Aim-listed platinum group metals (PGMs) miner Sylvania Platinum recorded net revenue of $69.1-million for the first half of its 2022 financial year ended December 31, 2021 – a 19% decrease year-on-year as a result of lower PGM ounce production and basket price, as well as a negative sales adjustment.

The average gross basket price for the period was $2 966/oz, which compares with the average price of $3 184/oz for the six months to December 31, 2020.

At period’s end, Sylvania’s cash and cash equivalents balance was $110.1-million, with cash generated from operations before working capital being $36.4-million. Working capital contributed $6.7-million mainly because of the movement in trade receivables as a result of the decrease in the gross basket price received.

During the period, provisional income tax of $10.9-million was paid, while $7.4-million was spent on capital expenditure, comprising $6.1-million spent on specific enhancement and stay-in-business projects and $1.3-million spent on exploration projects.

In December 2021, $14.6-million was paid to shareholders as a dividend.

Sylvania CEO Jaco Prinsloo says that, in addition to the yearly dividend paid during the period, the board approved the payment of a second windfall dividend of 2.25p an ordinary share – payable in early April.

“As with the first windfall dividend in April 2021, this dividend payment is based on excess cash flow generated from PGM prices achieved above long-term broker consensus prices for these metals for the 2021 calendar year.”

In addition, he says, Sylvania will continue to execute further share buybacks as opportunities arise as part of its commitment to return value to shareholders.

“As the company already holds sufficient shares in treasury for the current bonus share awards and the employee dividend entitlement plan, any such shares acquired will be cancelled.”

OPERATIONS

The operational cost of sales represents the direct and indirect costs of producing the PGMs concentrate and amounted to R415.5-million for the reporting period, compared with R382.1-million in the corresponding 2020 period.

The main cost contributors were salaries and wages of R144.5-million, mining costs of R53.2-million, reagents and milling costs of R33-million and electricity costs of R55.8-million.

Group cash cost increased to R13 247/oz in the period under review, from R10 825/oz in the prior comparable period, mainly as a result of fewer ounces having been produced.

The miner’s all-inclusive sustaining costs for the period amounted to R15 404/oz, up from the R12 188/oz of the corresponding 2020 period, while all-inclusive costs were R18 273/oz, up from the R12 988/oz experienced in the prior 2020 period.

Meanwhile, production at Sylvania’s Dump Operations (SDO) decreased by 11% year-on-year to 32 376 oz of PGMs for the six months under review, primarily as a result of lower treatment volumes at the Lesedi operation.

A combination of lower PGM feed grades and recovery efficiencies associated with run-of-mine (RoM) material received from the host mine at Mooinooi and Lannex during the period also contributed to the decrease.

Prinsloo says SDO achieved solid performances from most operations, especially Tweefontein, which achieved new record quarterly and six-monthly production performances, which helped mitigate the lower production from Mooinooi and Lesedi during the period.

However, the lower PGMs feed grade of Mooinooi RoM material received, the impact of the temporary production stoppage at Lesedi and subsequent water shortages, as well as some water supply issues which are being addressed, affected production from Sylvania’s western operations.

“As a result, we have made a modest adjustment to our [yearly] PGMs production estimate, with a range of 66 000 [oz] to 68 000 oz now targeted.”

While all other operations either met or exceeded their planned production volumes, the 7% decrease in PGM plant feed tonnes during the period was owing to the tailings-dam-related production interruption and water shortages at Lesedi.

PGMs plant feed grade decreased by 1% during the period under review, associated with lower-grade dump feed at Millsell and low-grade RoM sources at Mooinooi.

Going forward, Sylvania reports that, with the Lesedi secondary milling and flotation circuit expected to be commissioned next month, together with the implementation of initiatives to address both the water shortages at the Western operations and the current low RoM feed grades, it is expecting PGM ounce production to improve during the second half of the current financial year.

In addition, while the average PGMs and gold basket price during the period under review was about 30% lower than that earned in the first half of its 2021 financial year, Sylvania is “cautiously optimistic” about PGM prices this calendar year.

Based on market forecasts for palladium and rhodium to remain in deficit and demand forecast to increase with vehicle sales as the global chip shortage is resolved, Sylvania is expecting PGM prices to remain “healthy with potential modest upside” from current levels as the year progresses.