Sylvania Platinum Share Discussion Threads

[russman] 10/1/2020 10:57

Cash, more cash. What are SLP going to do with it.

[dangersimpson2] 10/1/2020 10:28

Q1's plant feed rate was 634kt, so if we get 90% of that you are looking at around 570kt. We don't know the likely grade and recoverability but we do know Q1 was exceptional:

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.

Similar 2.47g/t grade & 52% recovery would be 16.5koz/q but that would mean that they would do 71koz for the year, missing their 74-76koz target. Given that they had to reduce the production target during the year last year would expect that they would want to avoid this and be somewhat conservative in this.

The recovery figure reduction reduces the PGM oz but increases the value they receive for the concentrate so they must have a business case that says this makes economic sense, so we could see prices received rise faster than spot prices but on lower recovery.

At current spot 16.5koz/q is still likely to be around $13m EBITDA per quarter, $52m annualised vs an EV maybe somewhere around $95m at year-end. Given that the company has more than 2 years production and little capital requirements going forward, the market is clearly pricing that these spot values are not sustainable. The difficulty hedging the rhodium price, together with the political risk being maybe why more sophisticated funds are not buying SLP equity and hedging the PGM exposure.

You are right Grasvally has yet to close but that there is an agreement in principle in place suggests this does have value. It is pretty immaterial though at a few pence per share.

[carcosa] 10/1/2020 08:06

Read across from Thalisa update today suggests PGM's are down by 10% in volume & up 16% in value. ~18,700oz Q2 for SLP. If maintained = 77koz full Year. Real world numbers likely to be much lower as more cuts likely as the year progresses. Also, each company will have its own challenges to deal with.

Ref:

Nevertheless if Q2 production is 16,000 oz I'll be very very happy.

BTW Is not the Grasvally $7.6m yet to complete? MIght not happen??

[otemple3] 09/1/2020 22:09

Thanks Danger, if $55m this valuation will look even more anomalous

[dangersimpson2] 09/1/2020 22:01

Liberium were forecasting $39m FY20 YE cash balance I think, but that was before SLP sold Grasvally for $7.6m and with lower PGM pricing. I am forecasting c$55m if they hit their production targets, current PGM pricing holds and they receive the Grasvally cash, assuming no major working capital flows. Lot's of 'if's in there though.

[otemple3] 09/1/2020 21:50

I've bought a couple of times for the wife's ISA over the last couple of weeks, just hoping the outages aren't too significant as basket prices look very attractive. $45m cash looks reasonable - does anyone know latest forecast? Last one I saw was for $37.6m but may have been superceded

[dangersimpson2] 09/1/2020 20:48

Q2 sales adjustments probably only a few million ZAR not USD in Q2. Q2 was only about 2% higher in ZAR terms due to exchange rate strengthening against the dollar.

Of course, Q3 sales adjustments will be higher if the current PGM pricing holds.

[1jbrisky] 09/1/2020 20:25

Interesting piece on Rhodium attached. Looks like Rhodium and Palladium high for the foreseeable future.
I'm actually on holiday in Limpopo atm. There's plenty of water! But Escom and their "loadshedding" is an issue. However same for everyone and as mentioned in the article, it can take ten years to reach production.
My only concern would be that the original tailings producers recognise their value and attempt to wriggle out of their contracts. I've broken all of my maximum % rules on this one. SLP is a very large part of my portfolio.

[frazboy] 09/1/2020 20:19

Thanks danger, I’ll take that, should see a low single figures million number in Sales Adjustments for Q2 then.

I’ve pencilled in YE net cash of around $45m ($10m in each of Q2 and Q3, nothing in Q4 due to taxes) although hopefully a little bit higher - this assumes no dividend payments. That would give us an EV of just over $100m... very attractive if you believe highish values will be maintained, and if you can stomach the risks highlighted previously.

[dangersimpson2] 09/1/2020 20:05

My understanding is that SLP provisionally recognises revenue at spot prices at period end, then subsequent revenues are adjusted to reflect the price that the pipeline material was sold for 3-4 months later. This is what the Sales Adjustments are that are in the income statement.

[frazboy] 09/1/2020 19:08

Question: We get paid approximately 4 months in arrears by our purchaser but what price do we get? Do we get the spot price when we hand over the goods, or the spot price 4 months after?Anyone been adding recently or are we waiting for funds/the production report late January?

[barnaberible] 09/1/2020 12:35

I agree Redtrend - The article linked above references the massive spread in Rhodium, I would always do my forecasts with a discount to the quoted price.

I think there are more important things to be concerned with here, namely Samancor, Power & Water issues.

However, if you wanted to buy an ounce of Rhodium this is what Pamp are asking

hxxps://www.suissegold.ch/en/product/pamp-suisse-one-ounce-rhodium-bar

[redtrend] 09/1/2020 12:06

Rhodium is a closed wholesale market done between 2 parties by contract, it's not normally on a spot market like other metals, with a specified bid and ask.

If you really wanted to estimate a bid, you could lob off $50-100, unless there's a more accurate website?

If there's a better website I'd be interested, but its certainly not kitco when it comes to Rhodium. So the Ask on these websites is the most accurate source I've found to date.

As pedantic as I normally am, I'm not too concerned whether Rhodium is at 8,000 or 8,200 based on an unknown spread

[barnaberible] 09/1/2020 10:24

Couple of news snippets / articles that may be interesting:



and

hxxps://swedishstirling.com/investerare/pressreleaser/pressrelease/?itemID=1A89743880DF0952

[plat hunter] 09/1/2020 10:00

Metis, you're looking at the ASK, bid is the correct price

[metis20] 08/1/2020 15:27

Rhodium now moved up to US$8250/oz according to



price from the same site around this time yesterday was US$7650

SLP PGM 4E basket up to approx US$2,200/oz - approx 4% up on yesterday.

[routy] 08/1/2020 13:17

Thanks all for your responses!

[plat hunter] 08/1/2020 12:52

Redtrend.. note the disclaimers on JMATS link... (Wholesale prices) they're based on the offer.As a producer it's better to look at the bid

[dangersimpson2] 08/1/2020 12:36

The Rhodium price is pretty volatile and without a futures market then I expect SLP will have to take a price related to spot on delivery. With so many parts I don't think the most important thing for forecasting the impact on SLP is the actual price on these sites but the change over time. So although the absolute Rhodium price is different between Kitco & Johnson Matthey sites the percentage change is the same at around 25%. This makes the SLP basket up about 14% in the last week. If these price rises can hold then the company just got significantly cheaper in the last few days.

[metis20] 08/1/2020 12:04

Routy - At today's prices I make it 1.0 to 1.2 to 1.9 for Pd:Pt:Rh

using the 2019 Prill Split on slide 22 of the most recent presentation - see

[routy] 08/1/2020 11:52

HiDoes anyone know the rough revenue split between the PGMs?Thanks in advance.

[redtrend] 08/1/2020 10:24

If you find that hard to believe, would you believe me if I told you it's now $7,950 - 8,000?!

hxxp://www.platinum.matthey.com/prices/price-tables
hxxps://apps.catalysts.basf.com/apps/eibprices/mp/

Kitco is pretty poor for updated Rhodium pricing. These 2 sources seem much better

[mad foetus] 08/1/2020 09:31

Palladium has also been very strong