After a challenging second fiscal quarter, Aim-listed Sylvania Platinum’s Sylvania Dump Operations (SDO) performed “significantly better” and delivered 16 256 oz of platinum group metals (PGMs) – a 9% quarter-on-quarter increase – in the quarter ended March 31.

The increased production was owing to a combination of a 7% improvement in PGM feed tons and a 3% improvement in recovery efficiencies, while the PGM feed grades were similar to the previous period, the company said in a statement issued on Monday.

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.

With the increase in production and gross basket price, as well as the decrease in cash costs, the company generated positive cash flows, which enables the company to continue internally funding 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 is forecasting output of about 21 800 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, there were still intermittent shortages that continued to disrupt production during the period.

Further, power outages and load-shedding at various SDO operations resulted in unplanned downtimes 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.

Production guidance is revised to 72 000 oz for the 2019 financial year, which would mean that Sylvania attains record production in the last quarter, McConnachie added.

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

With the second milling and flotation (MF2) circuit at Mooinooi now added, grade improvement at Doornbosch and more consistent production at Lesedi, the company believes this should be achievable.

Additional new water boreholes, an additional storage dam and water supply line were commissioned during March and early-April to improve running time going forward, and Doornbosch starting a new million-ton tailings dam during the fourth quarter and current arisings from Doornbosch host mine are expected to return to normal after repairs and improvements to their circuits, were identified as some of the opportunities for Sylvania going forward.

Additionally, Lesedi’s spiral section is progressing well and remains on track for commissioning late in the fourth quarter.

OPERATIONAL FOCUS AREAS

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

Measures to mitigate the impact, such as additional boreholes and 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 since been running well, with limited downtime, the company said.

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

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

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

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

Optimisation of the enhanced process circuit modifications that use improved fine screening technology needed for more efficient upgrading of PGMs at Doornbosch, Millsell and Tweefontein, were commissioned during the previous quarter and would help improve PGM feed grades and ounce production, going forward.

FINANCIAL OVERVIEW

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

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

Operating costs increased by 6% in rand terms to R136.3-million, compared with the R129.1-million in the second quarter, mainly owing to the increase in electricity costs following a rebate received from the host mine in the previous quarter and planned transport costs in the East to transport dump material to the Lannex operation.

General and administrative costs are incurred in dollars, pounds and rands. These costs decreased by 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 by 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 by 55% from $5.3-million to $8.2-million for the third quarter.