sustaining cost (4E) R/oz 37% 13,910 10,181
---------- --------- ------ ----------------------------- ------ --------- ---------- -----------
713 981 38% $/oz All-in cost (4E) R/oz 36% 15,052 11,103
---------- --------- ------ ----------------------------- ------ --------- ---------- -----------
(1) The gross basket price in the table is average gross basket
for the year, used for revenue recognition of ounces delivered over
FY2021, before penalties/smelting costs and applying the
contractual payability.
(2) Revenue (6E) for FY2021, before adjustments is $201.0
million (6E prill split is Pt 48%, Pd 17%, Rh 9%, Au 0.2%, Ru 21%,
Ir 5%).
(3) The cash costs include direct operating costs and exclude
royalty tax.
A. OPERATIONAL OVERVIEW
Health, safety and environment
While dealing with COVID-19 and its associated challenges, the
operations continued to focus on health, safety and environmental
compliance. The Company is proud to report that there were no
significant health or environmental incidents reported during the
year and that the Company remains fatality-free since inception in
2006.
In terms of safety, the Doornbosch operation has achieved the
significant industry milestone of nine years lost-time injury
("LTI") free during June 2021 and Mooinooi, Lannex and Lesedi all
achieved one-year LTI-free milestones during the year.
Unfortunately, Tweefontein and Millsell each recorded one LTI
during the year after being LTI-free for eight and five years
respectively. In targeting zero harm to employees, management
continues to ensure that every injury that is recorded is fully
investigated and corrective measures are implemented to prevent any
future reoccurrences.
Impact of COVID-19
Since the emergence of COVID-19 in the country during March
2020, management has focused on identifying and minimising the
various risks posed by the pandemic to employees and contractors.
The Company provided relief to affected employees through the
provision of access to medical assistance, as well as providing
self-isolation facilities to those who were unable to safely
self-isolate at home and may have posed a risk to their immediate
families. Employees further received full salary and benefits
during this time and local communities were offered assistance in
the form of sanitisers and masks being issued on an ongoing basis
to various schools and community centres, food parcels and the
Company sponsored online learning material and text books to Grade
12 learners to assist with self-study when schools were closed due
to lockdown. An ongoing monthly feeding scheme was also started for
children in the community who lost parents due to the virus.
Having navigated through three waves of the virus since its
emergence in the country, the Company has recorded 113 confirmed
COVID-19 cases amongst its employees to date, with 107 affected
employees thankfully recovered and returned to work after
experiencing mild symptoms of the virus. Unfortunately, we sadly
lost two colleagues during the financial year and our condolences
go out to their family, friends and colleagues.
Through the collaborative efforts of management and all of our
employees, we continuously strive to maintain high safety standards
and a safe working environment at all operating sites, with each
plant continuing to operate in accordance with legislated safety
and occupational regulations pertaining to the industry and country
as a whole.
Operational performance
The SDO met its expected production target for the 2021
financial year by delivering an annual production of 70,043 4E PGM
ounces, a 1% increase year-on-year.
The substantial increase in PGM feed tons of 17%, following
stabilisation of operations after the COVID-related disruptions
during H2 FY2020, contributed significantly towards achieving our
annual target, while both the PGM feed grades and recovery
efficiencies were impacted by lower quality feed sources and blends
associated with the slow-down of underground host-mines at some
operations.
In order to mitigate the loss of underground ROM material due to
the slow-down strategy at affected operations, the host mines
started generating opencast ROM material as supplementary feed to
SDO plants, assisting to keep plants running at capacity without
having to substantially increase dump feed which would negatively
impact the life of operations. However, these opencast sources are
unfortunately typically of a lower PGM grade and have a lower PGM
recovery potential due to the more oxidised nature compared to
underground resources and hence the visible impact on both PGM feed
grade and recovery efficiency during the past financial year.
PGM plant recovery efficiencies declined 5% during the year
aligned with feed source blend, while plant feed grade declined 8%.
Al though the recovery efficiency range for individual operations
typically range between 50% and 65% 4E PGM, depending on the
specific circuit configuration and feed source blend, the recovery
for the combined SDO remains within the 52% to 54% range
communicated previously. Although we are expecting plant feed
sources to remain similar for at least another eight to ten months.
Management will ensure that operations focus on optimising feed
grades from existing dump resources and balance PGM recoveries
against mass pull and concentrate quality to optimise returns.
The SDO cash cost increased by 17% in ZAR (the functional
currency) from ZAR9,577/ounce to ZAR11,189/ounce while the USD cash
cost increased to $729/ounce against $615/ounce in FY2020. The
increase in costs was primarily driven by higher than inflation
power rate increases and higher process consumables and re-mining
and transport costs associated with lower grade opencast ROM
sources treated at some operations. A strengthening of the ZAR:USD
exchange rate during H2 FY2021 further impacted the dollar cost
increase.
Operational focus areas
The short to medium term changes made by operations to
accommodate the alternative feed sources and changing blends had an
impact on operating costs, as expected, but supported the PGM ounce
production and protected the resource life of operations. As the
higher costs associated with mitigating the impact of alternative
feed sources and to secure additional ROM sources at some of the
plants, are expected to remain a factor during H1 FY2022,
management remains focused on initiatives to optimise re-mining
costs and associated equipment hire for blending of feed sources as
well as continue to balance the impact of higher operating costs in
the short to medium terms against the impact on life of mine of
operations, while ensuring stable PGM ounce production at
operations.
Optimisation of flotation performance and recovery efficiencies
remain a focus area of the Group, especially at the Western
operations, where lower-grade and more oxidised open cast ROM
material is being treated. After experiencing some
post-commissioning challenges with instability and chokes on the
new Mooinooi fines classification and fine chrome recovery circuit
during Q4, the plant team has been optimising the circuit and has
made significant improvements during recent months with operations
expected to stabilise and start to realise benefits of the upgrade
during H1 FY2022.
As was reported in the interim results, power disruptions and
production losses related to load-shedding by the national power
utility were less frequent during the year, however there was a
significant increase in vandalism and theft of copper cables at
various substations of the utility, particularly at the Western
operations. To improve the stability of power supply to operations
and to minimise resultant intermittent operational downtime
experienced at some operations, specific power mitigation
strategies have been developed with conceptual designs completed
during recent months for those operations most significantly
affected, and roll-out is anticipated to commence towards the end
of FY2022.
Post the reporting period, during early August, specific
concerns regarding slow water drainage rates and a high phreatic
surface level at the current Lesedi tailings dam were raised as
part of the Company's formal routine tailings dam inspection and
monitoring. Specialist investigations indicate that the current
situation is related to historical re-mining practices that damaged
some perimeter drains of the dam, prior to Sylvania acquiring the
operation in 2017. Management proactively decided to temporarily
suspend operations at Lesedi during August 2021 to ensure the
integrity of the tailings dam is maintained and remedial work
instigated. The current tailings dam was expected to be
de-commissioned towards the end of this current calendar year, when
the new Lesedi tailings disposal facility is expected to be
commissioned, but unfortunately the condition of the current
facility deteriorated quicker than expected. Based on current
mitigation measures already in place and being implemented, it is
expected that Lesedi will resume operations towards the end of
September 2021. The situation is disappointing, but a prudent
decision to ensure we safeguard our operations, employees and
protect our environment and its impact is likely to be marginal and
is already included in our annual forecast for total SDO production
for this financial year.
Capital Projects
The most significant capital projects planned for the year ahead
include the roll-out of two further MF2 secondary milling and
flotation modules at Lesedi and Tweefontein operations;
construction of three new tailings storage facilities at Lesedi,
Mooinooi and Doornbosch respectively; and completion of exploration
in-fill drilling at Northern Limb mining project areas. Total
planned capital expenditure for FY2022 is approximately $22.0
million.
The MF2 expansion at Lesedi, similar to existing Project Echo
modules rolled out between 2016 and 2020, to improve the upgrading
and recovery of PGMs is progressing well and is on track to start
contributing towards production from early in the 2022 calendar
year. In addition, the Tweefontein MF2 module is also now
progressing and anticipated to commission during the second half of
the 2022 calendar year.
The new tailings dam facilities will cater for extended life of
operations that were originally anticipated to only last between
five and ten years and further allows for flexibility at operations
in terms of re-mining schedules and blending of feed sources from
various dump and current arising sources. These new and improved
tailings facilities comply to highest international standards and
are designed to both reduce the impact of mine tailings on the
environment and improve operability.
In terms of the exploration infill drilling programme, we are
making steady progress with drilling approximately 56% and 25%
complete for respective Hacra and Aurora mining right areas.
Following promising results from the Company's specific fine
chrome recovery research and test work initiated in HY1 FY2020, a
circuit configuration and technology was identified to enable the
economic recovery of fine chrome from some existing dumps, which
has historically been uneconomical to recover. Test work has been
concluded and engagements with our host mine are at an advanced
stage for the construction of the first circuit at one of our
Eastern operations, but neither the benefits nor capital have been
included in current forecasts for the year. This circuit will
enable the Company to re-treat low PGM grade tailings resources
that would otherwise have been sterilised thereby extending the
operational life of PGM operations at selected sites.
Outlook
Following a strong FY2021, we have entered FY2022 with a
continued solid production performance from our operations, barring
the disruption at Lesedi as mentioned above. This, combined with
our optimisation initiatives which will come to fruition during the
year ahead, supports management and the Board's confidence that
Sylvania will achieve its production target of approximately 70,000
4E PGM ounces for FY2022.
With the market forecast for PGMs, and in particular palladium
and rhodium , to remain in deficit throughout the 2021 calendar
year, coupled with the demand for PGMs remaining robust, we are
expecting PGM prices to remain healthy during FY2022, although not
necessarily at the levels experienced during the past year.
While being cautiously optimistic on the PGM price outlook, as a
Company our primary focus will remain on those things which we are
able to control, which include specific focus on improving direct
operating costs, maintaining a safe, stable and efficient
production environment, and ensuring disciplined capital allocation
and control.
Taking into consideration all of the above factors, the Board
looks forward to the rest of FY2022 with confidence and to updating
shareholders further as the year progresses.
B. FINANCIAL OVERVIEW
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
for the period ended 30 June
-------------------------------------------------------------------------------
2020
Note $
------------------------------------------------------------------------------- ---- ------------ ------------
Revenue 1 206,112,444 115,094,940
Cost of sales (54,767,603) (47,062,555)
Royalties tax 2 (8,276,344) (967,099)
----
Gross profit 143,068,497 67,065,286
------------------------------------------------------------------------------- ---- ------------ ------------
Other income 1,146,710 58,123
Other expenses 3 (2,334,764) (3,280,056)
Impairment of exploration and evaluation asset - (9,504,774)
------------------------------------------------------------------------------- ---- ------------ ------------
Operating profit before net finance income/costs and income tax expense 141,880,443 54,338,579
Finance income 1,705,366 1,916,197
Finance costs (373,236) (307,756)
------------------------------------------------------------------------------- ---- ------------ ------------
Profit before income tax expense 143,212,573 55,947,020
Income tax expense 4 (43,406,522) (14,951,537)
Net profit/(loss) for the period 99,806,051 40,995,483
------------------------------------------------------------------------------- ---- ------------ ------------
Other comprehensive income/(loss)
Items that may be subsequently reclassified to profit and loss:
Foreign operations - foreign currency translation differences 24,461,386 (17,291,509)
------------ ------------
Total other comprehensive loss (net of tax) 24,461,386 (17,291,509)
------------------------------------------------------------------------------- ---- ------------ ------------
Total comprehensive income for the year 124,267,437 23,703,974
------------------------------------------------------------------------------- ---- ------------ ------------
Earnings per share attributable to the ordinary equity holders of the Company:
Basic earnings per share 36.65 14.62
Diluted earnings per share 35.92 14.26
------------------------------------------------------------------------------- ---- ------------ ------------
1. Revenue is generated from the sale of PGM ounces produced at
the six retreatment plants, net of pipeline sales adjustments,
penalties and smelting charges.
2. The royalty tax increased by $7.3 million due to the change
in tax brackets from 0.5% to 7.0% as a result of the SDO's having
fully utilised the capital allowances which previously reduced the
tax rate applied, as well as the increase in revenue due to higher
basket prices compared to previous periods.
3. Other expenses relate to corporate activities and include
consulting fees, audit fees, insurance, PR costs, directors' fees,
share based payments and other smaller administrative costs.
4. Income tax expense include current tax, deferred tax and
dividend withholding tax.
The average gross basket price for PGMs in the financial year
was $3,690/ounce - an 83% increase on the previous year's
$2,015/ounce. This increase in the overall PGM basket price was
primarily due to an approximately 168% increase in rhodium prices
to record highs during the year, and approximately 28% increase in
palladium prices.
Revenue on 4E ounces delivered increased by 80% in dollar terms
to $188.3 million year-on-year with revenue from base metals and
by-products contributing $13.3 million to the total revenue. Net
revenue, after adjustments for ounces delivered in the prior year
but invoiced in the current financial year, increased 79% on the
previous year's $115.1 million to $206.1 million.
The operational cost of sales is incurred in ZAR and represents
the direct and indirect costs of producing the PGM concentrate and
amounted to ZAR788.5 million for the reporting period compared to
ZAR645.2 million for the period ended 30 June 2020. The main cost
contributors being employee costs of ZAR270.5 million (FY2020:
ZAR236.2 million), mining costs of ZAR106.6 million (FY2020:
ZAR62.4 million), reagents and milling costs of ZAR60.5 million
(FY2020: ZAR46.0 million) and electricity of ZAR99.5 million
(FY2020: ZAR79.9 million). In addition to these the Company paid
royalty tax of ZAR126.9 million (FY2020: ZAR15.1 million). The
significant increase in mineral royalty tax is as a result of the
increase in rate from 0.5% to 7.0%. The increase in the royalty tax
cost is a result of the SDO having fully utilised its capital
allowances, which previously reduced the tax rate applied, and the
increase in revenue due to the significantly higher basket price.
The rate is capped at 7.0% and in the absence of any future large
capital spend, is set to remain at this rate going forward.
Group cash costs increased by 21% year-on-year from $622/ounce
(ZAR9,683/ounce) to $755/ounce (ZAR11,590/ounce). Operating costs
increased 22% in ZAR (the functional currency) from ZAR645.2
million to ZAR788.5 million, attributable to above-inflation
electricity rate increases and higher re-mining costs, incurred in
order to supplement the lower ROM and current arisings from the
host mines and higher consumable costs associated with more
oxidised alternative feed sources at selected operations.
All-in sustaining costs ("AISC") increased by 39% to $907/ounce
(ZAR13,910/ounce) from $654/ounce (ZAR10,181/ounce) primarily as a
result of the significant increase in minerals royalty taxes that
account for approximately $100/ounce and operational costs
increases mentioned earlier. Similarly, all-in costs ("AIC") of 4E
increased by 38% to $981/ounce (ZAR15,052/ounce) from $713/ounce
(ZAR11,103/ounce) recorded in the previous period.
General and administrative costs, included in the Group cash
costs, are incurred in USD, GBP and ZAR and are impacted by
exchange rate fluctuations over the reporting period. These costs
increased 9% in the reporting currency year-on-year mainly due to
the increase in share-based payments expensed over the vesting
period on Director and management bonus share awards and an
increase in directors' and officers' liability insurance (FY2021:
$2.4 million; FY2020: $2.2 million).
Adjusted Group EBITDA (excluding impairments) increased 108%
year-on-year to $144.9 million (FY2020: $69.6 million). The
taxation expense for the year was $43.4 million (FY2020: $15.0
million), as per the statement of profit or loss and other
comprehensive income and includes deferred taxation movements and
dividend withholding tax.
The Group net profit for the year was $99.8 million, a 143%
improvement on the previous year's $41.0 million.
Interest is earned on surplus cash invested in South Africa at
an average interest rate of 4% per annum. Interest is paid on
instalment sale agreements for the purchase of movable plant and
vehicles.
Income tax paid for the financial year amounted to ZAR697.8
million ($45.5 million) compared to ZAR229.7 million ($14.8
million) for the previous financial year. The increase is as a
result of increased taxable profits mainly due to the increase in
the basket price during the year. Income tax is paid in ZAR on
taxable profits generated at the South African operations. Dividend
withholding tax of $1.6 million (ZAR23.4million) was paid during
the year.
CONSOLIDATED STATEMENT OF CASH FLOWS
for the period ended 30 June
==================================================== ============
2020
Note $
==================================================== ===== ============ ============
Cash flows from operating activities
Receipts from customers 173,210,207 112,398,238
Payments to suppliers and employees (59,436,882) (41,407,023)
----------------------------------------------------------- ------------ ------------
Cash generated from operations 113,773,325 70,991,215
Finance income 1,607,930 1,844,683
Finance costs (34,574) (56,309)
Taxation paid (47,111,379) (14,756,364)
Net cash inflow from operating activities 68,235,302 58,023,225
----------------------------------------------------------- ------------ ------------
Cash flows from investing activities
Purchase of property, plant and equipment (6,104,381) (5,200,789)
Proceeds from sale of property, plant and equipment - 64
Payments for exploration and evaluation assets (1,414,699) (211,551)
Advance paid TS Consortium (65,534) (291,774)
Assets held for sale cash (1,228) (7,915)
Net cash outflow from investing activities (7,585,842) (5,711,965)
----------------------------------------------------------- ------------ ------------
CONSOLIDATED STATEMENT OF CASH FLOWS
for the period ended 30 June
===========================================================================================
2020
Note $
======================================================== ===== ============ ============
Cash flows from financing activities
Repayment of borrowings (160,577) (194,611)
Payment of lease liabilities (80,288) (75,762)
Payment for treasury shares (1,602,765) (8,544,976)
Dividends paid (20,113,337) (2,853,641)
Net cash outflow from financing activities (21,956,967) (11,668,990)
--------------------------------------------------------------- ------------ ------------
Net increase in cash and cash equivalents 38,692,493 40,642,270
Effect of exchange fluctuations on cash held 11,566,330 (6,562,799)
Cash and cash equivalents at the beginning of reporting
period 55,876,612 21,797,141
Cash and cash equivalents at the end of the reporting
period 106,135,435 55,876,612
--------------------------------------------------------------- ------------ ------------
The cash balance at 30 June 2021 was $106.1 million (FY2020:
$55.9 million), including $0.9 million in financial guarantees
(FY2020: $0.8 million). Cash generated from operations before
working capital movements was $145.6 million, with net changes in
working capital resulting in a reduction of $31.9 million due to
the movement in trade receivables. Net finance income amounted to
$1.6 million and $47.1 million was paid in income taxes during the
year, including dividend withholding tax of $1.6million. Other
major spend items include $1.4 million spent on exploration
activities (FY2020: $0.2 million) and $6.1 million on strategic
capital projects and stay in business capital for the SDO plants
(FY2020: $5.2 million). At corporate level, $20.1 million (FY2020:
$2.9 million) was paid out in dividends and 1.96 million shares
(FY2020: 4.9 million) were bought back at a cost of $1.6 million
(FY2020: $8.5 million). The impact of exchange rate fluctuations on
cash held at year end was $11.6 million profit (FY2020: $6.6
million loss). It should be noted that the Group holds a large
portion of cash in ZAR and a strengthening ZAR:USD exchange rate
had a favourable impact on the Group cash balance, but a weakening
of the ZAR against the USD will have the opposite impact.
CONSOLIDATED STATEMENT OF FINANCIAL POSTION
At 30 June
2020
Note $
======================================= ==== =========== ===========
ASSETS
Non-current assets
Exploration and evaluation expenditure 45,351,817 42,840,775
Property, plant and equipment 39,915,437 30,472,227
Other financial assets 5 298,864 226,009
Total non-current assets 85,566,118 73,539,011
--------------------------------------- ---- ----------- -----------
Current assets
Cash and cash equivalents 6 106,135,435 55,876,612
Trade and other receivables 7 68,612,119 27,074,169
Other financial assets 5 885,593 622,711
Inventories 8 3,838,147 2,166,294
Current tax asset 4,329,860 -
--------------------------------------- ---- ----------- -----------
183,801,154 85,739,786
Assets held for sale 4,216,190 3,436,086
Total current assets 188,017,344 89,175,872
--------------------------------------- ---- ----------- -----------
Total assets 273,583,462 162,714,883
--------------------------------------- ---- ----------- -----------
CONSOLIDATED STATEMENT OF FINANCIAL POSTION
At 30 June
===========
2020
Note $
============================================================================ ==== =========== ===========
EQUITY AND LIABILITIES
============================================================================ ==== =========== ===========
Shareholders' equity
Issued capital 9 2,861,557 2,868,457
Reserves 10 65,314,647 41,594,587
Retained profit/(Accumulated losses) 175,776,721 96,084,007
Total equity 243,952,925 140,547,051
---------------------------------------------------------------------------- ---- ----------- -----------
Non-current liabilities
Borrowings 11 70,956 235,576
Provisions 12 4,539,937 3,646,044
Deferred tax liability 11,154,515 9,328,039
Total non-current liabilities 15,765,408 13,209,659
---------------------------------------------------------------------------- ---- ----------- -----------
Current liabilities
Trade and other payables 13,652,017 7,519,728
Borrowings 11 212,651 215,918
Current tax liability - 1,198,277
---------------------------------------------------------------------------- ---- ----------- -----------
13,864,668 8,933,923
Liabilities directly associated with the assets classified as held for sale 461 24,250
Total current liabilities 13,865,129 8,958,173
---------------------------------------------------------------------------- ---- ----------- -----------
Total liabilities 29,630,537 22,167,832
---------------------------------------------------------------------------- ---- ----------- -----------
Total liabilities and shareholder's equity 273,583,462 162,714,883
---------------------------------------------------------------------------- ---- ----------- -----------
5. Other financial assets mainly consist of the loan receivable
granted to TS Consortium from Sylvania South Africa (Pty) Ltd, a
South African subsidiary of the Group. TS Consortium is a joint
operation research and development project. Sylvania South Africa
(Pty) Ltd has a 50% interest in the joint operation.
6. The majority of the cash and cash equivalents are held in ZAR and USD.
7. Trade and other receivables consist mainly of amounts receivable for the sale of PGMs.
8. Inventory held is spares and consumables for the SDO.
9. The total number of issued ordinary shares at 30 June 2021 is
286,155,657 Ordinary Shares of US$0.01 each (including 13,681,792
shares held in treasury), 1,958,477 shares were purchased including
shares purchased through the share buyback programme, 690,000
shares were cancelled and 2,580,000 share options were
exercised.
10. Reserves include the share premium, foreign currency
translation reserve, which is used to record exchange differences
arising from the translation of financial statements of foreign
controlled entities, share-based payments reserve, treasury share
reserve, the non-controlling interests reserve and the equity
reserve.
11. Interest bearing loans and borrowings are secured instalment
sale agreements over various motor vehicles and plant and equipment
as well as the right-of-use lease liability.
12. Provision is made for the present value of closure,
restoration and environmental rehabilitation costs in the financial
period when the related environmental disturbance occurs.
C. MINERAL ASSET DEVELOPMENT AND OPENCAST MINING PROJECTS
The Group owns various mineral asset development projects on the
Northern Limb of the South African Bushveld complex and has
initiated studies to determine how best to optimize the respective
projects by targeting more localized, higher-grade areas and
considering less capital-intensive infrastructure and processes to
unlock value.
Volspruit Platinum Project
Based on the preliminary mining design information and results
from additional metallurgical test work generated as part of the
recent specialist study that was commissioned in mid-2020, two new
initiatives have been identified that will impact the feasibility
and strategy for the project.
Firstly, various processing and off-take options are being
evaluated for the typical PGM concentrate volumes and quality that
can be produced based on current mining design and processing
options and secondly, a resource optimization study has been
commissioned that should be completed during the 2022 financial
year.
The resource optimisation study will review and revise the
geological interpretation and the continuity of the mineralisation
at higher cut-off grades, reducing the orebody to a leaner, smaller
resource volume, but of a higher quality. The expected outcome will
be a smaller mine with optimised stripping ratios and higher
concentrator feed grades. This optimised resource model will allow
for a new mining schedule to be developed, feeding into further
process optimisation work and an update of the key project economic
assumptions.
The investment for the permitting requirements in support of the
existing Mining Right continues with specialist technical teams
continuing to work towards the authorisations which include the
Water Use license for the mining and on-site processing of the ore,
updating of the Environmental Impact Assessment and the
finalization of the amended Social and Labour Plan ("SLP") which
will update the Local Economic Development ("LED") project that is
included in the Mining Right held by the Company. Most of the
specialist studies need to be conducted during the rainy and/or
summer months and will kick off towards the last quarter of the
2021 calendar year.
Grasvally Chrome Project
The Grasvally mine remains an asset for sale and the Option
Agreement as negotiated and reported in the Company's FY2020 report
is still valid in terms of the potential sale of 100% of the shares
in Grasvally and claims against Grasvally Chrome Mine (Pty) Ltd to
Forward Africa Mining (Pty) Ltd ("FAM"). We continue to monitor
progress on meeting the conditions precedent by FAM and the Board's
intention to sell the asset has not changed.
An updated second generation Social and Labour plan has been
submitted to the DMRE for approval, while components of the LED
project are currently being implemented on site.
Northern Limb Projects
Mining Rights for PGEs are held by the Company for both the
Hacra and Aurora (Pan Palladium ("PPD")) developments.
The Company has made a significant investment to further develop
and unlock the value of the Hacra and Aurora PGM and Base Metal
projects, through an infill drilling programme, with specialist
geological and mining technical consultants appointed to oversee
the project and study. Steady progress is being made with this
study and drilling progress is approximately 56% and 25% complete
for respective mining right areas.
The updated resource model will be subjected to a concept-level
mining study to evaluate a new business case for the area of the
Mining Right with the final study reports expected by the mid-2022
calendar year`.
D. CORPORATE ACTIVITIES
Dividend Approval and Payment
On 7 September 2020, the Board declared a final dividend of 1.6p
per Ordinary Share, with a record date of 30 October 2020 and
payment date of 4 December 2020.
In addition to the annual dividend paid, the Board recognised
that the Company had enjoyed a significant positive cashflow impact
as a result of the palladium and rhodium prices and approved a
windfall dividend of 3.75p per Ordinary Share in February 2021,
with a record date of 5 March 2021 and which was paid on 9 April
2021.
The Board has now declared the payment of a cash dividend for
FY2021 of 4p per Ordinary Share, payable on 3 December 2021.
Payment of the dividend will be made to Shareholders on the
register at the close of business on 29 October 2021 and the
ex-dividend date is 28 October 2021. The possibility of another
windfall dividend being paid out in H2 FY2022 will be considered
should prices remain favourable and in accordance with the six
metrics of our dividend policy:
-- Liquidity and forecast cash requirements of the business: the approximate six-month working capital cycle which
needs to be provided for;
-- Debt: some negative covenants could restrict the payment of dividends in the event the Company were to secure
external funding;
-- Capital expenditure initiatives: expansion capital required to grow the business and continue to extend the life
of the SDO;
-- Metal prices and Rand / Dollar exchange rate: fluctuations in prices can have a major impact on the Company's
results, especially with lengthy payment terms.
-- Legal considerations: Bermudan law permits a company to declare or pay a dividend provided the liquidity and
solvency requirements are met; and
-- Sustainability: the Company's ability to continue annual dividend payments.
Further to the dividends paid to shareholders, the Company
rolled out an Employee Dividend Entitlement Plan ("EDEP") whereby
eligible employees receive an equivalent dividend paid on shares
bought back by the Company in the market and ring-fenced for the
EDEP. The first payment of equivalent dividends was made to
employees in January 2021 following the FY2020 dividend. A total of
ZAR7.4 million ($0.5 million) was paid out under the EDEP to
date.
Transactions in Own Shares
One of the Company's strategic goals is to return capital to
shareholders and to continue to review opportunities to do so, as
and when they arise.
At the close of FY2020, shares in the Company were valued at 41p
per Ordinary Share and at the close of FY2021, the share price
appreciated 193% to 120p per Ordinary Share.
During H1 FY2021, the Company concluded its second Share Buyback
programme in which it bought back 1,047,599 shares from
certificated non-UK shareholders who held 175,000 shares or fewer
in the Company.
The Non-Executive directors of the Company were awarded 25,000
shares each and a total of 2,505,000 bonus share award shares were
exercised by various directors and employees which vested from
bonus shares awarded to them in August 2017. All shares awarded
came from Treasury and 1,053,250 of the vested bonus shares were
repurchased to satisfy the tax liabilities of employees. An
additional 529,575 shares were repurchased from employees and
placed back into Treasury.
During the course of the financial year, a total of 690,000
shares held in Treasury were cancelled. Following the above
transactions and as at the date of this report, the Company's
issued share capital is 286,155,657 Ordinary Shares, of which a
total of 13,681,792 Ordinary Shares are held in Treasury.
Therefore, the total number of Ordinary Shares with voting rights
is 272,473,865.
Appointment of Director
Post period end the Company announced the appointment of Mr.
Adrian Reynolds as Independent Non-executive Director to Sylvania
Platinum, with effect from 1 August 2021. With over 40 years'
experience in the mining and minerals industry and having held
directorship at many reputable companies in the mining and
environmental sphere over the years, Mr. Reynolds brings a wealth
of mining knowledge and experience to the Board and we look forward
to his input and guidance. Mr. Reynolds is a fellow of the
Institute of Materials, Minerals and Mining as well as of the
Geological Society of South Africa. He is a registered Professional
Natural Scientist and holds a Masters of Science in Geology, as
well as a Graduate Diploma in Engineering.
Civil unrest in Gauteng and Kwa-Zulu Natal post period end
In the quarterly announcement released July 2021, the Company
reported that it had become aware of enquiries made by some
shareholders pertaining to the recent spate of civil unrest
experienced in two of the country's provinces in July, and any
potential impact to Sylvania's operations. Where the Board
acknowledges the devastating effects the unrest has had on the
communities affected, the Directors assured shareholders that there
were no impacts to operations to date. SDO are located in the
provinces of Mpumalanga and North West where no protest action or
riots have occurred and, as such, operations continued unabated.
However, management continues to monitor the situation and to
evaluate potential risks to operations, particularly from a supply
chain point of view and to ensure that any potential risks are
mitigated.
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
/ Ed Phillips
Communications
Alma PR Limited +44 (0) 20 3405 0208
Justine James / Harriett Jackson/ sylvania@almapr.co.uk
Faye Calow
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
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 and a chrome
prospect in the Northern Limb of the Bushveld Complex.
For more information visit https://www.sylvaniaplatinum.com/
ANNEXURE
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
---------------------------------------------------------------------
Adjusted Group Earnings before interest, tax, depreciation and amortisation
EBITDA adjusted for impairments
---------------------------------------------------------------------
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
All-in cost capital expenditure
---------------------------------------------------------------------
Bonus Shares Sylvania Platinum Limited Bonus Share Award Plan
---------------------------------------------------------------------
CGU Cash generating unit
---------------------------------------------------------------------
Fresh chrome tails from current operating host mines processing
Current risings operations
---------------------------------------------------------------------
DMRE Department of Mineral Resources and Energy
---------------------------------------------------------------------
EA Environmental Authorisation
---------------------------------------------------------------------
EBITDA Earnings before interest, tax, depreciation and amortisation
---------------------------------------------------------------------
EDEP Employee Dividend Entitlement Plan
---------------------------------------------------------------------
EIA Environmental Impact Assessment
---------------------------------------------------------------------
EIR Effective interest rate
---------------------------------------------------------------------
EMPR Environmental Management Programme Report
---------------------------------------------------------------------
FAM Forward Africa Mining (Pty) Ltd
---------------------------------------------------------------------
GBP Pounds Sterling
---------------------------------------------------------------------
HDP Historically Disadvantaged Persons
---------------------------------------------------------------------
IASB International Accounting Standards Board
---------------------------------------------------------------------
IFRIC International Financial Reporting Interpretation Committee
---------------------------------------------------------------------
IFRS International Financial Reporting Standards
---------------------------------------------------------------------
I&APs Interested and Affected Parties
---------------------------------------------------------------------
IRR Internal Rate of Return
---------------------------------------------------------------------
JO Joint operation
---------------------------------------------------------------------
LED Local Economic Development
---------------------------------------------------------------------
Limpopo Department of Economic Development, Environment and
LEDET Tourism
---------------------------------------------------------------------
Phoenix Platinum Mining Proprietary Limited, renamed Sylvania
Lesedi Lesedi
---------------------------------------------------------------------
LSE London Stock Exchange
---------------------------------------------------------------------
LTI Lost time injury
---------------------------------------------------------------------
MAR Market Abuse (Amendment) (EU Exit) Regulations 2019
---------------------------------------------------------------------
MF2 Milling and flotation technology
---------------------------------------------------------------------
MPRDA Mineral and Petroleum Resources Development Act
---------------------------------------------------------------------
MRA Mining Right Application
---------------------------------------------------------------------
NWA National Water Act 36 of 1998
---------------------------------------------------------------------
Persons displaying managerial responsibilities as defined
PDMR by the Market Abuse Regulation
---------------------------------------------------------------------
Platinum group metals comprising mainly Platinum, Palladium,
PGM Rhodium and Gold
---------------------------------------------------------------------
Phoenix Platinum Mining Proprietary Limited, renamed Sylvania
Phoenix Lesedi
---------------------------------------------------------------------
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
---------------------------------------------------------------------
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
---------------------------------------------------------------------
SLP Social and Labour Plan
---------------------------------------------------------------------
Shares Common shares
---------------------------------------------------------------------
Sylvania Sylvania Platinum Limited, a company incorporated in Bermuda
---------------------------------------------------------------------
TS Consortium Tizer Sylvania Consortium
---------------------------------------------------------------------
USD United States Dollar
---------------------------------------------------------------------
VWAP Volume-weighted average price
---------------------------------------------------------------------
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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END
FR LFMFTMTMMMTB
(END) Dow Jones Newswires
September 06, 2021 02:06 ET (06:06 GMT)
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