Quarterly Report: 30 June 2023

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27 July 2023

Sylvania Platinum Limited ("Sylvania", the "Company" or the "Group")

Fourth Quarter Report to 30 June 2023

Sylvania (AIM: SLP), the platinum group metals ("PGM") producer and developer with assets in South Africa, announces its results for the quarter ended 30 June 2023 ("Q4" or the "quarter"). Unless otherwise stated, the consolidated financial information contained in this report is presented in United States Dollars ("USD" or "$").

Highlights

• Sylvania Dump Operations ("SDO") produced 19,072 4E (24,383 6E) PGM ounces in Q4 (Q3: 17,926 4E (22,884 6E) PGM ounces);
• SDO produced 75,469 4E (95,965 6E) PGM ounces for FY2023 (FY2022: 67,053 4E PGM ounces; 85,659 6E PGM ounces)
• Exceeded production forecast for the year, which had previously been increased from 72,000 to 74,000 4E PGM ounces;
• Paid first interim dividend of 3 pence per Ordinary Share on 6 April 2023;
• SDO recorded $24.4 million net revenue for the quarter (Q3: $26.5 million);
• Group EBITDA of $7.8 million (Q3: $9.8 million);
• Group cash balance of $125.0 million as at 30 June 2023 (Q3: $144.2 million), the reduction primarily due to periodic tax payments of $13.7 million, dividend payments of $9.9 million and share buybacks of $3.6 million during the quarter;
• Doornbosch achieved 11-yearsLost-Time Injury ("LTI") free during June 2023;
• Successful commissioning of Tweefontein MF2 improves metal recoveries;
• Optimisation of blending improved results, especially at the Eastern operations; and
• Pilot-scalework on Pelletizer project completed, the Company is currently engaging potential industry partners to assess the commercial viability of the technology.

Outlook

• Re-miningof Dam 6A at the Mooinooi Plant has commenced with the focus on optimising the blend to ensure the planned grade profile is achieved;
• The commissioning of the Lannex MF2 flotation circuit is expected to commence in Q1 FY2024, which will further improve PGM recovery efficiencies;
• Continuous operational performance improvements relating to the optimisation of feed sources, throughput, recoveries, and cost saving initiatives implemented;
• The updated Mineral Resource Estimate ("MRE") at Volspruit is expected to be completed during Q1 FY2024, and the Preliminary Economic Assessment ("PEA") for the entire project is expected during Q3 FY2024; and
• The Group maintains strong cash reserves to allow funding of expansion and process optimisation capital and upgrading of the Group's exploration and evaluation assets with the potential to return value to shareholders.

Commenting on the Q4 results, Sylvania's CEO, Jaco Prinsloo said:

"I am very pleased with the strong finish to the financial year where the SDO achieved 19,072 ounces for the quarter. This performance was achieved on the back of a solid production effort from all operations, with all plants exceeding production throughput targets, as well as the contribution of the Tweefontein MF2 circuit that also added to our performance.

"The 18% lower PGM basket price received during the quarter impacted both the 4E revenue as well as the sales adjustment for the quarter. Consequently, revenues and profits were lower than in Q3, but still resulted in a strong cash position after the payment of taxes, first interim dividends, and share buybacks during the period.

"On the cost front, SDO cash costs increased 1% in rand and decreased 4% in dollar terms, benefitting from the higher ounces produced and weaker exchange rate, but operations are still navigating higher global cost inflation impacts and thus operating cost focus remains a priority.

"Despite the challenging macro environment, I am pleased with the significantly improved production performance of the SDO for Q4 which resulted in the Company achieving PGM production of 75,469 ounces for FY2023, exceeding our increased guidance for the year."

Disclaimer

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse regulation (EU) no.596/2014 as amended by the Market Abuse (Amendment) (EU Exit) Regulations 2019.

For the purposes of MAR and Article 2 of Commission Implementing Regulation (EU) 2016/1055, this announcement isbeing made on behalf of the Company by Jaco Prinsloo.

		USD														ZAR
							Unit		Unaudited		Unit
Q3 FY2023		Q4 FY2023		% Change									% Change		Q4 FY2023		Q3 FY2023
										Production
575,973		702,236		22%			T			Plant Feed		T		22%			702,236		575,973
1.92		1.81		-6%			g/t			Feed Head Grade		g/t		-6%			1.81		1.92
322,366		359,658		12%			T			PGM Plant Feed Tons		T		12%			359,658		322,366
2.98		2.89		-3%			g/t			PGM Plant Feed Grade		g/t		-3%			2.98		2.89
55.58%		57.01%		3%			%			PGM Plant Recovery1		%		3%			57.01%		55.58%
17,926		19,072		6%			Oz			Total 4E PGMs		Oz		6%			19,072		17,926
22,884		24,383		7%			Oz			Total 6E PGMs		Oz		7%			24,383		22,884
1,932		1,581		-18%			$/oz			4E Gross basket price2		R/oz		-14%			29,524		34,305
										Financials3
25,034		21,826		-13%			$'000			Revenue (4E)		R'000		-8%			407,707		444,488
3,193		3,454		8%			$'000			Revenue (by-products including		R'000		14%			64,526		56,681
						base metals)
(1,717)		(859)		-50%			$'000			Sales adjustments		R'000		-47%			(16,056)		(30,486)
26,510		24,421		-8%			$'000			Net revenue		R'000		-3%			456,177		470,683
12,337		12,577		2%			$'000			Direct operating costs		R'000		7%			234,945		219,045
3,404		2,939		-18%			$'000			Indirect operating costs		R'000		-9%			54,899		60,434
733		701		-4%			$'000			General and administrative costs		R'000		1%			13,095		13,018
9,784		7,806		-20%			$'000			Group EBITDA		R'000		-16%			145,816		173,764
1,581		1,784		13%			$'000			Net Interest		R'000		19%			33,325		28,079
6,112		3,136		-49%			$'000			Net profit		R'000		-46%			58,580		108,549
1,864		6,185		232%			$'000			Capital Expenditure		R'000		249%			115,537		33,106
144,182		124,983		-13%			$'000			Cash Balance		R'000		-8%			2,360,929		2,567,881
							R/$			Ave R/$ rate		R/$		5%			18.68		17.76
							R/$			Spot R/$ rate		R/$		6%			18.89		17.81
										Unit Cost/Efficiencies
688		660		-4%			$/oz			SDO Cash Cost Per 4E PGM oz4		R/oz		1%			12,319		12,219
539		516		-4%			$/oz			SDO Cash Cost Per 6E PGM oz4		R/oz		1%			9,636		9,572
843		824		-2%			$/oz			Group Cash Cost Per 4E PGM oz4		R/oz		3%			15,392		14,972
660		645		-2%			$/oz			Group Cash Cost Per 6E PGM oz4		R/oz		3%			12,049		11,722
932		881		-5%			$/oz			All-in sustaining cost (4E)		R/oz		-1%			16,446		16,548
1,007		1,159		15%			$/oz			All-in cost (4E)		R/oz		21%			21,642		17,883

The Sylvania cash generating subsidiaries are incorporated in South Africa with the functional currency of these operations being ZAR. Revenues from the sale of PGMs are incurred in USD and then converted into ZAR. The Group's reporting currency is USD as the parent company is incorporated in Bermuda. Corporate and general and administration costs are incurred in USD, GBP and ZAR.

1. PGM plant recovery is calculated on the production ounces that include the work-in-progress ounces.
2. The gross basket price in the table is the June 2023 gross 4E basket used for revenue recognition of ounces delivered in Q4 FY2023, before penalties/smelting costs and applying the contractual payability.
3. Revenue (6E) for Q4, before adjustments is $25.1 million (6E pill split is Pt 52%, Pd 17%, Rh 9%, Au 0%, Ru 17%, Ir 5%). Revenue excludes profit/loss on foreign exchange.
4. The cash costs include direct operating costs and exclude indirect cost for example royalty tax and Employee Dividend Entitlement Plan ("EDEP") payments.

A. OPERATIONAL OVERVIEW

Health, safety and environment

The Company is pleased to report that no significant occupational health or environmental incidents occurred during the quarter. The Doornbosch operation achieved 11 years LTI-free on 26 June 2023, which is a remarkable achievement by industry and global standards, and management are exceptionally proud of the Doornbosch team. Lannex achieved three years LTI free during the period and Millsell and Tweefontein are now both LTI-free for more than a year.

Operational performance

The SDO delivered 19,072 4E PGM ounces for the quarter. This 6% improvement in PGM ounces was enabled by a 12% improvement in PGM feed tons and 3% improvement in PGM recoveries, while the plant feed head grade decreased 6% quarter-on-quarter.

The Tweefontein MF2 circuit has been optimised following commissioning in Q2 FY2023 and continues to contribute to improved recoveries. The commissioning of the Lannex MF2 flotation circuit is expected to commence in Q1 FY2024 with the fine grinding circuit to commence towards the end of Q2 FY2024. Progressive improvement in recoveries is expected at Lannex from Q2 FY2024.

Load curtailment continued to impact the performance of the Lesedi operation contributing to 221 hours downtime during the first two months of the quarter, but fortunately no other operations were materially affected. The procurement, installation and commissioning of the back-up generator for Lesedi is expected to be complete by the end of Q1 FY2024.

SDO operating cash costs per 4E PGM ounce increased 1% in rand terms and decreased 4% in dollar terms to ZAR12,319/ounce and $660/ounce (Q3: ZAR12,219/ounce and $688/ounce) respectively. The average ZAR:USD exchange rate depreciated by 5% during the quarter.

The Group incurred capital expenditure of ZAR115.5 million ($6.2 million), in line with planned capital project schedules. The main contributors were ZAR25.6 million ($1.4 million) spent on Lannex MF2, ZAR24.3 million ($1.3 million) on various Tailings Storage Facilities, and ZAR3.1 million ($0.17 million) on exploration.

Operational focus areas

Overall operational performance has been excellent with production guidance exceeded for the quarter and for the financial year. Management continues to focus on optimisation of feed sources, blending strategy and reagent regimes to further enhance performance. ROM grades received from the host mine remain on target and collaboration is ongoing regarding further improvements in this area.

Water consumption at the Lesedi re-mining operations and the re-mining operation of Dam 6A at the Mooinooi Plant that commenced during the quarter remains a focus area, as well as optimal blending to ensure the planned grade profile is achieved.

Focus also remains on final PGM concentrate quality through optimisation of mass pull, concentrate grade and metal recoveries to contribute positively towards the revenue stream of the Group.

Operational maintenance has improved resulting in higher equipment availabilities and throughput for the quarter, Roll- out of the maintenance system is ongoing.

The decreasing metal prices and resultant impact on margins have reinforced the importance of managing operating costs and prudent capital spend. Operating costs continue to be reviewed on a regular basis.

Operational opportunities

Continuous operational performance improvements relating to the optimisation of feed sources, throughput, recoveries and cost saving initiatives have been identified and are achievable. This includes test work on optimising the reagent regimes on all operations.

Construction of the Lannex MF2 Plant is on target to commence commissioning in the latter part of Q1 FY2024, with commissioning of the fine grinding circuit to follow during Q2 FY2024.

The Company's Pelletizer project, developed in partnership with a 'binding technology' player, has progressed well. Pilot-scale work has been completed and potential industry partners are being engaged to assess the commercial viability of the technology.

B. FINANCIAL OVERVIEW

Financial performance

Revenue (4E) for the quarter decreased by 13% to $21.8 million (Q3: $25.0 million) impacted by the 18% decrease in the basket price recorded in June and applied to calculate revenue for ounces produced and delivered in the quarter. These deliveries are invoiced in the following quarter and revenue will be adjusted in the month of invoice. The average 4E gross basket price for the quarter was $1,581/ounce against $1,932/ounce in Q3, impacted mainly by the drop in rhodium and palladium prices.

Net revenue for the quarter, which includes base metals and by-products and the quarter-on-quarter sales adjustment, was $24.4 million (Q3: $26.5 million). Net revenue also includes attributable revenue received for ounces produced from material processed from a third-party on a trial basis.

Group cash costs per 4E PGM ounce increased by 3% in rand terms from ZAR14,972/ounce to ZAR15,392/ounce. A 2% decrease in dollar terms from $843/ounce in the previous quarter to $824/ounce was due to the 5% depreciation in ZAR/USD average exchange rate quarter on quarter.

General and administrative costs decreased from $0.73 million to $0.70 million. These costs are incurred in USD, GBP and ZAR and are impacted by the exchange rate fluctuations over the reporting period.

Group EBITDA for the quarter was $7.8 million (Q3: $9.8 million) and net profit was $3.1 million (Q3: $6.1 million), the decrease was primarily a result of the lower basket price and higher costs.

The Group cash balance for the quarter was $125.0 million (Q3: $144.2 million). Dividend withholding tax of $1.3 million, provisional income tax of $9.9 million and mineral royalty tax of $2.5 million were paid to the South African Revenue Services during Q4. The Company paid its first cash interim dividend of 3 pence per Ordinary Share amounting to $9.9 million on 6 April 2023 to all shareholders on the register at the close of business on 3 March 2023. A further $3.6 million was spent on the share buyback programme during the quarter. The Group spent $6.2 million on capital during Q4 (Q3: $1.9 million), comprising of $0.2 million on exploration projects and $6.0 million on improvement and stay in business capital. The increase in capital spend is mainly due to the work on tailings dams at various plants as well as the MF2 project at Lannex and was in line with planned capital project schedules.

Cash generated from operations before working capital movement was $7.8 million. Net changes in working capital amounted to $4.1 million, which is mainly due to the decrease in trade debtors of $4.9 million as a result of lower commodity prices in Q4.

The impact of exchange rate fluctuations on cash held at the end of Q4 FY2023 was ZAR37.6 million ($2 million) loss as a result of the 6.1% weakening of the ZAR to USD at 30 June 2023.

C. MINERAL ASSET DEVELOPMENT

The Group holds approved and executed Mining Rights for various mineral asset projects on the Northern Limb of the Bushveld Igneous Complex located in South Africa which are currently in the exploration and optimisation stage. Detailed studies are underway on both the Volspruit and Far Northern Limb PGM project areas to determine how best to optimise the respective projects. Continued progress has been made in understanding the approach of unlocking the mineral potential on these projects to generate value for shareholders.