Sylvania Platinum Share Discussion Threads

[stoodio] 05/4/2019 17:45

Haha. Good one :)

[deme1] 05/4/2019 16:15

time to put profits into JLP

[mfhmfh] 28/3/2019 15:07

'Strong Uptrend'


Spot palladium fell 2.2 percent to $1,412.81 per ounce. The autocatalyst metal marked its biggest daily percentage loss in over two years in the last session, with prices plummeting 6.3 percent as investors booked profits.

”(The price rally) has been very speculative-driven and with the technical outlook changing somewhat after the break below $1,500, we’re seeing the speculative interest being reduced,” said Saxo Bank analyst Ole Hansen.

“From a technical perspective, the next major level is another $100 lower at $1,316,” he added. “Given the distance palladium had travelled since last year, this only just reflects a weak correction within a continuous strong uptrend.”

[risa5] 26/3/2019 12:21

Seems the proposed takeover of Lonmin has had a positive effect here ?

[redtrend] 26/3/2019 04:00

Thanks mfhmfh - here's the full piece from IC:


"Palladium and rhodium surge boosts Sylvania

Shares in Aim-traded Sylvania Platinum (SLP: 30p),a fast-growing and low-cost South African producer and developer of the platinum group metals (PGMs) platinum, palladium and rhodium, surged by 50 per cent to an eight year high of 31.95p a share after I highlighted the chronic undervaluation five weeks ago (‘Playing the commodity complex’, 18 February 2019). Longer-term holders have done well too as the price has now doubled on my 14.75p original entry point in my 2018 Bargain Shares portfolio. The re-rating is fully justified.

That’s because the price of palladium and rhodium have been booming, up 23 per cent to $1,600 per ounce (oz) and 25 per cent to $3,050 per oz, respectively, since early February. That’s good news for the platinum group metals (PGMs) Rand basket price that is made up of the key metals Sylvania recovers from PGM-rich chrome tailings material from mines in the North West Province, South Africa. The rough split is 62 per cent platinum, 24 per cent palladium and 14 per cent rhodium. This improves the chances of Sylvania producing an earnings beat in the coming months. Let me explain why.

Analysts at house broker Liberum Capital currently predict that Sylvania will produce 74,500 ounces of PGM production in the 12 months to end June 2019, split 34,000 ounces in the first half and 40,500 ounces in the second half. On this basis, they forecast revenues of $71.1m, up from $62.7m in the 2018 financial year, based on the following metal prices: platinum $819 per oz; palladium $1,227 per oz; and rhodium $2,493 per oz. However, the current palladium price is 30 per cent above that level and rhodium is 22 per cent higher. Palladium remains in multi-year deficit, so the market is very tight, a situation that is being acerbated by demand from the automotive sector. The same is true for rhodium as its major use (around 80 per cent of global production) is as one of the catalysts in the three-way catalytic converters in cars.

Even without factoring in potential earnings upgrades, Liberum is forecasting that Sylvania’s pre-tax profit with surge by 65 per cent to $26.6m in the 12 months to end June 2019 to drive up earnings per share (EPS) from 3.8¢ to 6.6¢ (5p). Moreover, I expect net funds of $20.2m (5.4p a share) at the start of 2019 to grow in the second half after factoring in the company’s capital spending plans. On this basis, and I stress this is before factoring in any upgrades, the shares are priced on a price/earnings (PE) ratio of 6 for the current financial year to end June 2019, and on a cash-adjusted PE ratio of 5. Liberum also expect the dividend per share to treble to 1.94¢ (1.5p), implying the shares offer a 5 per cent prospective dividend yield.

I would also flag up that Liberum’s forecasts for the 2020 financial year – pre-tax profits of $32.2m, EPS of 7.8¢ (5.9p) and dividend per share of 2.36¢ (1.78p) – are based on respective PGM prices at levels well below the current spot rate. On this basis, the cash pile could rise by half to $30m, or 8p a share, implying the forward cash-adjusted PE ratio is less than 4.

So, not only are Sylvania’s shares incredibly lowly rated based on current year forecasts, but predictions of increasing levels of profitability are well supported by strong industry demand for palladium, rhodium and by-products too (Iridium and Ruthenium), tight supply, and scarcity of the commodities. In the circumstances, and ahead of next month’s third quarter production report, I rate Sylvania’s shares a buy and raise my target price to 35p. Buy."

[mfhmfh] 25/3/2019 15:28

very bullish article by ST in IC today:

'(PE) ratio of 6 for the current financial year to end June 2019, and on a cash-adjusted PE ratio of 5.'

target price raised to 35p.

[russman] 21/3/2019 07:40

Maybe it would help if ADVFN updated the historic eps figures - 3.76c.

[snorky123] 21/3/2019 06:47

Live Palladium spot $1,612Live Platinum spot $872

[redtrend] 19/3/2019 14:01

"Palladium Panic-Bid To Record Highs As Putin Corners Market" (Zerohedge)

[russman] 19/3/2019 05:01

& the cash keeps rolling in.

[redtrend] 18/3/2019 18:31

mfhmfh - palladium at $1,536 is actually the June 2019 futures Contract.

The current palladium spot price is $1,575 (albeit Palladium very volatile).

So palladium is in backwardation (spot price higher than futures price) highlighting there is a shortage of palladium on the spot market.

[mfhmfh] 18/3/2019 15:58

palladium at 1,536 on cnbc.com

[redtrend] 18/3/2019 11:30

Because SLP was significantly under-valued when the PGM basket price was circa $1,140 Oz when the Interims were released with a detailed presentation.

Now the basket is $1,300+ per Oz and USD:ZAR Forex is over 14.2 again (which pushes down AISC in USD terms), the "under-valuation" is even more stark.

Liberum released a broker note with a target of 35p I believe. Not sure what their timeframe is.

With palladium & rhodium getting more attention, in turn the unloved PGM sector may be getting more attention itself and those that do the research, SLP sticks out from the crowd like a diamond in the rough.

Hopefully a positive multiplier effect can take place if Rhodium + Palladium keep this momentum up. If SLP can eek out 20% more gains and reach £100m market cap (34-35p), this in turn may spur more attention from Institutional Investors (although SLP already has some 50% of equity already in 5 IIs hands).

Miners/ producers are normally a leveraged play on the underline metals. A 10% increase in metals prices will translate to a much higher % increase in earnings. However the opposite is of course true too and inherently more riskier than investing in the metals itself.

Additionally you have the country and company specific risks to factor in too. At moment Eskom are "load shedding" in SA, however it will not be clear until the next quarterly report if this has any material impact on SLP's production.

[snorky123] 18/3/2019 10:37

Does anyone know why the share is moving so strongly over last couple of days, more than just Palladium price and a few buyers?

[plat hunter] 13/3/2019 00:15

Rhodium will trade close to 10k an ounce imo

[redtrend] 12/3/2019 10:12

Yep and depending what site you look at, Rhodium is now $3,145 Oz!

[mfhmfh] 12/3/2019 09:53

Palladium back above 1,500

[plat hunter] 01/3/2019 09:47

Lots of resistance to 26 on the offer and certainly topping out for now.

May be because the fears of platinum strikes have subsided a little but will need more of an effort on the buy side to break 26 in the short term.

I'll be adding on weakness when the opportunity arrives here now, i've watched it for long enough I think

[mfhmfh] 28/2/2019 15:50

Liberium Capital today reiterates buy rating and 35p target price.

[retsius] 26/2/2019 08:41

Redtrend
OMG what analysis! If you are not a financial guru, you should be !
R.

[redtrend] 26/2/2019 05:25

Based on last SLP presentation, their 4E PGM basket split is as follows:

62.7% Palladium (current spot $1,550)
24.5% Platinum ($850)
12.6% Rhodium ($2,725)
0.3% Gold ($1,325)

On top of this they have the 6E PGM "by-products" of Ruthenium ($275) and Iridium ($1,485), as well as Nickel and Copper. Whilst they now provide data for 6E PGMs, SLP still focus on 4E PGM reporting (if they reported on 6E basis like THS and JLP do, their PGM production is actually circa 100,000 Oz per annum).

Based on the above, the basket price is now $1,259 per 4E PGM Oz. Considering SLP usually pay the refiner circa 17-22% of basket price, the sale price to SLP is $1,040.

Guidance for FYE June 2019 is 73,000 - 76,000 4E PGMs. With 34,000 produced in 1st 6 months, to meet the bottom-end of guidance, SLP need to produce 39,000. Based on the challenges faced last quarter and most of these being addressed, SLP should be able to meet 39,000.

So revenue to SLP based on current spot prices should be in region of $1,040 x 39,000 = $40.6M for next 6 months.

The AISC for last 6 months was $20.6M (based on ZAR to USD Forex of 13.8). So this then leaves $20M of EBITDA. To then get to "free cashflow", you have to take into account the forecast $8M Capex spend to be deducted.

So before tax, we're looking at USD 12M free cashflow or thereabouts. Without knowing how much D&A they will apply or "other expenses" to reduce the accounting Profit before tax by, it's hard to estimate the corporate tax ($2.4M for last 6 months) to be applied, but at 28% Income Tax, will be in region of $3M. Leaving free cashflow after tax of USD 9M (USD 18M annualised).

It will be slightly different on basis we're always 4 months behind in terms of refiners paying out and hence why SLP have such a huge trade receivables in addition to their $20M cash balance, but provides a good indication of the continuing growing cash position.

Whilst there may be other expenses outside of PGM produced AISC and Capex, SLP also achieve 7% interest on a lot of their cash in the bank.


All shareholders should be writing to SLP to commend them for a great job, but requesting much more clarity on the dividend policy, including ensuring it's 2 dividends per Financial Year. Even with $8M of Capex over next 6 months, they can easily afford another dividend of 2-3% this financial year ending June 2019 and still the cash pile would be growing. Next Financial year with Capex reducing and cash pile continuing to grow, the dividend should be a yield of 10%+.

With 50.3% of SLP equity in the hands of 5 Institutional Investors, at some point they may act to force SLP's management hand to pay out commensurate dividends. This would not only ensure a yield, but re-rate SLP share price to ensure it's not undervalued.

Current market cap of SLP at 26p is £76M ($98M). Normalising for cash position, that's $78M which if you divide by free cashflow per annum after all costs (incl. tax), that's a PE of only 4 and not even taking into account on top of $20M cash position, SLP have a positive trade balance of $18M too. And of course basket price could improve further from here on out and 4E PGM Oz projected to increase to over 80,000 Oz next financial year.

A PE of 4 when the life of production is at least 15 years. Madness. But SLP will always be under-valued until a proper dividend yield is paid or they make a new acquisition/ organic growth strategy to utilise the cash.

[redtrend] 26/2/2019 04:30

And still Palladium rises, with Platinum following.

The following article shows on COMEX just how little physical palladium there is in comparison to the contracts for delivery. It's at a ratio of 67:1 and for once the conspiracy theorists could be right regarding a default and the whole precious metals fractional system breaking down, for palladium at least.

[mfhmfh] 25/2/2019 12:48

still rising with high volume