Quarterly Report: 30 September 2022

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31 October 2022

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

First Quarter Report to 30 September 2022

Sylvania (AIM: SLP), the platinum group metals ("PGM") producer and developer with assets in South Africa, announces its results for the quarter ended 30 September 2022 ("Q1" 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 19,194 4E PGM ounces in Q1 (Q4 FY2022: 18,837 ounces);
• SDO recorded $42.9 million net revenue for the quarter (Q4 FY2022: $34.9 million);
• Group EBITDA of $26.4 million (Q4 FY2022: $16.8 million), with the benefit of increased production and the higher basket price realised in the quarter;
• Group cash balance of $138.6 million (Q4 FY2022: $121.3 million);
• Zero Lost-time Injury ("LTI") across all SDO;
• Improved performance at the Lesedi operation with the MF2 plant fully commissioned and optimisation of the fine grinding MF2 unit and flotation circuit underway;
• An updated Mineral Resource Estimate ("MRE") and Scoping Study on the Volspruit North Body was produced and based on these reports the Company has taken the decision to progress to a Pre-Feasibility Study ("PFS") during the year; and
• An MRE is complete for the La Pucella study area and a concept-level mining study, using the Mineral Resource, will be completed later in Q2 to provide the Preliminary Economic Assessment ("PEA") for the project area.

Outlook

• Tweefontein MF2 is scheduled to commence commissioning in Q2 FY2023 and is expected to start contributing to additional ounces from Q3 FY2023;
• The Lannex MF2 project is under construction and scheduled for commissioning towards the end of Q4 FY2023;
• ROM PGM feed grade from the host mine at Mooinooi is being managed to ensure a consistent grade is maintained, with focus on continued improvement of recoveries through stability and blending opportunities;
• Focus remains on operational cost controls, which have been managed well during the quarter, and reagent optimisation continues at all SDO to explore improved efficiencies; and
• The Group maintains strong cash reserves to allow funding of capital expansion and process optimisation projects, upgrading the Group's exploration and evaluation assets and to return value to shareholders.

Commenting on the Q1 results, Sylvania's CEO, Jaco Prinsloo said:

"I am pleased to report that the first quarter of the FY2023 year has yielded strong results in line with our expectations with 19,194 4E PGM ounces achieved by the SDO, which is our best quarterly production since the COVID-lockdowns in early 2020. This increase in production ounces and the 2% higher PGM basket price recorded in the quarter, resulted in stronger profits.

"Higher global cost inflation remains an area of focus, however, the optimisation of reagents to explore improved efficiencies at all SDO is ongoing. In the quarter, it was encouraging to see performance improve at the Lesedi operation following the commissioning of the MF2 plant. At Mooinooi, the management team continue to work diligently with the host mine to explore blending opportunities as a means of stabilising recoveries and improving the feed grade and this has already yielded positive results during recent quarters.

"The Company remains in a strong cash position allowing it to fund carefully selected growth opportunities and return value to shareholders.

"Post quarter end the Company released results of its extensive optimisation studies at the Northern Limb Mineral Assets including detailed Mineral Resource Estimates and a Scoping Study. All results demonstrate attractive projects with significant upside potential across our entire Northern Limb asset portfolio. While the Company continues to focus on delivering value and growing its existing cash generating dump reprocessing operations, the optimisation of value from the exploration assets remains one of the important pillars of Sylvania Platinum's growth strategy and a future value driver."

		USD														ZAR
							Unit		Unaudited		Unit
Q4 FY2022		Q1 FY2023		% Change									% Change		Q1 FY2023		Q4 FY2022
										Production
647,249		691,953		7%			T			Plant Feed		T		7%			691,953		647,249
2.04		1.89		-7%			g/t			Feed Head Grade		g/t		-7%			1.89		2.04
331,578		349,384		5%			T			PGM Plant Feed Tons		T		5%			349,384		331,578
3.30		3.15		-5%			g/t			PGM Plant Feed Grade		g/t		-5%			3.15		3.30
53.49%		54.26%		1%			%			PGM Plant Recovery		%		1%			54.26%		53.49%
18,837		19,194		2%			Oz			Total 4E PGMs		Oz		2%			19,194		18,837
23,751		24,067		1%			Oz			Total 6E PGMs		Oz		1%			24,067		23,751
2,589		2,650		2%			$/oz			4E Gross basket price1		R/oz		12%			45,161		40,361
										Financials2
34,397		36,905		7%			$'000			Revenue (4E)		R'000		17%			628,830		536,161
3,232		3,382		5%			$'000			Revenue (by-products including		R'000		14%			57,626		50,381
						base metals)
-2,683		2,634		198%			$'000			Sales adjustments		R'000		207%			44,879		-41,825
34,946		42,921		23%			$'000			Net revenue		R'000		34%			731,335		544,717
12,175		11,789		-3%			$'000			Direct operating costs		R'000		6%			200,876		189,782
3,600		4,032		12%			$'000			Indirect operating costs		R'000		22%			68,703		56,107
758		690		-9%			$'000			General and administrative costs		R'000		-1%			11,756		11,816
16,787		26,423		57%			$'000			Group EBITDA4		R'000		72%			450,242		261,678
499		830		66%			$'000			Net Interest		R'000		82%			14,147		7,781
13,817		18,621		35%			$'000			Net profit4		R'000		47%			317,303		215,384
4,350		2,554		-41%			$'000			Capital Expenditure		R'000		-36%			43,520		67,810
121,268		138,629		14%			$'000			Cash Balance		R'000		26%			2,509,178		1,985,958
							R/$			Ave R/$ rate		R/$		9%			17.04		15.59
							R/$			Spot R/$ rate		R/$		11%			18.10		16.38
										Unit Cost/Efficiencies
646		614		-5%			$/oz			SDO Cash Cost Per 4E PGM oz3		R/oz		4%			10,465		10,075
513		490		-4%			$/oz			SDO Cash Cost Per 6E PGM oz3		R/oz		4%			8,347		7,990
794		737		-7%			$/oz			Group Cash Cost Per 4E PGM oz3		R/oz		1%			12,563		12,390
630		588		-7%			$/oz			Group Cash Cost Per 6E PGM oz3		R/oz		2%			10,019		9,826
911		873		-4%			$/oz			All-in sustaining cost (4E)		R/oz		5%			14,876		14,205
1,108		987		-11%			$/oz			All-in cost (4E)		R/oz		-3%			16,823		17,269

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. The gross basket price in the table is the September 2022 gross 4E basket used for revenue recognition of ounces delivered in Q1 FY2023, before penalties/smelting costs and applying the contractual payability.
2. Revenue (6E) for Q1, before adjustments is $40.1 million (6E prill split is Pt 53%, Pd 18%, Rh 9%, Au 0%, Ru 16%, Ir 4%). Revenue excludes profit/loss on foreign exchange.
3. The cash costs include direct operating costs and exclude indirect cost for example royalty tax and EDEP payments.
4. The net profit and Group EBITDA excludes the profit on the sale of Grasvally Chrome Mine (≈$2.1 million) previously held as an asset held for sale.

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 and that all plants were LTI-free for the period. The Doornbosch operation remains at 10 years LTI-free, Lesedi and Lannex have exceeded two-yearsLTI-free, and Mooinooi and Tweefontein have each exceeded one-yearLTI-free. In addition, the combined Eastern operations have achieved six months all-injury free at the end of September, which is a truly commendable achievement.

Operational performance

The SDO delivered 19,194 4E PGM ounces for the quarter, a 2% increase quarter-on-quarter. The overall SDO PGM recovery has increased by 1.4%, which together with a 5% increase in throughput, resulted in the increased ounces. ROM feed from the host mine at Mooinooi has increased by 18%, while feed grades have increased and stabilised resulting in improved performance for the period. The Lesedi MF2 plant has been fully commissioned with optimisation of the fine grinding and flotation circuit resulting in improved performance, which, together with improved feed stability and flotation performance at Mooinooi, has contributed towards the overall improved recovery performance. Focus has remained on increasing runtime and improving operational stability and has also contributed to improved efficiencies at all sites.

SDO operating cash costs per 4E PGM ounce increased 4% in rand terms and decreased 5% in dollar terms quarter- on-quarter to ZAR10,465/ounce and $614/ounce (Q4 FY2022: ZAR10,075/ounce and $646/ounce) respectively. The higher ounce production had a positive influence on unit costs while reagent price increases, transport costs and fuel price increases continued to impact on operating costs. The average ZAR:USD exchange rate depreciated by 9% during the quarter.

The Group incurred capital expenditure of ZAR43.5 million ($2.6 million), in line with planned capital project schedules.

Operational focus areas

The development of a new formal planned maintenance system has been successfully implemented at Millsell and anticipated to be rolled out to selected priority operations during FY2023. This is expected to improve plant availabilities and runtime, resulting in improved process stability and increased efficiencies.

Focus and communication with the host mine on the preferred source of ROM and associated grades remains a priority for the Mooinooi operation and is producing positive results. The declining feed grades of the surface sources are being managed to ensure a consistent grade is maintained, with focus on improving recoveries through stability and blending opportunities.

Significant focus continues to be placed on the operational aspects of the SDO tailings facilities by the operations teams, the engineer on record, relevant expert advisers, and associated service providers.

Operational opportunities

Continuous focus on improving availabilities, runtime and associated stability has resulted in improved performance and further improvements are expected. Reagent optimisation continues at all SDO to explore improved efficiencies.

Tweefontein MF2 is scheduled for commissioning in Q2 and is expected to contribute to additional ounces reaching stability during early Q3. The Lannex MF2 project is under construction and scheduled for commissioning towards the end of Q4 FY2023.

Focus remains on the control of operational costs, which have been well controlled during the period.

Impact of COVID-19 and South African Government imposed lockdown regulations

The Company reported one active case of COVID-19 during the quarter with a total of 143 infections reported since the start of the pandemic. While all regulations have been lifted, Sylvania continues to encourage responsible behaviour amongst employees and will continue to monitor the situation and to implement measures for both the corporate office and operations to limit interaction and exposure where possible.

B. FINANCIAL OVERVIEW

Financial performance

Revenue (4E) for the quarter increased by 7% to $36.9 million (Q4 FY2022: $34.4 million) mainly on account of the increased ounces but also due to the 2% increase in the basket price recorded in September and applied to calculate revenue for ounces produced and delivered in the quarter but only invoiced in Q2 as well as the impact of the average USD to ZAR exchange rate changes. The average 4E gross basket price for the quarter was $2,650/ounce against $2,589/ounce in Q4 FY2022. Net revenue for the quarter, which includes base metals and by-products, and the quarter- on-quarter sales adjustment increased 23% to $42.9 million (Q4 FY2022: $34.9 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 during Q1 increased by 1% in rand terms from ZAR12,390/ounce to ZAR12,563/ounce and decreased 7% in dollar terms from $794/ounce in the previous quarter to $737/ounce as a result of the stronger dollar.

General and administrative costs decreased 9% quarter-on-quarter from $0.76 million to $0.69 million. These costs are incurred in USD, GBP and ZAR and are impacted by the exchange rate fluctuations over the reporting period.

Group EBITDA increased 57% from $16.8 million to $26.4 million and net profit increased from $13.8 million to $18.6 million, primarily as a result of the 2% increase in both ounces produced and the basket price received.

The Group cash balance increased 14% from $121.3 million to $138.6 million during the quarter. Cash generated from operations before working capital movements was $26.4 million with net changes in working capital amounting to $6.0 million, which is mainly due to the change in trade debtors and trade creditors. The increase in basket price and higher ounce production during Q1 resulted in a higher trade debtors balance quarter-on-quarter. Trade debtors arise from the concentrate delivered in the quarter but only paid for in the following quarter as per the concentrate off-take agreements.

Provisional payments for both royalty tax and income tax are payable in December 2022 in line with the South African tax authority timelines, at an anticipated rate of 7% for royalty tax on applicable ounces, and a rate of 27% for income tax. A cash dividend for FY2022 of 8 pence per Ordinary Share was declared and is payable on 2 December 2022 to all shareholders on the register at the close of business on 28 October 2022.

The Group spent $2.6 million on capital for the quarter mainly on the Project Echo MF2 modules at both Tweefontein and Lannex.

The impact of exchange rate fluctuations on cash held at the end of Q1 was a $3.3 million loss due to the spot ZAR to USD exchange rate depreciating by 11%.

C. MINERAL ASSET DEVELOPMENT

Volspruit Project

Post quarter end, the Company released an update to its Volspruit project, including an updated MRE and Scoping Study which focused solely on the Volspruit North Body, with the Volspruit South Body still to be completed during FY2023. The Scoping Study was produced on conservative assumptions and does not yet include a JORC compliant rhodium ("Rh") resource, although it does illustrate the project's promising potential based on conservative assumptions, particularly when considering the inclusion of potential Rh revenue and additional material from the South Body which could be treated through already capitalised infrastructure in the future. The Company has accordingly taken the decision to progress to a PFS during the year on the entire Volspruit asset.

Far Northern Limb Projects

The MRE using new geological interpretation and covering an estimated 12% of the deposit strike length, is complete for the La Pucella target area. A concept-level mining study, using the reported JORC compliant Mineral Resource, will be completed later in Q2 to provide the PEA for the La Pucella target area. Future studies are aimed at applying the new geological interpretation along the strike length to increase the Mineral Resource volume and improve analytical confidence to include Rh and base metals in the MRE that are currently at inferred level. The Exploration Results previously reported on the Hacra Project will be subject to a MRE and is anticipated to provide a maiden Mineral Resource early in the 2023 calendar year.