Sylvania Platinum: (SLP.L, AIM All-Share, Market Cap ¬£105m, 37p, 2.6% of JIC Portfolio and 0.0 of JIC Top 10)
Q1 update for the quarter ending 30th¬†September.
Conclusion: Looks like a strong quarter from Sylvania with strong recoveries. Forecasts put the shares on a prospective June 2020 pe ratio of 5.3x (44% growth in earnings) and a prospective dividend yield of 4.8%. When I bought the position in September, I ranked the stock as High Risk/High Return, suggesting for me a 2.5% position. I‚Äôm happy with that judgement. It has to be High Risk because of the sensitivity of its cash flow and profits to the platinum price. The chart below shows the platinum price over the last 17 years; a strong move up toward historic highs would more than justify my High Return rating. Happy Holder!¬†
Net revenue increased by 54% to $31.2m q-o-q.
Group EBITDA more than doubled q-o-q to $19.2m.
20,797 $E PGM (platinum group metals) ounces were produced, slightly down on q4‚Äôs 21,789.
PGM recoveries improved by 11% to 59.46%.
Group cash balance on 30th¬†September was $26.6m, up from $21.8m on 30th¬†June.
Cash generated was $19.3m, although net changes in working capital reduced this by $9.7m.
Commenting on the Q1 results, Sylvania’s CEO Terry McConnachie said:
“I am pleased to say that the SDO achieved another solid production performance in the first quarter of our financial year towards our annual guidance of 74,000 to 76,000 ounces. Recovery efficiencies improved well to 59.46% and are¬†attributable to a combination of the Mooinooi MF2 circuit running for a full quarter, improved feed stability and circuit configuration at Lesedi and higher flotation mass pull philosophy at some of the operations.¬†
¬†This recovery figure will taper off to an expected rate of around 52% going forward due to a lower flotation mass pull which will be required to address concentrate quality and¬†payability.
¬†The Company also undertook a share buyback programme during the quarter whereby a total of 4.2 million shares were purchased from both the market and employees so as to fulfil the current shortfall in shares held in Treasury needed to cover the bonus share awards and options, which vest over the next five years.¬†
¬†We continue to maintain a good cash holding due to Q4′s pipeline and a healthy basket price. However, we are ever mindful of the payment of tax on revenue which increases in line with our earnings and because of this, we will continue with tight cost controls to ensure the Company can meet its tax obligations as well as continue to internally fund further capital expenditure and the payment of dividends.” ¬†