SYLVANIA Platinum forecast improved platinum group metals (PGM) production in the second half of its 2022 financial year following water supply disruption and lower than anticipated feed at its Western operations in the six months ended December 31.
Sylvania is South Africa’s largest miner of current and historical chrome deposits extracting PGMs by agreement with mine owners. Production in the first half of the year from its Sylvania Dump Operations (SDO) business totalled 32,376 PGM ounces compared to 36,335 oz for corresponding six month period in the previous financial year.
The company consequently adjusted annual PGM production downwards to 66,000 to 68,000 oz.
SDO’s Western operations at Lesedi were heavily affected by water shortages. Jaco Prinsloo, CEO of Sylvania Platinum said in comments to the firm’s interim results today that second half production would respond to an improved water supply.
Similarly, feed problems at Mooinooi – also in SDO’s Western operations – were being addressed with the host mine looking at alternative options.
Despite these problems, strong PGM pricing and an improvement in the firm’s calendar year-end cash position – $110m compared to $67.1m at end-December 2020 – were sufficient grounds for the approval of a second successive year-end windfall dividend, as it suggested it might in September. This is in addition to the base year-end dividend.
The outcome for shareholders is a four pence per share total dividend for the calendar year and a 2.25p/share windfall payment which will be made in April. Commenting on the payout, Prinsloo said the strong PGM basket price generated sufficient cash to fund expansion and return value to shareholders.
In addition, Sylvania Platinum would press on with a share buyback programme. It had repurchased about 1.87 million shares from employees during the six month period. These shares would be now cancelled.
Sylvania received a 30% lower PGM basket price of $2,966 per oz compared to $3,184/oz in the previous financial year. However, Prinsloo said he remained “cautiously optimistic” on the outlook. Palladium and rhodium would remain in deficit as vehicle demand recovered from a semi-conductor chip shortage in the second half of calendar 2021.
“We are expecting PGM prices to remain healthy with potential modest upside from current levels as the year progresses,” said Prinsloo.
“While electric vehicle sales have increased sharply … PGM consumption in ICE (internal combustion engine) vehicles is expected to remain robust for the short to medium term, based on the balance of market fundamentals,” he said.
Shares in Sylvania were about 7% weaker in late afternoon London trade. On a 12 month basis the stock is down about 20%.
