Debtless platinum group metals (PGMs) miner Sylvania Platinum achieved a 56% quarter-on-quarter increase in net revenue to $43.6-million for the quarter ended March 31, the third quarter of its financial year, buoyed by increased production and a 9% increase in the PGMs dollar basket price.

The miner recorded a net profit of $25.4-million for the quarter – a 123% increase quarter-on-quarter, thereby resulting in the group’s earnings before interest, taxes, depreciation and amortisation increasing by 83% to $32-million.

After share buybacks during the quarter, the group has a cash balance of $45.3-million.

Sylvania CEO Jaco Prinsloo says that, traditionally, the third quarter is often the lowest production quarter of the year.

However, by building on the solid performance from the previous quarter, he says the Sylvania Dump Operations (SDO) again performed well and produced 19 968 oz, surpassing the second quarter as the third highest quarter of production in the history of the company.

However, as a result of Covid-19, its SDO operations have been placed on care and maintenance, since March 27; however, the SDO has permission under the host mine approval to resume scaled-down operations in alignment with reduced workforce and stringent additional safety measures contained in amended lockdown regulations announced on April 16. Therefore, operations are expected to resume by May 1.

The nature of the SDO enables quicker start-up of operations compared with traditional underground mines.

As a result of suspended operations, force majeure notices were received from contracted smelters treating the SDO's PGMs concentrate, resulting in a suspension of deliveries since the start of the lockdown. Therefore, Sylvania notes that any concentrate produced during the lockdown will be stockpiled on site where possible, resulting in delayed revenue and cash flow.

Based on the impact of the lockdown period to date and related uncertainty for the future, the previously announced guidance of between 74 000 oz and 76 000 oz has been suspended. However, the group’s expected PGMs production for the 2020 financial year will be about 68 000 oz, provided the operations are able to resume as planned.

Meanwhile, power interruptions related to Eskom load-shedding and quality of supply are still impacting negatively on some operations.

A depressed chrome market will also potentially result in retrenchments at certain host mines, Sylvania notes, adding that this will impact on the amount of current arisings feed during next quarter and in the 2021 financial year.

However, Sylvania states that the SDO is able to substitute current arisings and run-of-mine sources with historic dump material in order to mitigate this impact.

The miner, however, notes that its strong cash reserves will enable it to maintain plant and safeguard its employees during these times of uncertainty.

Sylvania also says an enhancement project has been initiated at Mooinooi to improve the upgrading and recovery of PGMs, with commissioning expected towards the end of the first half of the 2021 financial year.