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Sylvania delivers ‘significantly better’ third quarter, despite challenges

10th May 2019

By: Simone Liedtke

Creamer Media Social Media Editor & Senior Writer

     

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After a challenging second fiscal quarter, Aim-listed Sylvania Platinum’s Sylvania Dump Operations (SDO) performed “significantly better” and delivered 16256 oz of platinum- group metals (PGMs) – a 9% quarter-on-quarter increase – in the quarter ended March 31.

The increased production was due to a combination of a 7% improvement in PGMs feed tons and a 3% improvement in recovery efficiencies, while the PGMs feed grades were similar to those of the previous period, the company said in a statement issued last week.

The total SDO cash costs for the period decreased by 4% in rand terms to R8 353/oz and by 1% in dollar terms to $599/oz.

Capital expenditure of R29.5-million was invested during the quarter, a 21% quarter-on-quarter decrease, in line with the planned Project Echo roll-out and project schedule.

Given the increase in production and the gross basket price, as well as the decrease in cash costs, the company generated positive cash flows, which enabled it to continue to internally fund its Project Echo and expansion projects, while simultaneously continuing to grow its cash in the bank, Sylvania CEO Terry McConnachie said.

Provided there are no unforeseen disruptions, Sylvania expects output of about 218 00 oz of PGMs for the fourth quarter.

During the second quarter, the water supply to the Lesedi operation was interrupted and, while the situation improved in the third quarter, intermittent shortages were experienced, which continued to disrupt production during the period.

Further, power outages and load-shedding at various SDO undertakings resulted in unplanned downtime and temporary disruptions in the higher-grade current arisings from the host mine at Doornbosch, which, in turn, impacted on the grade delivered to the PGMs plant.

The production guidance for the 2019 financial year has been revised to 72 000 oz, which means Sylvania will attain record production in the last quarter, according to McConnachie.

The company’s revised production guidance is a minor decrease on Sylvania’s previous guidance of between 73 000 oz and 76 000 oz for the full 2019 financial year.

With the second milling and flotation circuit at Mooinooi now added, grade improvement at Doornbosch and more consistent production at Lesedi, the company believes the new guidance should be achievable.

Focus Areas

During the quarter, the abnormal drought conditions continued to impact on water availability and supply to the Western operations, particularly Lesedi.

Measures to mitigate the impact, such as the drilling of additional boreholes and implementing water transfers from neighbouring operations, helped improve supply, but Lesedi still experienced significant downtime during the quarter.

The final upgrades to the water supply system were completed during the final week of March and the plant has been running well since then, with limited downtime.

Management continued to focus on the Doornbosch remining operation at the current dump, which is at the end of its life.

This improved PGMs feed tons but the significantly lower-than-planned current arisings feed from the host mine still impacted negatively on the PGMs feed grades during the quarter.

The overall chrome mining and treatment rate of the host mine did not deteriorate during the quarter, but the specific ratio of current arisings to other products reduced, which led management to implement process improvements at the host mine operation.

As a result, since late March, current arisings tons and PGMs feed grades have been improving.

Financial Overview

A higher basket price for PGMs, coupled with the increase in ounce production, was the main contributor to the 23% increase in net revenue to $18.3-million for the quarter.

The gross basket price improved 15% quarter-on-quarter to $1 383/oz, as a result of the continued upward trend of palladium and rhodium prices.

Operating costs increased 6% in rand terms to R136.3-million, compared with R129.1-million in the second quarter, mainly owing to an increase in electricity costs.

General and administrative costs decreased 26% quarter- on-quarter from $600 000 to $400 000.

Group cash costs decreased from R9 094/oz to R8 699/oz, owing to higher ounce production and, in dollar terms, the group cash costs decreased 2% from $635/oz to $624/oz.

All-in sustaining costs and all-in costs also decreased as a result of the decrease in capital expenditure and higher ounce production in the third quarter.

Earnings before interest, taxes, depreciation and amortisation increased 55% from $5.3-million to $8.2-million for the third quarter.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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