Sylvania Platinum Share Discussion Threads

[epicsurf] 03/7/2020 15:24

Are we assuming there a forced seller/institution in the background, everytime it starts to rise it's sold into ,happened a few times with shares I own when overhang is cleared recovers pretty quick, just a thought

[pleaty1] 03/7/2020 13:23

I too am still holding at a loss, larger than I would normally, due to the nature of the movements. You only need to look at the long term chart to see the huge swings. Although we don't expect a spectacular update, the amount of cash generated is what I'm interested in. For all we know with the deficit in palladium ect, the Chinese could still be buying as much as they can and the company could be valued at 2x - 3x it's cash. The share price could just as quickly rise as it did in feb20 if cash generation hasn't been impact too much

[pleaty1] 03/7/2020 13:23

I too am still holding at a loss, larger than I would normally, due to the nature of the movements. You only need to look at the long term chart to see the huge swings. Although we don't expect a spectacular update, the amount of cash generated is what I'm interested in. For all we know with the deficit in palladium ect, the Chinese could still be buying as much as they can and the company could be valued at 2x - 3x it's cash. The share price could just as quickly rise as it did in feb20 if cash generation hasn't been impact too much

[nimrod22] 03/7/2020 13:15

A good time to start drip feeding small buys so as to be in on the dip curve and be ready to ride it back up.

[prettygreen] 03/7/2020 10:13

Platinum virtually unchanged over last month, yet this is down over 20% on no news. How low can it go ?

[graham86] 02/7/2020 19:48

ds2 thanks for the ot imfo

[neilunderwood] 02/7/2020 19:24

Being a rabbit is not good.

Either become an assassin and cut your losses (or take your winnings)
Or become an Hunter and buy some more

(If you haven't, read the excellent Art of the Execution, it will explain the above)

This is the only share in my portfolio I haven't stop lossed, just as well after this morning. I'm waiting to see what happens with the potential 12% dividend on offer.

Been a few stockopedia articles rating this stock, so I am still in, currently running a small loss after being nearly 60% up at one stage! but you pays your money you.........

[petewy] 02/7/2020 18:35

I read all the post but I'm having a Homer moment. Duuuuhhhh. Do I buy sell or keep on my watchlist.

[dangersimpson2] 02/7/2020 15:36

Hi Redtrend,

Thanks for the feedback.

I have included the 6E production revenue but split into 4E & byproducts. The production forecast is for 4E so we are expecting 8koz of 4E production in Q4 and about 2.7koz of byproducts on top since 4E production is almost always close to 75% of 6E. Byproduct prices here are pretty consistent and don't make a big difference. Byproducts add about $0.6m to the 4E revenue for Q4.

The difference between the gross basket quoted by the company and the JM average is usually pretty close, in fact normally the gross basket is slightly higher than JM. However, Q3 was an anomaly and was 89% of the basket, the big change was that Rhodium prices had gone up a lot, which suggests to me that SLP are not getting the JM average for Rhodium. In Q4 Rhodium is still historically elevated on JM values so I may be misguided but I think there is a reasonable chance that the SLP quoted Gross basket for Q4 will be below the JMM average of ZAR37,577 or $2088.

On the refining fees vs sales of concentrate, I get your point but this doesn't seem to make any difference. You can calculate the 4E reported revenue/oz and compare it to the gross basket price and it almost always comes out very close to 67%. I think the whole point of the sales adjustments is that they book revenue at prevailing prices and adjust later including the refiners fees which is why this remains so consistent across almost all quarters.

19Q1 19Q2 19Q3 19Q4 20Q1 20Q2 20Q3 AverageJM Average Basket Price 14,716 16,040 17,153 18,253 21,594 25,830 38,056 SLP Reported Gross Basket/Oz 16,263 17,14 19,868 18,659 24,557 27,499 33,921 SLP as a % of JM 111% 107% 116% 102% 114% 106% 89% 106%4E Reported Rev /Oz 10,453 11,815 13,498 11,737 17,415 18,16 22,797 4E Reported Rev as a % of Gross Basket 64% 69% 68% 63% 71% 66% 67% 67%4E Reported Rev as a % of JM Avg Basket 71% 74% 79% 64% 81% 70% 60% 71%


Therefore if you want to estimate the 4E revenue you should take the number of oz x 67% of the gross basket price. If Q3 was an anomaly and the gross basket price comes in at $2088 then you have $11.2m 4E revenue but if I'm right and the gross basket will be lower than the JM value in high quoted Rhodium price environments then this could be as low as $10m. I guess we'll know at the end of the month

I agree with most of the rest, costs are likely to be higher per oz, hence my value being optimistic.

Sales adjustments are a massive unknown, since ZAR weakness may have saved them from this being a loss in ZAR terms.

The cash balance will be at balance sheet date though and here the ZAR strengthened slightly from 18.04/$ at end of Q3 to 17.35 at the end of Q4 so this will help cash balances, as will working capital unwind. Good point on the cash taxes.

So cash balance may not be that bad, of course depending on whether they ended up with an EBITDA loss for Q4 or can eke out a positive number.

I agree Grasvally looks dead in the current environment which is a shame.

[redtrend] 02/7/2020 14:37

Danger - on your EBITDA ratio of 3, did you normalise for SLP's cash position of $40m+?

EBITDA ratios can be misleading as another Company may also have a ratio of 3, but may have large Debt + Interest payments (rather than Cash like SLP, who also themselves get paid interest on their cash) and high Capex eating cashflows - as we all know SLP Capex is very low.

I prefer looking at free cashflow, so taking into account Interest & Tax, Capex and then normalising for cash/ debt position.

What other miners have a ratio below 3? I'd be interested to know if not too off topic.

[redtrend] 02/7/2020 14:31

Danger - whilst I agree with your pessimism for this FY Q4 2020, I don't agree with some of your calculations in post 2922.

SLP predominantly report on a 4E basis, but do also provide all the 6E stats. However all the Oz production forecasts we all use are 4E (e.g. 8,000 Oz forecast for this Q4), so you need to base all calcs on 4E basis.

It is not correct to state SLP receive 67% x 82% of basket price, which would be only 55%. SLP receive the final refined price of 4E basket minus refiner's costs + fees (normally 20-25%), hence the 4-month payment delay from time they hand over concentrate to refiner, to time it's refined and SLP are paid - they do not sell on a concentrate basis.

As an example using SLP's last FY Q3 2020 Report:
- SLP report a 4E basket price of $2,038 per 4E Oz in their Q Report.
- Using JM PGM prices, 4E basket price for same period is $2,052 - near exactly same as SLP reported, so depending on when in period PGMs were sold by SLP, difference is negligible.
- SLP don't report exact "Oz sales" each Q, but as Q2 and Q3 had same production level, you could assume they sold circa 19,500 Oz.
- $2,038 x 19,500 Oz = $39.7M revenue
- SLP don't receive above of course. If you strip out sales adjustments which would inflate SLP's revenues for Q3, their revenue for Q3 was stated as $31.3m, the difference compared to $39,7m being the Refiner's costs + fees. This amounts to basket price realised by SLP of $1,605, therefore a Refiner's costs + fee in realms of 21% for Q3, not 33% and certainly not an additional further reduction of 18% on basket price.


In terms of where I agree and why I'm pessimistic for this Q3:

- AISC per Oz will shoot up if SLP only produce 8,000 Oz. A lot of costs will be fixed and whilst some may be tied to production, AISC will still increase substantially.

- Further ZAR weakness will hit the USD cash balance again, because SLP keep a huge proportion of cash in ZAR. I sent number of emails on this when Terry was at helm that it was better to pay a dividend than leave cash in the bank with risk of Forex. Only benefit is SLP seem to be making near $0.5m per Q on interest which isn't too shabby.

- Period of Grasvally Sale has expired and been no news - either way should have received a RNS on this, but assume it hasn't gone through.

- SLP appear to pay tax on bi-annual basis, so there will be the taxes to consider (Q2 and Q4 always have less cash build up because of this).

- With basket price falling in Q3 compared to Q2, we may see a negative sales adjustment, compared to Q2 which because of rising basket price was a huge $12.3m.


I believe therefore the cash balance will actually decrease for this Q4. However with such a large cash balance overall, hard to know if this pessimism is now already baked in to the share price

[dangersimpson2] 02/7/2020 14:03

I think it will be weak into Q4 results when people see the big drop in EBITDA and then may turn if the FY results in August contain reasonable production guidance for FY21. If they can do around 60koz in FY21 and PGM pricing remains at current levels then they will start to look good value again, maybe on a fwd EV/EBITDA of around 3, just not as good value as earlier this year when they were on less than 1xEV/EBITDA. The big question is, is that cheap enough? Plenty of companies have a fwd EV/EBITTA below 3 in the mining sector at the moment.

[basem1] 02/7/2020 12:49

Days of relentless selling here Should turn on a sixpence when the times right

[martinfrench] 02/7/2020 09:27

but all very wierd, now gets raised, so some sort of coincidence and/or tree shake attempt by looks of it

or a forced seller has finished ?

[martinfrench] 02/7/2020 09:06

neil,

since i could trade during that period for normal prices, dont think it would trigger stop losses, that would be too easy and highly illegal would suspect.

might have caused normal panic selling at normal prices but didnt seem to, as soon as you see the real prices quoted they would have probably held off

[neilunderwood] 02/7/2020 08:54

Would it have anything to do with the share buy back and the market makers shaking that tree, if so that would be absolutely awful for anyone who has it stop lossed.

[martinfrench] 02/7/2020 08:34

sadly you cant i have made a trade and it was 39.7

[pwooly] 02/7/2020 08:31

Fat fingers? I hope someone's been trying with their toes!

[deme1] 02/7/2020 08:29

I hope not, I would love to buy in at sub 14p

[epicsurf] 02/7/2020 08:23

I hope some one has got fat fingers

[russman] 01/7/2020 19:59

BoD need to think a lot bigger.

[dangersimpson2] 30/6/2020 23:08

Mr Stephens, I guess we'll find out at the end of July but you may be missing a couple of points:

- The company doesn't receive the JM price. In Q3 their gross basket price was 82% of the JM average, it seems that they generally get a lower Rh price than JM quote in high Rh price environment. But most importantly they only receive 67% of their gross basket price since they sell concentrate to refiners not dore. 67% x 82% x $2088/oz = $9.2m revenue. They should get $0.6m for byproducts on top though.

- Operating costs are unlikely to be as low as $600/oz on reduced volumes but let's assume they are for a moment so we have $4.8m operating costs but you also have $0.5m G&A and $1.2m Depreciation. So that would be $3.3m EBIT.

- However, the big unknown is the sales adjustments. It is possible that the low average zar has saved them here since the drop in PGM in ZAR is only a few %. However, its possible that negative sales adjustments may have a big effect. Rising prices in Q3 added $12.4m to EBIT & EBITA so this effect is not insignificant, but we simply don't know at this stage.

- So I think the best case is an EBIT of $3.3m but could come in much lower. If you are expecting $12m EBITDA you will be disappointed IMO. The main difference being they simply don't receive the price that JM quote to sell refined metal for concentrate delivered to refiners.

- You are right that some of the working capital build should unwind with lower revenue so that is a positive. However, I think sadly in the current environment it is highly unlikely that the Grasvally sale completes - although I may be pleasantly surprised on this front.

[goldry] 30/6/2020 17:54

Especially mine, bought back in yesterday.

[otemple3] 30/6/2020 17:11

It's what shares do