Sylvania Platinum Share Discussion Threads

[plat hunter] 03/9/2020 13:51

Palladium's up almost 5%

[plat hunter] 03/9/2020 11:50

Yeah good day for top slicing yesterday if you did it.

[martinfrench] 03/9/2020 11:47

had to add 10k more at 63.5, rather good price

[plat hunter] 03/9/2020 09:43

Tree shake on the BID, don't fall for it... 68 getting pinged in the same vain 60 was last week

[plat hunter] 03/9/2020 09:35

Decent volume this far.. Another tick up coming this arvo

[davebowler] 03/9/2020 09:26

someuwin -good header with the addition of Rhodium price!

[plat hunter] 03/9/2020 08:17

Lol Stephens just woken up with a smile.. thank you.Cmon silvia a nice bid today, 70p by Friday.£1 by christmas, roll up, roll up.... get your sylvi tickets here. You'll be gutted when they're all gone

[mr stephens] 03/9/2020 08:02

Rhodium up from $12,400 to $13,000. I think that’s a new high Puts SLP basket price over $3,000 or $2300 post smelting
Over to you PLAT ive done my bit

[plat hunter] 02/9/2020 17:41

Ahhh sweet, cheers Stephens.I'd over looked that in the RNS.

[mr stephens] 02/9/2020 17:37

PLAT they’re scheduled for Monday with investors presentation at 2.30pm Tuesday

[plat hunter] 02/9/2020 17:29

I was expect the results yesterday though, hopefully tomorrow

[mr stephens] 02/9/2020 16:40

Tomorrow Obi 1 PLAT you shall have your day

[plat hunter] 02/9/2020 16:36

Lol, i tries my hardest

[mr stephens] 02/9/2020 16:34

Can’t see so well on the iPhone and the underline doesn’t help Plot sounded gloom apologies you shall forever be known as PLAT. Calculations are accurate. I’ve forecast each quarter correctly using same formulas so must be doing something right. Unlike you as you failed to get us to 67

[plat hunter] 02/9/2020 16:28

You realise my name doesn't have a single 'o' in it right?


Rhodium BID is at 10,200 with an ASK at 12,000, your calc's are all over the place, the difference in rhodium alone is 15% out and that's if you were JMAT selling into the market.

have you had your medication today?

[mr stephens] 02/9/2020 16:04

Plot your getting the disease I said spot not spit
Please focus your will power
67p close today please
Thanks
MrS

[plat hunter] 02/9/2020 15:51

There is only spit..


Sorry Steveo, that's an unfamiliar term, thank you for offering to help with my sums though very much appreciated, however I'm a wizz around a calculator as it goes.

[mr stephens] 02/9/2020 15:46

Ok Risa I think that the scribblers only have time to look at the surface and get the detail wrong. I leave Simon Thompson out of that as he is very good. We’re more passionate as actually we all own part of the company
Plot Hunter if will power could drive the price up then you have it and keep going mate
Re PGM prices the $2200 i put in us after smelting costs. If you would like me to provide the calculation let me know. There is only spot on Rhodium as you know
Next year on the basis of 80,000 ounces the profitability if prices stay the same and costs stay the same could be nearer $80m after tax probably $75m. Before you think I’m mad
To put that into context this year would’ve been around $67m to $70m if covid had not come along and shut them down
Production will be up 16% and basket price up 20%

[plat hunter] 02/9/2020 14:41

C'mon Sylvia, good girl

[plat hunter] 02/9/2020 14:07

They probably didn't calculate at full ask using the spot price.I'd agree that basket prices are about 2200 on a BID basis with a production cost of 600 to 650.Even if smelting was on a 50/50 basis that'd still generate 60 million a year in gross earnings.SLP are coining it in.

[risa5] 02/9/2020 13:40

MR S~ Is it possible that he has misplaced Rhodium with Palladium?
At least in some instances.
Must say I was a bit surprised myself when I read it.

[mr stephens] 02/9/2020 12:32

Great article thanks Riss. 3 points I would like to comment on. SLP did report a fall off in tailings of 10-15% but when that gets to the actual ounces produced it is in effect a 1% drop. Thus is explained in full in earlier threads.Secondly the authors PGM figure is way out. At gross level it is currently just on $2900 after smelting so realised value it is around $2200
Finally there is an emphasis on Palladium but for SLP Rhodium is the key price mover. It is 14% of the basket in ounces produced but $1740 in value $1300 after smelting. Also for PGM trends the best report which is a very long read is the Johnson Matthew report available free online. There view pre covid is that PGM prices are only going one way for 3 years and that’s up

[risa5] 02/9/2020 11:24

This article comes complete with a map and exhibits...

Sylvania Still Looks Cheap After SA Palladium Mines Restart
Sep. 1, 2020 2:59 PM ET

Summary
The mining sector in South Africa restarted operations in May following a six-week lock-down due to COVID-19.

Norilsk estimates point to a balanced palladium market in 2020 and 2021, but June production data from South Africa shows a different picture.

I think the palladium market is likely to remain in a structural deficit for at least a year, which should support high prices.

With a forward EV/EBITDA ratio of below 1.5x, Sylvania looks like a compelling investment opportunity.

Introduction
Among palladium (PALL) producers, my favorite company is Sylvania Platinum (OTC:SAPLF). The reason is that it has very low costs and it produces platinum group metals (PGMs) from chrome tailings, which is much less technically challenging compared to deep underground mines. However, in January, I wrote an SA article in which I said it was time to sell as high palladium and rhodium prices were unlikely to last for much more.

Then the situation changed drastically on the supply side as COVID-19 pushed South Africa to order the closure of mining operations at the end of March with the aim to contain the spread of the virus. I reversed my take on Sylvania and posted another SA article in which I concluded that the company was well-positioned to weather the storm thanks to its strong cash position and should benefit from rising platinum and palladium prices as supply was destroyed.

South Africa, which accounts for close to 40% of global palladium mine supply, allowed mining to resume on 1 May and some data suggests that the palladium market is close to balance in 2020 and 2021. However, I have a different view and think deficits are likely to last and keep prices high.

Sylvania's business and its H1 2020 results
Sylvania owns a total of six operating chrome beneficiation and PGM processing plants, which process chrome tailings at host-mine sites on the Eastern and Western Limbs of the Bushveld Complex in South Africa. The latter is the largest source of PGMs in the world, although most mines are now deep underground and technical challenges are plenty.

The company currently has an annual production capacity of 74,000 to 76,000 ounces of 4E PGM, with palladium accounting for around a quarter of that.

However, this is still a high proportion of palladium compared to traditional miners as the metal is usually mined as a by-product of other metals - platinum in South Africa and nickel in Russia.

What I like most about Sylvania is that it has a strong balance sheet with no debt and its cash costs are the most competitive in the whole PGM sector at around $600 per ounce.

At the end of June, the company had $55.9 million in the bank.

Regarding the financial results for Q2 2020, it was a weak quarter with production of 4E PGMs dropping by 55% to 9,055 ounces. However, this is understandable as the business was closed through April and began running at full capacity in June. Still, Sylvania managed to squeeze a net profit of $2.2 million, which I consider an achievement in this environment.

On a negative note, retrenchments at two host mines (Mooinooi and Lannex) due to the depressed chrome market led to Sylvania reviewing its plant feed strategy, which will result in a decrease of 10-15% in production during the next 12 to 18 months.

The impact of COVID-19 on the palladium market
Platinum and palladium are primarily used in catalytic converters, which are a part of auto exhaust systems that reduce toxic gas emissions. The automotive industry accounts for more than 80% of palladium demand, which is bad as there are few sectors which have been more heavily impacted by COVID-19. According to data from Norilsk (OTCPK:NILSY), demand destruction from the auto sector is estimated to stand at around 1.6 million ounces in 2020.

On the supply side, South Africa accounts for 75% of the global platinum and 38% of the global palladium mine production and Norilsk estimates the lock-down in the country will be the main contributor to a 14% decrease in global supply in 2020.

With demand dropping faster than supply, data suggests that the palladium market will be close to balance in 2020 and 2021 for the first time in a long time.

However, I think the estimates from the Russian mining giant are too optimistic. The reason behind my thinking is that PGM production in South Africa failed to recover in June, although mines in the country were allowed to reopen.

As you can see from the June 2020 data from South Africa's national statistical service, output from open pit mining operations such as manganese has recovered but PGM production is actually down month-on-month. In fact, PGM was the only mineral group, which registered a double-digit decline on the month. Also, production was very weak in March too, which leads me to think that the impact on palladium supply from disruptions in South Africa is going to be higher than 0.7 million ounces in 2020. Statistics South Africa doesn't provide separate data for PGMs, but I think it's relatively safe to assume that palladium output is down proportionally to platinum.

If palladium output in South Africa doesn't recover by the end of 2020, I think production of palladium for the country could be down by at least 0.9 million ounces during the year, thus keeping structural deficits in place. Deep underground mines are technically challenging to operate as well as to re-open and I think it's possible that palladium production from South Africa remains subdued in 2021, especially if some mines stay closed permanently. With this, deficits in the palladium market aren't going anywhere anytime soon and this should support high prices for the metal.

Investor takeaway
Sylvania has a high proportion of palladium and rhodium output compared to other South African PGM producers, which allows it to currently have a gross basket price of around $2,100 per ounce. At these prices, the company can generate EBITDA and profits of around $30 million and $25 million per quarter, respectively.

The main listing of Sylvania is on the LSE and the company currently has an enterprise value of $162 million, which makes it look like a compelling investment opportunity with a forward EV/EBITDA of around 1.4 times.

Palladium prices will eventually decline, but I don't see it as being likely over the next year as the lack of recovery in South African production is keeping the market into deficit.

[zho] 02/9/2020 09:18

Sylvania Platinum’s a great UK share to buy to latch on to current investor nervousness and to ride the eventual economic recovery. Fears over Covid-19 should keep on driving precious metals prices over the near term, assisted by the weakening US dollar. A recovering auto sector should push platinum and palladium prices higher further out too, along with this AIM company’s share price. I’d buy Sylvania because of its low forward price-to-earnings (P/E) ratio of 5 times and its monster 6% dividend yield.

[plat hunter] 01/9/2020 18:33

Give it to me :-P