Sylvania, the mid-tier platinum mining company, reported its half-year financial results for the first half of the 2024 fiscal year, ending December 31. Despite a significant drop in the PGM basket price, the company managed to maintain robust financial health, with net revenue reaching $40.8 million and group EBITDA at $7.3 million. Sylvania's production stayed strong, and it continued to focus on operational optimization and efficiency improvements.
Key Takeaways
- Net revenue reported at $40.8 million despite a 48% decline in PGM basket price.
- Group EBITDA stood at $7.3 million, with a full-year estimate of $22 to $24 million.
- Sylvania maintained a cash balance of $107 million and declared an interim dividend of one pence per share.
- The company produced 48,405 4E ounces, with a cash cost of $833 per ounce.
- Growth strategy includes expanding existing assets and exploring new opportunities.
- Environmental and social initiatives remain a priority, alongside maintaining low-cost production.
Company Outlook
- Sylvania is well-positioned as a cash-generative business with a focus on growth.
- Price forecasts for metals like Palladium and Rhodium are higher than current spot prices, suggesting potential recovery.
- The hydrogen economy's impact on platinum demand is seen as a positive influence.
Bearish Highlights
- Revenue impacted by lower metal prices, particularly platinum and rhodium.
- Share buybacks postponed due to declining metal prices.
Bullish Highlights
- Company remains one of the lowest cost producers despite cost increases.
- Strong demand for Palladium and Rhodium expected to continue due to the slow transition to electric vehicles.
Misses
- The company experienced a significant 48% decline in the PGM basket price, affecting revenues.
Q&A Highlights
- Sylvania discussed production optimization and tailings dam safety.
- Break-even prices for operations and the impact of the hydrogen economy on platinum demand were highlighted.
- The company addressed questions on cost information for platinum, palladium, and rhodium.
- Emphasized commitment to efficiency and transparency in challenging market conditions.
Sylvania's half-year earnings call painted a picture of resilience amid market challenges. The company's production levels and strategic focus on efficiency and cost management have enabled it to navigate the volatility in metal prices. With a strong cash balance, a commitment to shareholder value through dividends, and a clear growth strategy, Sylvania is poised to exploit future market opportunities while prioritizing environmental and social responsibilities. The company remains transparent with its shareholders, encouraging feedback and maintaining a dialogue on its performance and strategic direction.
Full transcript - Sylvania Platinum (31L) Q2 2024:
Operator: [Abrupt Start] Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged and can be submitted at any time by the Q&A tab situated in the right hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question it receives through the meeting itself. However, the company can review all questions submitted today and publish responses where it is appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you up to Jaco Prinsloo, CEO. Good afternoon to you, sir.
Jaco Prinsloo: Good afternoon, Alessandro and thank you. Welcome to everybody else who's joining us in the webinar. As always, we welcome the opportunity to share our information with you. And myself and Lewanne Carminati, our CFO, will be taking you through our presentation today. We are presenting our half-year results, the first half of the 2024 financial year that ended up at 31 December. So just as we go into the presentation, I will show you just point your attention to the disclaimer that the information we share is not intended for you to make investment decisions. We'll give you an overview of the performance. Okay. And if we look at the company and just what Sylvania is about, maybe for those of you who are not familiar with Sylvania. We are a cash generative, dividend-paying, mid-tier platinum mining company that has been in operation for just over 15 years now. And explaining both our historic success and also looking our strategy and vision we apply going forward. The board and management continuously focus on maintaining safe and profitable production, and ensuring that we maintain and strengthen our license to operate. And we focus on strategic investments in R&D and business improvement so that we can ensure we maintain a sustainable cash generative business. That has been the key enabler for us over the past couple of years to grow our operations and also for us into the future to pursue further growth opportunities and to return attractive value to our shareholders. So, the past number of years, we have reinvested most of the cash we've generated back into our operations, growing our operations from one to six operating units. And we are currently building the seventh unit. And we've also been able to do significant share buybacks and pay stable dividends since 2018. So, if we go just into what the business is about and where operations are located. So, the results we're going to share with you today, the revenue and production figures you will see is primarily originating from the current Sylvania Dump Operations. That's six current Chrome and PGM beneficiation plants that we have operating. Three of them, Mooinooi, Millsell and Lesedi on our Western Limb of the South African Bushveld Complex and Lesedi, Tweefontein and Lannex, sorry, Lannex, Doornbosch and Tweefontein on the Western Limb of the Bushveld complex. To the north of the Western Limb is also the new Thaba JV, the joint venture operation we've announced in August last year, that's currently the project in execution. And that is a similar process, flow and design and business model and now other businesses. And then in terms of the other side of our business and all the assets we own is the exploration assets in our portfolio, and these are a number of attractive, shallow, open-pittable resources and mining projects that the company has owned for more than 10 years already and we've acquired a number of years ago for which we own approved mineral rights and that we are currently improving studies to better understand and improve the resource classification on these projects. But I'll tell you more about that in the rest of the presentation. So if we just look at a glance at the results for the half year just concluded, I think the first thing, like with most other operations in the industry, all other PGM companies, the PGM basket price is probably the most prominent factor and something specific. We have seen in our basket in particular, we have had a 48% decline year-on-year -- this half year period compared to the corresponding one in 2023 where we've been at $2,513 per ounce in '23, we are now at $1,311 an ounce, so a significant decline. However, and I think due to our position in the market, we have still been able to post a good financial returns for this period. Despite the heavily declined PGM price, we still have been able to post net revenue of $40.8 million, a group EBITDA of $7.3 million. And after paying our final dividend during December and funding our capital commitments of our project pipeline, we're maintaining a cash balance of $107 million at the end of the period. And given the strong financial performance and also taking our cash balance into financial account, the board have approved one pence dividend per ordinary share as the interim dividend, the first interim dividend for the year. And Lewanne will elaborate a bit more on the dividend in the finance part of the presentation. And then obviously, worth noting that the financial performance is always underpinned by strong production fundamentals and cost control, and this half year, again, has been no exception, we have had a very good production performance, achieving 48,405 ounces, 4E ounces, if you equate that to 6E, it would be 48,670 ounces for the period. It was basically on par with the corresponding period in 2023. And also very important when you're in a price environment like we currently are, I'm very proud that we've been able to maintain our position at the lowest quartile of the industry cost curve at $833 per ounce, 4E group cash cost. And so overall, I think a very satisfactory performance for the year and well in line with our expectations, except the basket price that obviously impacted on our operations. If we just now focus a bit more on the operations itself and how the ounce production came about, I've already said here, ounce production was about on par with previous performance. And that is despite quite a significant drop of 9% in PGM feed grades for the period. But we have managed to improve PGM feed tons by about percent -- PGM recovery by about 2% as we optimized the recently commissioned MF2 circuits at Lannex and Tweefontein during the period, and also lower work in progress stock at the end of the period. I'll deal in one of the next slides a bit more about the feed grades. I think if we look at the dump operations and the next financial, the half of the financial year, we are looking at optimizing the Lannex fine grinding circuit and also the fine screening circuits that are add-ons to the MF2 that's recently commissioned, and that should be optimized during the next quarter or two. And we're hoping to bring further efficiency improvement. And then also at Doornbosch, we are supplementing the feed with a higher grade third-party material where we source the external source for the next 18 months. In terms of the addition of our Thaba JV project, you will see on the 2025 and 2026 production bars, right at the top of the green blocks are the Thaba JV contribution coming in with the project contract to be commissioned in the second half of the 2025 financial year as we originally announced. And then eventually taking our overall production profile, just over 80,000 ounces, about 83,000 ounces 4E or 104,000 ounces 6E for the period. If we look at -- this is just some detail on the individual operations and I'm not going to take you through all of it. Probably just worth highlighting are the two aspects already I've mentioned in terms of the lower feed grades. And that was primarily at Lesedi and at Tweefontein we've had lower feed grades. Lesedi was due to lower dump sources being mined and where they were on the current mining plan where they surface dump. And at Tweefontein, we had lower volume and grade of current arisings from the host mine. At both these operations, we have secured and ensured that we have higher grade third-party resources to supplement the feed grades. And we're also working at Tweefontein with the host mine collaborating in terms of improving the current arisings volumes and grade for various initiatives. So overall, we still anticipate our annual production to be between 74,000 and 75,000 ounces for the financial year and we expect operations to perform well. I think the one other thing probably worth pointing out, and a lot of people ask about the power situation and risk in South Africa. And as I've pointed out from previous presentations, the one operation from Sylvania that have been exposed to load curtailment has been Lesedi. We've suffered 300 hours of production downtime during the 2023 financial year. However, with lower load shedding during the past half year, that reduced only about 81 hours downtime. But as of the third quarter, so post the period end, we have successfully commissioned the Lesedi backup generators and Lesedi will therefore now be able to run even if there are load curtailment periods. So we don't anticipate any other operations to be impacted by load curtailment or load shedding going forward. Okay, I'll hand over to Lewanne to take us through the financial results, and then I'll turn of to the presentation again.
Lewanne Carminati: Thanks, Jaco. Looking at the financial results for the reporting period, for the first six months to 31 December, the company reported a net revenue of $40.7 million. This includes 4E PGM revenue, by-product revenue from ruthenium and iridium, as well as base metals, copper and nickel. It also includes the sales adjustment for ounces delivered at 30 June 2023, but only invoiced in the 2024 financial year. And then cost of sales, we had a $3 million increase in cost of sales, which I'll provide a little more detail on in the next slide. Our royalty tax came down as a result of a drop in the basket price. The calculated percentage is applied to the revenue resulting in the lower royalty tax for the period. On the other expenses line is mostly administrative and corporate costs and these are incurred in Rands, Dollars and Pound Sterling in South Africa, Bermuda, as well as the UK. Finance income includes interest on invested cash, and this cash has earned an average of 5% per annum, as well as interest on the loan to CromTech for their portion of the Thaba CapEx, as well as the loan to Forward Africa relating to the sale of the Grass Valley. That was concluded last year. The income tax expense line includes the normal income tax on taxable profits generated at our SDO plant and taxed at the South African corporate rates of 27%. It also includes the deferred tax movements and dividend withholding tax on the dividends declared by Sylvania Metals to the parent entity. If we look at our financial performance and our revenue and costs in a little more detail, you'll note that revenue for the period was impacted almost entirely by the drop in the basket price, much like the rest of the industry. Although the production prowl has remained fairly consistent, the movement in the metal prices has shifted the revenue contributions of the 6E metals, with the biggest change being that of the platinum and rhodium contributions. Platinum increased 17% to 40% of our 6E revenue, and rhodium decreased 12% to 30% of our revenue. With stable production, the operations still remain cash generative, despite the drop in the basket price, and we continue to focus on what we can control, being costs and optimizing production. We did however have higher inflation increases for -- higher than inflation increases for electricity and reagents, as well as an increase in our labor complement compared to the prior year corresponding period. And as a result, our cash costs per 4E PGM ounce for the reporting period was $682, and group cash costs $833 per ounce. All our operating costs are incurred in Rands, and the largest contributors, as you can see in the bottom right of the slide, are labor, power, mining costs and consumerables. But despite the increase in our costs, we're still one of the lowest cost producers on an all-in cost basis, and you'll see that in the NedBank Industry Cost Curve, which is highlighted in the presentation. Touching on our EBITDA, we have a $7.3 million EBITDA for the reporting period, again impacted by the lower basket price. At our current production guidance, and a basket price based on the average forecast metal prices of a number of institutions, we've estimated a full year EBITDA of between $22 and $24 million. If prices remain at the current spot, then this EBITDA is estimated to be around $18 to $20 million as is indicated by the orange dotted line. Details of the price assumptions are included in the appendix on slide 39, if you'd like to have a look at those. Even in the current price environment, the company has a strong balance sheet. Cash generated from operations was $10.7 million for the six months to December. $4.8 million was paid in taxes to the South African Revenue Services, and there was provisional income tax in December, as well as dividend withholding tax. We spent $7.4 million on capital, and this includes capital for our SDO, $1.3 million on the Thaba JV, and $400,000 on exploration projects. The spend on the SDO capital includes tailings dams, the milling and fine grinding project at Lennax, last payments on the MF2s, as well as the backup power. The capital estimates for the second half of the year include all budgeted capital, but as cash management and preservation in the current price environment is critical, the management and board are constantly reviewing the capital, and each project is assessed prior to commencement, and we take the cash flow, payback, and contractual requirements into account. The company also paid the final dividend declared for the last financial year in December, and that amounted to an outflow of $16.7 million. Returning value to our shareholders has always been a priority for the board, and since 2018, the company has paid out $98 million to shareholders in dividends, and $3 million to employees under the employee dividend plan. We've bought back 61 million shares and cancelled 24 million shares, and as communicated last year in February, the board has revised the dividend policy with the intention to distribute a minimum of 40% of the annual adjusted free cash flow, its split into a one-third interim and a two-third final dividend. So based on the free cash flow forecast for 2024, and adjusting for the Thaba capital, the board has declared a one pence interim dividend per share. If we have a brief look at our ESG, ESG is entrenched in the daily lives of the company and its employees, and we continue to align our ESG strategy with the company's values. To just touch on a few of the highlights for the six months, on the environmental side, the revegetation trial has been progressing well. It's currently in the final phase, and we will be concluding the trial in April 2024. Initial reports indicate that there are two possible solutions to rehabilitate the tailings dam, with the third one that is currently being tested. The solution will significantly reduce the cost of revegetation and the impact on other areas, as we'll no longer have to need to truck topsoil to rehabilitate these dams. We've also partnered with the Endangered Wildlife Trust in conservation and protection of threatened species and ecosystems in South Africa. On the social side, the Doornbosch plant remained more than 11 years LTI-free, and the company's had no fatalities since the first operation was commissioned in 2007. Our female complement has increased to 23.47%, and safety and awareness campaigns are run regularly and for the reporting period under review. The annual safety campaign over the festive season was run from November to January, and the anti-gender-based violence campaign was launched in November. The company maintains its clear and transparent reporting to all stakeholders, and continues to make a significant contribution to the South African economy. And we are also in the process of reviewing the QCA corporate governance code updates, and we'll apply those where applicable for the full financial year. I'll now hand back to Jaco to take you through the growth strategy and market outlook.
Jaco Prinsloo: Thank you, Lewanne. And now that we have discussed and reviewed the past period's performance, I think we'd like to take you through some of the projects looking forward, and also our strategy for growth. But I think before I start, it's important to stress that despite the current PGM price environment, we still maintain a robust outlook for the industry, and certainly we still see an opportunity for growth, especially from our position in the industry. And we will continue to explore, and do continue to explore, low-risk opportunities, especially where there's a high yield potential, and especially where they can be brought into production fairly quickly. So to this end, our growth strategy focuses on a few items. Firstly, as we've discussed in the SDO graph already, we look at how can further unlock potential from our existing suite of assets. And that's both the dump operations where we are improving technology, roll out new, like the MF2 circuits we've done, fine-chrome beneficiation, so that we unlock more value from the dump operations we already have, but also from the exploration assets we already have. And that I'll cover in just a moment. And then we further focus on how we can replicate this proven business model outside of our current operations, but on similar kind of operations. And the Thaba JV is a perfect example of such an initiative, where we have taken a proven business model from our current operations and a similar process technology and flow sheets, and apply that to another operation. And then, finally, we continue to explore external growth opportunities where we also can replicate or can employ our current technology, but in different metals and jurisdictions as well. So that's a continuous area for our exploration and R&D teams to focus on. So if we go into the Thaba JV first, then, and as I mentioned already, we've announced it last year and I covered it in the previous presentations. I won't go through all the key features of the project, but I think one aspect, for instance, to highlight on the Thaba JV is the fact that it's transformative to the company in the sense that it's the first project that introduced a chromite concentrate revenue stream. And it's not just a treatment charge, it's the full revenue stream from the sales as part of the joint venture. And, you know, which is another -- especially when you view the current PGM market, it brings a very attractive revenue stream to the market. At our attributable portion of 200,000 to 210,000 tons of Chromite a year, this project could add between $50 million and $55 million of revenue to Sylvania's revenue stream per year. And so it's a nice diversification of that. I think -- then also just in terms of the progress, we have progressed very well with the detailed design. Most of the process design is complete. There will always be some design in terms of structure and the final electrical up until the final construction. But we are on track with our detailed design. We've enabled us to place all our long lead item orders already. So the procurement of that has been done. The procurement of the other items and equipment is on track and in progress. We have commissioned earthworks and civil construction towards the end of quarter two. So that was November, December last year, and that is currently in progress with teams on site. And our operational management teams are currently busy with operational readiness planning as well to make sure we have all the infrastructure and logistics in place before the project commission. So overall, all the work streams are on track for us to ensure we deliver the project on time during the second half of the '25 financial year as we've indicated before. Then just moving to the exploration projects, and again, as I said, the aim here is for us to see how best we can unlock value for shareholders. I think a lot of people say it's fundamentally different from your dump operations. We're planning to go into mining. I've said it a couple of times before. The intention is not for us to say, we're suddenly going to mine these projects. But they have been on our books and balance sheet for a number of years. And by improving the resource classification from the exploration target to a non-resource estimate, completing a feasibility study, at every step we improve the value that we could potentially unlock for our shareholders. And that will enable us to make the right investment decision to decide, do you spend these operations out? Do you do an outright sale of it? Do you partner with somebody who has the mining expertise and you stick to the processing of it? Those are decisions we can take only once we fully understand the value of these projects. So in terms of understanding the value, in terms of Fall Sprite, some of you might remember we announced the first mineral resource estimate for the Fall Sprite project in October 2022. At that stage, we focused only on the north ore body on the project and as a proof of concept study initially and also at that stage the south ore body and the rhodium assays wasn't at a job compliant level yet and we spent the last year now to improve the classification of the south ore body and also to include the rhodium at the jaw compliant level so that we can then ultimately published an updated mineral resource estimate. And that was published on the 16th of February. And the table at the bottom of the slide just gives you an idea of this. It resulted in ultimately 28 million tons of ore and about 2.2 million ounces of PG, for PGMs. I think through the exercise and I'll just briefly touch on the next slide, I've included the table for tables for reference so people can see how the individual metals are making up the Monroe Resource Estimate. But I think are making up the mineral resource estimate but I think just notable in the on the description of the summary on the left is that the South ore body contributed to an additional 38% to the overall volume of the resource. Rhodium constituted about 6% of the overall OE grade and you know we also managed to almost double the PGM content, the original mineral resource estimate at 1.1 million ounces of PGEs and we now have 2.2 million ounces. So certainly this exercise have added significant value. The next step for Fall Sprite now is to complete an updated preliminary economic assessment or scoping study as it's also known. We have commissioned SRK in that regard. The study is already in progress and they are using the updated mineral resource estimate. In that study, we should have those results by the end of our financial year, around June, July, in order for us to decide if we progress to a pre-feasibility study or what the next step for the project would be. In terms of The Far Northern Limb projects, and that is Aurora and Hacra, at the moment don't have any new information to publish on that. We have however continued by understanding and defining the mineralization along the strike in order to determine and prove the continuity. We have an initial mineral resource estimate we published on Aurora, for instance, was only over the La Pucella area that only constitutes about 12% to 14% of the overall strike length. And that constituted about 16 million tons. So if there's continuity across the entire strike length, this resource is potentially significantly more. So our work at the moment is to better define that continuity and then to work towards declaring a mineral resource estimate on the entire strike length. And then only will we decide on the next steps of a scoping study or what next to do with that project. So, and I think this slide, again, just summarizes a lot of what I've said into timelines and, you know, the different streams looking at both the existing Sylvania dump operations, the new dump and cromatolite facilities and the exploration assets on the existing dump operations. I have already mentioned the Lennox optimization that is in place. I have mentioned also that we in the short term have quite attractive high-grade third-party material that is available to us to supplement feed. And then longer term on the existing operations, we believe that if we can progress our fine chromite technology, we can unlock potential in some dormant dams as additional revenue stream and also extending operational life in certain areas. On the new dump operations, I have covered the Thaba operation already in quite detail, so I am not going to talk about that again. But then just worth noting that we have also opportunities at both the eastern and western limb respectively, where we are engaging with specific host mines in terms of technical commercial due diligence, where we have exclusive right to chromite material, both the chromite and run-of-mine material. And we are hoping that that can translate similar to the Thaba JV into new operations at the east and the west respectively. And we are working towards finalizing those studies in order to determine the way forward. And the exploration assets, I think I have just explained, maybe just the one point worth pointing out, that if there is an investment decision taken on that, your time to production is typically four to five years. It is a lot faster than underground operations because of surface operations, but it is still quite a significant amount of time. Just briefly touching on some of the market fundamentals, and people always ask us about it, just to put into context how the market impacts on Sylvania. I have included just the Platinum, Palladium and Rhodium trends here as Gold is less than 1% of the Pearl Split. But you can see a significant decline in Palladium and Rhodium over the period. Palladium 43% decline over the past year, Rhodium 63% decline. And you can see then at the top right graph how that translates into the 4E grade impact. And as I have mentioned earlier, a 48% decrease over the past year. So that is significant in the process. I think bearing that in mind and understanding the cost, the prices, you start to better understand the importance of managing your cost and maintaining a position very low on the cost curve. If you look at how the prices have declined in recent years, if you look at the industry cost curve, you can see that the red line is the spot basket price trends. And you can see that most operations in the industry are not able to turn a profit under the current price environment. And that is important, first of all, in terms of sustaining your operations. But secondly, on the longer term, it might impact supply and demand fundamentals. So that's always worth noting for. We are very fortunate and grateful that we are able to maintain our position in the bottom of the industry cost curve. Looking at the specific metals and just in terms of users to try and understand the market a bit better. I've been talking to various analysts over the last couple of weeks and it's very difficult to make an outright prediction. What we can try and do is look at what the supply and demand do. Certainly from Palladium and Rhodium point of view, it's primarily driven by the automotive sector. The primary use is in the auto catalyst. We've seen in Palladium is about 84%, Rhodium is about 90% of the use, where Platinum is a bit lower at about 41%. Looking at the supply and demand, Platinum is expected to be in deficit in the short to medium term. While Palladium is in deficit at the moment, it's expected to move in slight surplus in the medium term. That is if nobody cuts Palladium production. I just showed you the industry cost curve. It's unlikely that people will sustain the production, but if we assume the production stays on, Palladium will be in surplus. Rhodium is in a slight deficit at the moment, but balanced for the medium term. It varies between slight deficit and slight surplus. I think the important thing is, if you look just at the supply and demand fundamentals, you would have expected the price to be stronger for all the metals at the moment. We suggest that it's not just the supply and demand that plays a role. I think the global social political status plays a role. I think when you have conflict in the US and Russia-Ukraine conflict, some of the inflation pressures internationally, that all plays a role on the current prices. But the fundamentals are still strong. In Platinum, with the use in the hydrogen economy, and the industrial use of Platinum, also the investment demand of Platinum, Platinum demand should be strong. Even in Palladium and Rhodium, there's always the big debate about the internal combustion engines being substituted with electric vehicles. I think it's been generally accepted, over the last couple of months or years, that that decision will probably not happen as fast as everybody anticipated. There's a lot more structural issues to consider, charging infrastructure, raw material availability. So we believe that Palladium and Rhodium demand will be stronger for longer. With that in mind, you look at the price forecast, and I probably should have included the spot prices, on the current outlooks we have here from some institutions. You can see that the forecasts are currently quite a bit higher than the current spot price. Everybody is expecting the price, even in 2024, to recover. To what exactly it's going to be, is a more difficult question. You can see how the different outlooks, from Standard Bank, for instance, for Platinum, to Librium and Nedbank differ. Every analyst and every institution has their own views on exactly how it's going to play out. We always include this as sensitivities, but it's very hard to pick an exact number. These are just the prices that are associated with the sensitivities that were explained in the EBITDA graph earlier in the presentation.
Lewanne Carminati: So I think, just in closing, looking at the investment case, for Sylvania, I think our shareholders would agree that Sylvania remains an attractive, low-cost, low-risk, cash-generative business. I hope that we have developed a track record over the years of strong performance, and ensuring that we can deliver significant value to our shareholders, through a combination of stable and growing dividends, as well as significant share buybacks over the years. We are well positioned to continue doing this for the years to come. Especially where we are positioned on the cost curve, I think we are in a unique opportunity to look at opportunities to grow and to take our business forward. So, yes, that concludes the current presentation. I'll hand it back to Alessandro now for some questions, if there are.
Operator: Perfect. Hello, and thank you very much for your presentation. What I'll do is I'll just bring your cameras back up at this point. Ladies and gentlemen, please do continue to submit your questions just by using the Q&A tab, which is situated on the top right-hand corner of your screen. But just while the company take a few moments to view the questions that have been submitted today, I'd like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A, can be accessed via your investor dashboard. As you can see, we have received a number of questions throughout today's presentation. Jaco, if I could just hand back to you just to read out those questions and give responses where it's appropriate to do so, I'll pick up from you both at the end.
Jaco Prinsloo: Thank you, Alessandro. I'm just looking at some of the pre-submitted questions that are on there. I think the first one, Lewanne, did answer in the presentation and somebody asked, what blended interest rate does the company enjoy on the significant cash pile? And I think, you know, there's, and I like it in the financial performance, it's a -- average of 5%. Because some of it is offshore invested and some of it is in South Africa. The second question we had, it said, are you looking at the cash pile and are you prepared to use some of the company's cash in order to pay dividends in the future? I mentioned this because of the falling profits due to the low basket price of the various elements such as ROADM. I think we have explained in our dividend policy that we have stated a minimum of 40% of the free cash flow when it's to be distributed to shareholders, but we also said we will take into account the capital requirements and financial requirements and the forecast. And I think this year already, as an example, the £0.01 interim dividend will be declared, taken that into account already. So we have promised shareholders before that we would, for instance, fund the Thaba JV out of the existing cash operations. So when we do the calculation that we are able to distribute, we would already, you know, adjust for instance, the Thaba capital we have said we will do. So in a sense, we are already using some of the cash power to fund the dividend and we will continue to evaluate as we go forward the financial position and also the need for cash allocation as we go forward. So every time when we have to make a dividend decision, we would review the strategic capital requirements for growth opportunities. We review our cash requirement for maintaining adequate working capital in difficult times. So, yes, it's always a decision. We do appreciate that, a lot of people say you still have a large cash balance relative to what you probably need to hold just for working capital. But it's also that what enables us in this industry, especially in the downturn industry like we are, a downturn cycle we are in now, that you can capitalize on opportunities if you are able to acquire or expand your operations. Somebody asked, why the share buybacks or sparse management said they would start after the previous investor meeting, but nothing happened. So I think there's a couple of things and always with the share buybacks, we have to, again, like with a dividend, the philosophy I just explained, decide how much money you have available to distribute for a dividend or for a share buyback is looking at what you strategically need the cash for and what the markets are doing. I think in the current environment, after the last meetings, we saw quite a sharp further decline in metal prices and where we expected and hoping for a recovery. So we didn't think it would be prudent at that stage to use more cash on the share buybacks at the time. But we continue to evaluate our position and -- when opportune and affordable in future, we will again look at share buybacks. Somebody asked, what is the basket price break even? You know, and they said it's a thousand dollars, for example. So because of our different operations, some of our operations are larger scale and higher grade operations like Tweefontein, for instance, versus older operations of lower grade. So that break even price would vary for operations. You know, we currently have a place like Tweefontein are well below a thousand. I think we're even below $600 to $700 an ounce when then some of the older operations are higher. If you look at the profit margin for the companies, you would see that we're probably closer to a $1,200 to $1,300 per ounce break even, but depending on what feed grades you are putting through the feed, it's also varying for different operations. The next question said, why has the basket price declined so significantly? The hydrogen economy will be a large boost for platinum amount because it's used in electrolyzers. How do you see that playing out? I think I tried to explain that. As I said, one of the first things that we are seeing at the moment and a lot of analysts frustratingly mention in their reports is that the price is not currently following pure supply demand fundamentals. There are other political and economical factors at play. So, looking at the demand, you're 100% right with platinum having to play a more pronounced role in the hydrogen economy going forward. Also, with palladium and rhodium, as I said, we are expecting to be stronger demand for longer. That should also be a boost positive for prices. So, yes, it's not 100% sure why we've seen the current supply. There's a lot of speculation in the market. One of them on palladium specifically is that you potentially have Russian palladium supply going directly to China because of some of the other economic constraints in trade. That might even be going to China at a discount. That might impact on it. But that's not substantiated. But, there are indications that there's more to the current price decline than just the supply and demand fundamentals. Then somebody also said that the decline in market prices suggests that changes in demand are not matched by changes in supply. In other words, PGM producers optimize production and sales accepting whatever the price the market offers. But would it be preferable to scale back sales at these prices and simply building inventories or simply reducing mining activity when prices are soft? Yeah, and I think, you know, that is very difficult to do, especially if you have multiple commodities. We, for instance, in the production where we is, there's obligations to the host mine in terms of production. So if we would cut down operations, you know, you have certain contractual obligations to bear in mind. And a lot of the bigger mines, you know, it's not always possible to scale down the workforce and ramp them up again. Although, we have seen some significant announcements, I think Anglo Platinum announced potential 3,700 workers or jobs at risk. Just Anglo Platinum, there was another figure of up to about 4,000 workers between Nipala and Spania mentioned. So there are big announcements coming through. o far, people, some of the majors have announced labor restructuring and cuts, but not necessarily production. And, you know, you can probably cut labor and maintain production in the short term. But I do believe on the long term, structurally, it will impact on supply if that is prolonged. So I think that you do see those dynamics playing out in the industry as we're going on. And I think that ties on. There's another person who asked, are there signs of industry players shutting production? And as I mentioned, you know, yes, we have seen some of the majors making significant announcements already. There's another question that says, cost information was very useful. Was that just the platinum or does this also carry through to palladium and rhodium? The lowest cost producer, yes, sorry. And when we say the lowest cost producer, it is on the 4E, a typical 4E basket price. So it includes rhodium and palladium. So that graph, the industry cost curve we showed is on average 4E basket price. So most of the producers, they would have all the elements in their basket, although at different ratios. And that's why you saw the step up or step down on the cost curve. And it's on how the individual baskets for individual mines might differ. But it definitely is the 4E price. Somebody else also asked, are there any commercial sense in not selling all of the rhodium produced until prices become more profitable? I think I explained earlier, it was very difficult for us to, you know, the four metals in the basket are all produced together. And we produce one concentrate that contains all these metals, you know, a typical polymetallic concentrate that gets sold to the smelters who then have the offtake. So it's very difficult for us to handle individual metals differently or to delay the revenue streams. There's a question that says, after the tragic events in Brazil in recent years, has there been systematic reassessment of risks of in Slovenian tailings dams? Yes, I think we've done in terms of our ESG significant work on our tailings dams in the last couple of years. Part of it is introducing audits and aligning with the GISDM, the global industry standard on tailings dam management, which is currently at a higher standard than our existing standards in South Africa. So we certainly do. There's a significant focus and there's always been a significant focus on our tailings dams. So I think it's always worth pointing out that, you know, structurally, there are some big fundamental differences between our tailings dams and typically the Brazilian impacts. So first of all, you know, the weather conditions is a lot different. Topography is different where a Brazilian tailings dams are built in valleys or up against mountains because of the topography. Our tailings dams are mostly on a flat surface. Also, the Brazilian dams typically at hundreds of millions of ton and up to 100 meters in elevation, high the tailings dams, you know, our biggest tailings dam go up to 3.5 ton or 4 million ton and maybe 25 meters or 30 meters in construction. So certainly from a risk profile point of view, we are not nearly in the same category. However, saying that tailings dams remains one of the highest priorities from a risk management point of view in the industry. It doesn't matter who you are, both in terms of the potential risk to the health and safety of people, but also, you know, the reputation risk if something goes wrong, as happened with the Brazilian mines. And yes, I think that brings us to the end of the questions I've seen on the presentation. So, Alessandro, I don't know if I hand back to you. It looks like.
Operator: Perfect. Thank you very much for answering those questions. You can for investors and of course, the company can review all the questions submitted today and we'll publish those responses out on the Investor Meet company platform. But just before redirecting investors to provide you with their feedback, which I know is particularly important to the company, Jaco could I just ask you for a few closing comments.
Jaco Prinsloo: Thank you very much. And I think, you know, while I've said during the discussion, it's -- it is a challenging time. It is. We are cautious about the industry, but at the same time, I'm also excited about potential opportunities. I think if you position yourself in the industry where you are, you can be very efficient at maintaining your cost low, keeping your production consistent and stable. You're able to capitalize on opportunities when they come around. So we certainly focusing to continue to do the things well that we can control, the stuff we can't control. We're certainly making sure we put measures in place to mitigate against any potential risks. And yeah, so I think for our track record, the ethics and transparency, how we operate, we would continue to hopefully continue in the market as a partner of choice for growth and further mergers and also the opportunities going forward. And I hope our shareholders agree and support us on this journey. And hopefully we have some better news about the market and the PGM prices the next time we meet. But in the meantime, as I said, we're doing what we can well and ensuring we return the best value to our shareholders that we can. Thanks.
Operator: Perfect. And thank you once again for updating investors today. Could I please ask investors not to close this session as you know we automatically redirected to provide your feedback in order that the management team can better understand your views and expectations? This will only take a few moments to complete, but I'm sure will be greatly valued by the company. On behalf of the management team of Sylvania Platinum Limited, we'd like to thank you for attending today's presentation and good afternoon to you all.
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