Possible special dividend on high-flying rhodium, palladium prices – Sylvania

Sylvania Platinum CEO Jaco Prinsloo

Sylvania Platinum Millsell operation.

Sylvania Platinum Doornbosch operation.

Sylvania Platinum Lannex operation.

7th September 2020

By: Martin Creamer

Creamer Media Editor


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JOHANNESBURG ( ­ – High-flying rhodium and palladium prices are giving rise to a possible special dividend being paid to the shareholders of cash-flush Sylvania Platinum, the London Aim-quoted company that recovers platinum group metals (PGMs) from chrome tailings.

The board of the company, which benefits from sizeable higher-than-usual 12.5% to 13% rhodium average in its prill split, has already recommended a cash dividend of $0.02 (1.6p) a share for payment on December 4, on the back of the company shrugging off the impact of the Covid-19 pandemic to deliver 130%-higher earnings before interest, taxes, depreciation and amortisation of $69.6-million for the 12 months to June 30.

Now, the company is looking to distributing a special windfall dividend early next year if prices remain as high as they are.

“We’ll evaluate the metal prices up to December and probably make an announcement in February in terms of the payment of the interim dividend, a windfall on palladium and rhodium prices specifically,” Sylvania CEO Jaco Prinsloo told Mining Weekly.

Sylvania paid a maiden dividend of 0.35 p a share in the financial year (FY) 2018, more than doubled it to 0.78p a share in FY 2019, and now the recommended double-plus 1.6p a share for FY 2020.

Sylvania Dump Operations has exclusive rights to reprocess mine arisings and tailings dumps at current host mines and runs six chrome beneficiation and PGM processing plants on the eastern and western limbs of the Bushveld Igneous Complex, which treat a combination of current and historical chrome tailings at host-mine sites.

The chromite concentrate produced is returned to the host mine at nominal cost, while PGMs in concentrate are recovered for Sylvania’s benefit and sold to smelters.

The current operating model ensures low cost operations at $500/oz to $600/oz and as at June 30, the company had cash of $55.9-million with no debt and no pipeline financing.

In the 12 months to June 30, the operations came within 4% of record production with output of 69 026 four-element PGM ounces.

Net revenue soared 62% to $114.1-million, net profit by 125% to $41-million and basic earnings a share by 130% to $0.1462 a share.

Owing to current Covid-19 uncertainty, formal guidance has been suspended, but production of 75 000 oz is estimated for FY 2021.

Targeted before Covid hit for FY 2020 was 78 000 oz to 80 000 oz but the impact of poor performing chrome operations constrains fresh resources for a company that treats a combination of current and historical chrome tailings at host-mine sites.

The outbreak of Covid resulted in a 10 000 oz loss in FY 2020, when water constraints at the operations, particularly the western operations of Millsel, Mooinooi and Lesedi, continued to present some challenges. Research into the reduction in water losses and consumption, as well as alternative measures to supplement water supply to operations, yielding very positive results in the six months to June 30.

The depressed chrome market and associated retrenchments at the host mine resulted in production cuts and a non-cash impairment of $9.5-million on the Aurora exploration project was charged as the carrying value exceeds the fair value based on current exploration data.

The group continues to generate sufficient cash reserves to fund capital expansion and process optimisation projects. The Mooinooi optimisation project incorporating proprietary processing modifications is on schedule to commission during the first half of FY 2021, with projects at Millsell, Doornbosch and Tweefontein successfully commissioned during the year.

The new Lannex mill, as part of the Lannex plant life extension project, was completed during the year, and the new secondary milling and flotation module at Lesedi is scheduled to commission during the first half of FY 2022.

Potential opencast mining material from host mines is being evaluated as alternative feed sources to substitute some of the lost underground run-of-mine production and progressive research and development of the new chrome/coal pelletising joint operation project is advancing.

Formal review processes are been initiated to explore the most suitable execution strategies for both Volspruit and Northern Limb exploration assets for either potential development or sale.

Edited by Creamer Media Reporter



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