TIDMSLP
RNS Number : 7292V
Sylvania Platinum Limited
07 November 2017
Sylvania Platinum Limited
("Sylvania", "the Company" or "the Group")
AIM (SLP)
SYLVANIA ANNOUNCES THAT THE ACQUISITION OF PHOENIX PLATINUM IS
NOW UNCONDITIONAL
7 November 2017
INTRODUCTION
Sylvania Platinum Limited ("SLP"), the low-cost Platinum Group
Metal ("PGM") processor and developer, is pleased to announce that
the acquisition ("the Transaction") by Sylvania from Pan African
Resources Plc ("PAR") of 100% of the shares in and claims against
Phoenix Platinum Mining Proprietary Limited ("Phoenix Platinum") is
now unconditional.
This follows, amongst other conditions, the approval of the
Transaction by the South African Competition Authorities in
accordance with the Competition Act 1998.
As a result, the effective date of the implementation of the
Transaction was, 6 November 2017 when Sylvania took over control,
ownership and management of Phoenix Platinum.
PHOENIX PLATINUM OPERATIONS
Phoenix Platinum has an operational Chrome Tailings Retreatment
Plant and approximately 2.3 mt of tailings dump resources situated
in close proximity to Sylvania's Millsell and Mooinooi operations
in the western bushveld region. See below for further details of
Phoenix Platinum's operations.
TERMS OF THE ACQUISITION
The purchase price of R89 million ($6.3 million) was settled in
cash on the effective date from Sylvania's internal cash resources.
The SLP Group cash balance stands at approximately $11.2 million
following the payment for Phoenix Platinum.
Commenting on the Transaction, Sylvania's CEO Terry McConnachie
said:
"We believe that these assets provide an attractively priced
addition at an advantageous moment in the price cycle. Phoenix
Platinum's operations are similar in nature to Sylvania's current
retreatment of PGM-rich chrome tailings operations, which will
benefit from Sylvania's operational expertise. After extensive
engagement with Pan African Resources and completing a thorough
operational review, we are confident that we will be able to
realise value for our stakeholders by leveraging our successful
operating model.
Phoenix Platinum's operations are well positioned geographically
to our current operations which will assist us in increasing our
production and earnings profile going forward, allowing us to
effectively utilise our existing infrastructure and management team
to enhance this business. The outcome is a sensible commercial
transaction, which is beneficial for both parties.
Phoenix Platinum is a significant acquisition for Sylvania as we
look for growth opportunities, and, together with Project Echo (the
secondary milling and flotation program) will help contribute to
Sylvania's expansion over the coming years.
We look forward to welcoming the Phoenix Platinum employees and
beginning the process of integrating the operations into the
Sylvania Group."
RATIONALE FOR THE TRANSACTION
This Transaction is consistent with Sylvania's strategy of
growing its business in order to enhance and sustain its position
as the largest PGM producer from chrome tailings retreatment. The
addition of Phoenix Platinum's assets increases Sylvania's fully
operational chrome tailings processing complexes from six to seven,
after Steelpoort was successfully de-commissioned in June this
year. Phoenix Platinum is expected to increase annual PGM
production by approximately 8,500oz per year, but based on the
effective date of the transaction the attributable ounces from
Phoenix Platinum to Sylvania during FY2018 will be approximately
5,500oz, increasing total Sylvania production from 70,000oz to
75,500oz for the year.
The Transaction secures one of the most attractive remaining
operating PGM from chrome tailings dump opportunities in the
industry.
Immediate and medium term benefits from the Transaction, which
is estimated to reduce direct operating cost to a range of $500/oz
to $550/oz include:
-- Phoenix Platinum will form part of the existing Sylvania
operations with shared management and infrastructure thereby
reducing overall production costs;
-- Using Sylvania's proven operating model to reduce direct
operating costs at Phoenix Platinum;
-- Benefiting from new and improved PGM concentrate off-take
agreement concluded in December 2016, the benefits of which have
only been realised in recent months due to a long processing
pipeline;
-- Benefiting from improved PGM recoveries due to a combination
of the recently installed high-energy agitation cells at the
Phoenix Chrome Tailings Retreatment Plant ("CTRP") and flotation
mass-pull optimisation strategy; and
-- The utilisation of Phoenix Platinum's remaining unredeemed
capex allowances against future taxable income from Phoenix
Platinum's operations;
Future synergies from the Transaction estimated to reduce direct
operating cost to below $500/oz include:
-- Providing extensive flexibility in the use of Sylvania's
existing dump resources in the area;
-- Pooling Phoenix Platinum and Sylvania's existing adjacent
Mooinooi dump resources, thus providing further flexibility in
terms of increasing overall production capacity and extending the
life of operations;
-- Enabling the recovery of PGM ounces from additional Phoenix
Platinum resources otherwise sterilised, due to potential blending
with existing higher grade feed material from neighbouring
operations;
-- Improving plant feed grade and extending the life of Phoenix
Platinum's operations from future current arisings material, which
will accrue should Samancor Chrome resume the mining operation at
the Lesedi Host Mine over which Phoenix Platinum has the PGM rights
to;
-- Securing an independent, approved property for future tailings disposal; and
-- Project Echo could be extended to include Phoenix Platinum in
the future in order to apply the same processing methodology and
technology to deliver similar benefits as identified in SDO.
The Board of Sylvania believes that the purchase price of R89
million (including net working capital of approximately R27.8
million) is an attractive price for a tailings retreatment plant
capable of processing 30,000tpm tailings and 2.3mt of tailings dump
resources of 2.32g/t 4E PGEs.
BACKGROUND ON PHOENIX
Phoenix Platinum was acquired by PAR in 2009 and contained the
PGM rights to the Buffelsfontein, Kroondal and Elandskraal dumps.
In 2011, the construction of the CTRP commenced. The Phoenix
Platinum operation consists of a 30,000tpm CTRP which was
commissioned in November 2011 and reached full production in May
2012. The Phoenix CTRP is located in the North-West Province near
to Sylvania's Millsell and Mooinooi complexes.
Phoenix Platinum currently recovers PGM's from chrome tailings
dumps and dams through Mineral Rights Agreements pertaining to the
Kroondal and Elandskraal tailings dumps, and Buffelsfontein
Tailings Dams and potential future current arisings at the Lesedi
Mine, recently acquired by Samancor Chrome. As part of the
Transaction, Sylvania will acquire an independent property for
tailings disposal with associated regulatory approvals.
Phoenix Platinum currently has Chrome dump reserves of
approximately 2.3mt, containing 2.32g/t 4E PGEs and is estimated to
sustain current production levels for approximately seven and a
half years.
The information in the table below is extracted from Phoenix
Platinum's latest published provisional audited results for the
year ended 30 June 2017:
FY 30 June FY 30 June 2016
2017
------------------------- ------------- -----------------
Tonnes processed 283 067 248 981
------------------------- ------------- -----------------
PGE's sold (oz.) 8 709 8 339
------------------------- ------------- -----------------
R'million R'million
------------------------- ------------- -----------------
PGE Revenue 82.2 74.7
------------------------- ------------- -----------------
PGE Cost of Production (86.4) (74.1)
------------------------- ------------- -----------------
PGE Production $731/oz
unit cost ($/oz) $730/oz
------------------------- ------------- -----------------
Depreciation &
other costs* (17) (12.1)
------------------------- ------------- -----------------
Taxation 4.8 2.5
------------------------- ------------- -----------------
Net loss after
tax before impairment
charges (16.4) (9)
------------------------- ------------- -----------------
Impairment charges (100.9) -
------------------------- ------------- -----------------
*Excludes inter-company
charges
------------------------- ------------- -----------------
Net assets excluding
goodwill 89 181.1
------------------------- ------------- -----------------
As at 30 June 2017, Phoenix Platinum's published SAMREC
compliant resources and reserves are summarised as follows:
- PGE resources of 0.6Moz (2016: 0.6Moz)
- PGE reserves of 0.2Moz (2016: 0.2Moz)
CONCLUSION
Based on a detailed due diligence review of operational,
financial and legal compliance, Sylvania is confident that it will
be able to streamline Phoenix Platinum's operating costs and
operating efficiencies in line with existing Sylvania dump
operations, and that Phoenix will be cash-generative and earnings
enhancing transaction for the group.
CORPORATE INFORMATION
Registered and Sylvania Platinum Limited
postal address:
Clarendon House
2 Church Street
Hamilton HM 11
Bermuda
SA Operations postal PO Box 976
address:
Florida Hills, 1716
South Africa
Sylvania Website: www.sylvaniaplatinum.com
CONTACT DETAILS
For further information,
please contact:
Terence McConnachie (Chief
Executive Officer) +44 777 533 7175
Nominated Advisor and Broker
Liberum Capital Limited +44 (0) 20 3100 2000
Richard Crawley / Neil
Elliot
Communications
Alma PR Limited +44 (0) 77 8090 1979
Josh Royston / Helena Bogle
/ Hilary Buchanan
ABOUT SYLVANIA PLATINUM
Sylvania Platinum Limited (AIM:SLP) is a rapidly expanding
producer of the platinum group metals ("PGMs") platinum, palladium
and rhodium, with two distinct lines of business: the retreatment
of PGM-rich chrome tailings material from mines in the region and
processing methods for low-cost PGM extraction. All of the Group's
assets are situated in various locations across South Africa's
Bushveld Igneous Complex ("BIC"), which is the world's richest
source of PGMs.
This information is provided by RNS
The company news service from the London Stock Exchange
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