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Sylvania reports 10% drop in production owing to December shutdown

31st January 2024

By: Darren Parker

Creamer Media Contributing Editor Online

     

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Platinum group metals (PGM) producer and developer Sylvania reported a 10% drop in production for the quarter ended December 31 – the second quarter of its 2024 financial year.

The Sylvania Dump Operations (SDO) produced 18 232 oz of platinum, palladium, rhodium and gold (4E) and 23 105 oz of platinum, palladium, rhodium, ruthenium, iridium and gold (6E) PGMs during the quarter, down from the 20 173 oz of 4E and 25 533 oz of 6E PGMs produced in the previous quarter.

Sylvania CEO Jaco Prinsloo said on January 31 that, although these production figures were lower than the previous quarter, they were in line with the production target for the period.

“The 10% lower production was primarily attributed to lower current feed tonnages and feed grades from some of the host mines due to the festive season closure. However, the second-quarter production was supported by higher recovery efficiencies over the period. Despite these challenges, we remain on course to meet the full-year production guidance,” he said.

The SDO recorded $20.9-million in net revenue for the quarter, up from $19.7-million in the preceding quarter.

Sylvania’s earnings before interest, taxes, depreciation and amortisation (Ebitda) of $4.4-million were up from $2.8-million in the quarter before, while a final cash dividend for the 2023 financial year of 5p an ordinary share was issued, amounting to $16.7-million, which was paid in December. The company also paid provisional income and mineral royalty taxes.

"Net revenue was up 6% due to a smaller sales adjustment during quarter two, and consequently, group Ebitda increased by 57%. Despite the ongoing pressure on the PGM 4E basket price, which experienced a further 3% reduction during the period, these positive financial indicators reflect the resilience and strategic adaptability of our operations. Net profit was 13% lower than in quarter one due to the impact of intercompany dividend withholding taxes. Nonetheless, the company maintained a strong cash position,” Prinsloo explained.

On the cost front, SDO's cash costs per 4E ounce increased by 13% in dollar and rand terms, respectively, and were primarily affected by the lower ounces produced compared with the first quarter.

In addition, the Lannex MF2 flotation circuit was commissioned with optimisation well advanced, and improved recoveries are expected following the commissioning of the Lannex fine grinding circuit, with optimisation to follow in the third quarter of the 2024 financial year. Continuous operational performance improvements relating to the optimisation of feed sources, throughput, recoveries, and cost-saving initiatives are being implemented.

Meanwhile, progress on the Thaba joint venture (JV) project is on schedule, and construction of the earthworks and civil works package began during December.

"The Thaba JV is progressing well with the design, procurement, and construction elements of the project all on schedule,” Prinsloo said.

In addition, an updated mineral resource estimate statement for the combined Volspruit North and South orebodies is mostly complete, and final documents are expected to be signed off during the third quarter.

A preliminary economic assessment (PEA) for the Volspruit project is ongoing, with SRK Consulting having been appointed to undertake the work. Upon the completion of the combined North and South orebodies PEA, it is expected that a prefeasibility study will begin. Prinsloo said that the PEA for the Volspruit project, along with the results from the metallurgical test work, are expected during the second half.

Prinsloo said Sylvania maintains sufficiently strong cash reserves to enable the funding of expansion and JV initiatives, process optimisation capital, and upgrading of the company's exploration and evaluation assets.

“The optimisation of value from the exploration assets remains a key component of Sylvania Platinum's growth strategy and will aid in supporting the company's future value proposition,” Prinsloo said.

No lost-time injuries were recorded during the quarter.

Meanwhile, after a decade of service as nonexecutive chairperson Stuart Murray stepped down on December 31 to focus on his other business interests and was succeeded by Eileen Carr.

Carr has more than 35 years of professional expertise in the global resources sector.

Additionally, nonexecutive director Simon Scott has taken over Carr's role as audit committee chairperson.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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