Sylvania Platinum Share Discussion Threads

[metis20] 18/2/2020 15:07

Mr S

Surely precious metals are always measured in troy ounces rather than ordinary ounces?

From the Kitco website

"Gold and most precious metals prices are quoted in troy ounces; however, countries that have adopted the metric system price gold in grams, kilograms and tonnes."

[sonofbanjosinger] 18/2/2020 15:05

There was a 26000 oz deficit for Rhodium on demand of 1.144.000 oz for 2019 mainly due to a 10 percent increase for auto catalysts. In 2020 we see a deepening market deficit with further strong gains expected from auto catalysts although slower than the 10 percent gain from 2019.

[mad foetus] 18/2/2020 14:54

I'm told by a metal trader friend that someone was bidding 12k for rh this morning

[mr stephens] 18/2/2020 14:52

As you know unlike the other previous metals their is no official trading exchange for rhodium so prices vary
Also some of the sites quote at the OZT or Troy ounce
This is heavier than your regular ounce so the price is higher
But $11,000 is around the median level at the mo
The other prices are current spot so no contest
Your analysis of the basket price spot on save for a level of possible error in rhodium
Which makes my forecasts look even more accurate

[sonofbanjosinger] 18/2/2020 14:37

I make the Basket price at 2838 at todays prices with a spot price of 11800 for Rhodium, 2322 for Palladium and 970 for Platinium. With a 60 26 14 split....Rhodium makes up 58.2 percent of the basket price

[mr stephens] 18/2/2020 14:02

Danger enjoying the banter but I wasn’t clear as rushing so apologies
If the PGM basket price holds
Costs increase per oz by 10%
Capex is as per current trend
Less tax and assumed dividend
I get to around $56m to $59m net bottom line
It’s the PGM price at $2450 for q3 and q4 that does it
If the costs stay the same then the increase in turnover just falls on the bottom line

[mr stephens] 18/2/2020 13:05

It started moving rapidly through Jan which is when I set up my own models based on SLP mining info that essentially works out
Platinum 60% around 950oz
Palladium 26% around 2200 oz
Rhodium 14% around 10,000 oz
That was giving a mixed basket in jan of $2300
Since then platinum has stabilised but palladium rising due to shortages and emission regulations and rhodium going through the roof as more efficient
The detailed report from jMathey clearly states no sign of this changing anytime soon
Tab through the posts and there is a link to it

[dangersimpson2] 18/2/2020 12:59

Liberum forecast is $59m PAT for FY20E, so they are forecasting exactly the same as you.

You also have to remember that professional analysts don't just calculate a forward earnings estimate and apply a P/E to commodity producers with limited LoM. So the idea that a target price should proportionally follow the earnings estimate for a single year is much too simplistic.

Instead, they do a DCF with production assumptions & forward PGM pricing assumptions. These may prove unduly pessimistic but they are based on their educated view of market supply-demand dynamics so unlikely to be out by a factor of 2.

Suggesting that this NPV calculation isn't their honestly held view based on all current information is neither accurate nor wise IMO.

[mad foetus] 18/2/2020 12:47

Rhodium at 12,000. Was 6,000 in December. Is this a structural change in the market or a short term thing? In any event, the longer it holds the more SLP makes.

[mr stephens] 18/2/2020 12:34

Also IC daily just in and nothing from ST

[mr stephens] 18/2/2020 12:33

Danger I’m sadly in an environment where I can’t look at my financial models but from memory Liberium forecast £20m profit full year and target price of 70p
Of course the PGM basket uplift has been fast but Slp have delivered over the full year forecast in the 1st half and we are all delighted
But the basket price since mid Jan has been north of $2200 now sitting around
$2500 depending on whose rhodium spot price you take a 32% increase
Simply factor that across 34,000ozs the lower of managements forecast production and it throws up and additional $30m net profit Making a fy total of $53m
I have cross checked this against my previous posts which with full workings show $59m net on an additional 36,000 ozs
Therefore if Liberians logic holds that’s 3x their original forecast
So I know you can’t just drive a share price on profits alone but that would equate to a £2.10 target price
This does not account for disposal but does account for a 2p dividend and a cash balance increase of approx an additional $34m
I do agree with you that £1.50 is a truer reflection but a forecast from them of $36m and target price of £1.10 seems over prudent and disingenuous
There is also the issue of the share buyback both on the market and from the current ceo by 31st March

[metis20] 18/2/2020 11:39

Tresham - all revenues currently come from processing tailings



Points from the recent Investor Presentation -

Currently fresh current arisings and ROM fines emanating from mining operations constitute approximately 40% - 45% of SDO's total plant feed, but it is anticipated that only a relatively small part of this total capacity will be impacted by the downturn;

o Sylvania has the necessary resources, flexibility and infrastructure to increase dump mining, albeit at slightly lower PGM grades, to supplement any potential current arisings or ROM fines shortfall and to maintain consistent feed to the plants;

o Management is in continuous discussions with host mines in order to manage impact and evaluate potential processing alternatives that could benefit both Sylvania and our hosts;

o Sylvania remain confident to deliver on guided production target of 74,000oz to 76,000oz for FY2020

[dangersimpson2] 18/2/2020 11:36

I doubt Liberum's 111p valuation is off by 100%. Yes, the PGM pricing assumptions still look conservative compared to current spot (now up something like 55% in ZAR in 2020) but they are not that far off reasonable forward expectations. Importantly, Liberum see the current rise in Pd & Rh supported by fundamentals with little speculative buying driving price & instead driven by big users scrabbling to ensure product supply.

Volspruit isn't in the 111p valuation so there is another 15p or so to add-in IF this does get sold.

So I'd say 150p max fair value if you are being optimistic about long term PGM price trajectories. Not that this matters really, given that this is still 3x the current price.

I also doubt Simon Thompson knows more than Liberum with access to management, I would certainly place more weight on the Liberum price target than ST's. Q3 results have the potential to show up to $30m EBITDA for the quarter at current prices so these may concentrate minds somewhat, as will a 22% yield in 2021.

[gary1966] 18/2/2020 11:27

bookwormrobert,

I hear what you are saying but we are only 4.5 months away from that 2020 payout if that is the case. You would have thought some mention could have been made in the announcement yesterday. Nothing in that statement suggests 15c is coming our way in the near future.

[tresham] 18/2/2020 11:12

Is there a limit to the amount of tailings available? What proportion of the turnover is retreatment of PGM rich chrome tailings?

[arcadian] 18/2/2020 11:10

Just `phoned Proactive Investors to query the absence of comment and to suggest an interview or an observation on the stunning results with the prospect of an even better H2.

[mr stephens] 18/2/2020 11:00

Yet the shares still languish 50% below the brokers new target which is 100% below what the real valuation should be
Hopefully soon the man of real
Insight ST will point this all out

[bookwormrobert] 18/2/2020 10:35

I don't think Liberum would make those kinds of dividend estimates without having discussed them with the company. I don't think a house broker would go that far out on a limb without a nod and a wink from the client.
The broker-suggested yields at current share price are pretty mind-boggling, though!

[gary1966] 18/2/2020 10:16

If the company confirmed in an RNS that, that was their stated dividend strategy then I think we would re-rate quite dramatically. Not so much because of the amounts involved but more because real intent put in writing to pay a progressive dividend. Despite the large, rapidly growing hoard of cash there has been no indication that the directors are ready to share that in any meaningful way with shareholders. It would be a statement by the co that they don't see current profitability levels and free cash flow as stopping anytime soon.

GLA

[stoodio] 18/2/2020 09:49

I'll be waiting for a quid then take it from there. Been in over a decade... caught the knife at 6p and fully loaded up at that time.

[thelongandtheshortandthetall] 18/2/2020 09:37

Hi Gary
Appols. Didn't realise it was paid for. Just didn't want to sign up for another thing.
Cheers anyway :)

[gary1966] 18/2/2020 09:24

The long,

Paid for research and so unreasonable to expect someone to post the full article and probably breaks every rule in the book to boot.

[thelongandtheshortandthetall] 18/2/2020 09:21

could you guys post the article to save me signing up.
Thanks in advance