Sylvania posts leap in net profit for first quarter as PGM production revives

SYLVANIA Resources said its operations had been largely restored following Covid-19 lockdowns in South Africa.

The company reported first quarter production of 17,972 platinum group metal (PGM) ounces, lower than first quarter ounces last year but an improvement on the 9,055 PGM oz registered in the fourth quarter of its 2020 financial year.

This puts the company on course for its previously guided full year production target of about 70,000 PGM oz.

Pricing for palladium and rhodium have elevated the overall rand-denominated price deck and laid the foundation for solid earnings before interest, tax, depreciation and amortisation (EBITDA) of $29.7m for the first quarter.

The resilience provided by higher pricing is evident considering EBITDA in the first quarter in Sylvania’s 2020 financial year, at a higher production of 20,797 oz was $19.2m.

Net profit for the quarter totalled $21m (Q4: $2.2m) owing to the increased production in the quarter.

Nonetheless, the company said that an increase in Covid-19 cases in South Africa raised the risk of a higher level of lockdown being implemented by Government. President Cyril Ramaphosa was quoted by BusinessLive today as saying there were no plans to increase the lockdown level so far.

“Our management and technical teams continue to explore further opportunities to increase both feed grades and recovery efficiencies across operations that could add value in the near term and also continue to engage with various consultants to evaluate the potential of the longer-term mineral asset projects,” said Jaco Prinsloo, CEO of Sylvania.

“The company continues to enjoy the benefits of the strong PGM price environment and the 31% increase in gross basket price from Q4 has assisted in boosting our financial performance and cash reserves,” he said.

Sylvania reported a cash balance of $60.9m at the close of the first quarter compared to $55.9m reported at the end of the firm’s financial year on June 30.

The cash balance at the end of the first quarter last year was $26.6m partly demonstrating the impact of higher PGM pricing.

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