Sylvania Platinum Share Discussion Threads

[norsewebster] 02/2/2018 09:15

Good find and nice article.

[chimers] 02/2/2018 08:57

IC BARGAIN PORTFOLIO

1 of 10 share tips for the year.

Sylvania Platinum (SLP) is a fast-growing and low-cost South African producer and developer of platinum group metals (PGMs) platinum, palladium and rhodium, with two distinct lines of business: the re-treatment of PGM-rich chrome tailings material from mines in the North West Province; and the development of shallow mining operations and processing methods for low-cost PGM extraction.

The company’s dump operations comprise seven active PGM recovery plants that treat chrome tailings from surrounding chrome mines across the western and eastern limbs of the Bushveld Igneous Complex. The chrome tailings re-treatment plant is located at Kroondal on the western limb, and is managed by Aquarius Platinum Corporate Services. The operations are hugely profitable. Buoyed by a 17 per cent rise in production to 70,869 ounces of PGM, the fourth consecutive year of record output, the company’s dumping operations produced cash profits of $20m (£14.8m) at a margin of 40 per cent on revenues of $50.5m in the 12 months to end-June 2017.

Cash costs were half the gross basket price of $935 per PGM ounce achieved, enabling the company to generate $18.8m of cash from operations before movements in working capital. In turn, net cash on Sylvania’s balance sheet ballooned by over $8m to $14.8m in the 12-month period, and that’s after taking into account the planned investment in ramping up output from the company’s Millsell and Doombosch facilities. The aim of the investment there is to replace the output lost from its Steelport operation, which came to the end of its life last summer.

In addition, the company paid $6.3m a few months ago to acquire Phoenix Platinum Mining Proprietary, a PGM dump operation with an operational concentrator plant and 2.4m tonnes of tailings dump resources of a similar grade and recovery potential as Sylvania’s neighbouring Mooinooi dump operation. Due to the close proximity of Phoenix to Sylvania’s existing operations and similar process and business model, the company expects to generate savings from the combined operations. The acquisition, together with the expansion of output from Millsell and Doombosch, is expected to boost Sylvania’s production to 75,000 ounces of PGM in the coming year.

The other point worth noting in this week’s trading update was that the company’s cash profits increased from $9.2m to $10.4m for the six-month period to end-December 2017, buoyed by an average basket price of $1,057 per PGM ounce, up from $883 in the same period of 2016. Moreover, in the second quarter to end-December 2017, Sylvania invested $5.2m on capital expenditure and paid $6.3m for the Phoenix acquisition, but its cash balances only declined by $4.8m to $12.6m, highlighting its impressive cash generation. I expect a positive trading update when Sylvania announces its interim results on Monday, 26 February.

A glance at the charts for rhodium, palladium and platinum is revealing too: the PGMs increased in value by around 45 per cent, 30 per cent and 5 per cent, respectively, in the final three months of 2017. That can only be positive for Sylvania’s profits if these prices are sustained through 2018.

The point being that this is not in the price with the shares trading on a 46 per cent discount to its last reported NAV, and net funds equating to over a fifth of its market capitalisation of £41.5m. Strip out cash on the balance sheet, and operations that reported post-tax profits of £6.6m in the 2017 financial year are effectively being valued on five times net profits. That’s an incredibly harsh valuation for a business that has reported record output four years on the trot, and boasts a massive cash profit margin of around 40 per cent. Interestingly, the share price chart could be poised to make a sustainable move above last February’s high of 14.2p. Buy.

[chimers] 02/2/2018 08:55

Hey.....I'm good ...what can I say!!

[norsewebster] 02/2/2018 08:50

How did you guess that. Lol.

[chimers] 02/2/2018 07:24

Hey.....I'm good ...what can I say!!

[chimers] 02/2/2018 07:17

You will see significant rises over the coming days starting at 8 am TODAY!!

[kmann] 30/1/2018 15:43

Someone took a million at 14p, looks like a new buyer imo.

[redtrend] 30/1/2018 15:27

value hound - thanks for that, first time I've seen that quote.

I'm ignorant to the admin side of dividends, I'm not clear on why it would cost SLP money/ fees to disburse dividends out to the minor non-UK Australian shareholders.

On a positive note, they are taking steps to address the non-UK shareholders, which ultimately must be with dividends in mind. In August 2017 they commenced Share buyback programme for the legacy non-UK shareholders:

a) 4,156,982 shares in total with non-UK shareholders
b) 2,014,400 shares bought back as of last update, so nearly 50% completed.

[canigou2] 30/1/2018 10:18

Yes, pretty much as expected. Phoenix acquisition now paid for and more importantly contributing to production and revenues (as the renamed "Lesedi"). Project echo is in full swing. Next few quarters should now see increasing profits. Expect SLP to increase cash balances from here (again). Some news (this year?) on the dividend policy would be welcome. Any weakness in the share price is a buying opportunity IMHO. Well run and managed little company in this sector and largely overlooked. GLA.

[kmann] 30/1/2018 08:53

Good update considering the aquisition and capex increase, suggests revenues/profits will rise. The numbers work for me!

[value hound] 30/1/2018 08:10

Thanks Redtrend

Reasonable update today - and your projected cash figure wasn't far off.

Regarding the reasons for no dividend, this is what Shares Magazine had to say a year ago:

SYLVANIA PLATINUM’S DIVIDEND CONUNDRUM

HAVE YOU SEEN Sylvania Platinum’s (SLP:AIM) share price recently? It is up 75% year to date. Its core business is doing very well,generating lots of cash and profit is rising.

Costs are coming down, it has no debt and there is a large cash pile in the bank. So
why doesn’t it pay dividends? They are on the agenda; but not this year, says boss Terry McConnachie.

It has 300 individuals in Australia with fewer than 2,000 shares each in the
company, having not disposed of them when Sylvania cancelled its stock exchange listing in that country. McConnachie says it would cost them more in fees to collect the dividends than they’d get from the cash payments. Therefore the miner is looking at ways to buy their shares and clean up the shareholder register before it starts paying dividends.

[redtrend] 30/1/2018 05:42

Terry McConnachie has 5 million of shares and built this up since 2011 (nearly 2%), so he has more than enough "skin in the game" and incentive to pay dividends, if dividends is the right course of action at this time.

Quarterly should be released today or tomorrow so see what it says. I would either like to see a clear statement on dividend (even if it's just that they will provide such a statement as part of the interims on 26 Feb) or more detail on definitive growth opportunities, for which cash will be used for.

I made a mistake above stating end of Q3 17 SLP had cash of $11.2m. They actually had $11.2m as of 7 November when Phoenix acquisition was completed. So end of Q4 17, cash may be more in the $13m region, not $14-$15m I said previously.

As to why a dividend hasn't been paid yet, last year 2017 was really the only year they were in a position to. However Project Echo (Capex of $12m total) was just starting up, basket price was lower and we then had Phoenix acquisition of $6.3m.

However now Phoenix is complete, Project Echo is further along and basket price has improved and has sustained > $1,000 for long time, even with remaining Capex for Echo and Phoenix incorporation, the time now appears right for a dividend. Unless there are growth plans afoot we're not currently aware of. For example, expediting Volspruit development (3.1m Oz PGMs, Copper 77 million lbs & Nickel 262million lbs) or an acquisition. In June 2017 SLP was granted Mining Right to Volspruit, however it's still pending Environmental Authorisation and then Water Use Licence, so can't see this fast tracked yet.

[value hound] 27/1/2018 18:17

I just had a quick look at salaries; Terry McConnachie earned just under £350k last year. This is above average for AIM but not hugely over the top - and his seems to be the only big salary. That said; none of them are spending their earnings on their own shares - and with no dividend in sight, maybe it's time to bank a profit despite the value remaining.

Any thoughts?

[value hound] 25/1/2018 15:36

Redtrend; I agree that SLP still looks to be excellent value and, as you say, the introduction of a dividend of, say, 0.7p p.a. - equating to around £2m payout and a yield of 4.5% - would be easily do-able. So why don't they actually do it?

[fillipe] 17/1/2018 11:18

SLP - still at a crazy low sp, imo.

Year to 30-6-2017 was Norm eps of 2.38p - Int's are due close to 26th Feb and I'll then be pleased I've held for those. Surely 20p must be well on the way!

f

[norsewebster] 12/1/2018 10:36

I am hoping with the anticipation of results at the end of the month this is about to break the stubborn 14p area. It has had a few goes and is trying again today with loads of buys. To be fair SLP has money in the bank and a low PE, this could be ready to hopefully fly. It's been a hard long slog and I'm hoping we are going to rewarded soon.

[utrecht_00] 04/1/2018 13:30

wonder if this will ever be an acquisition target?

[kmann] 04/1/2018 11:35

Good to see SLP supporting their own company by buying back, also reduces shares in issue, hence increases eps!

How many financial geniuses don't see that until after the event?

Keep buying those dips guys, the mainstream will be on it at +25p

[utrecht_00] 20/12/2017 09:35

The major shareholders in Slp is curious- hedge fund is the biggest shareholder - seems tightly controlled

[kmann] 19/12/2017 13:30

Yes i think the reaction before to the election was negative for "no-brains" Zumas. So should retrace upwards imo

[utrecht_00] 19/12/2017 08:35

agreed, I would hope that we could get to 20p without a perfect storm and as a normal course of business...

[redtrend] 19/12/2017 06:01

Election of Cyril Ramaphosa as the new leader of the ANC, rather than Nkosazana Dlamini-Zuma could be major boon for both SA, business environment/ sentiment and mining, although could of course be a bumpy road to ensure the country has seen the back of the Zumas.

Let's hope a rising Platinum price, SLP dividends at some point in 2018 and improving sentiment to SA provide perfect storm to propel SLP to 20p+.

[kmann] 18/12/2017 15:17

Gold and platinum on a flyer