Sylvania shares scoping results, points to low PGM price

ylvania, a platinum group metals (PGM) producer and developer with assets in South Africa, saw shares spike in early trade in reaction to scoping study results before falling back by mid-morning.

The share price reached 59p/share at the open before trading lower, at 55p/share, by 10am. 

The company was sharing the results of the study completed on its Volspruit project, as well as the declaration of an exploration target at its Hacra project and an update on the Aurora project.

Volspruit

At Volspruit, a scoping study for the north body was completed in 2022, and the MRE was updated in 2024 to include resources from the south body, as well as estimates for both Rh and ruthenium, which had previously not been assayed.

The new figure of 28.24Mt (gross in-situ)4E, palladium and Rh is up from a 2022 MRE of 15.4 Mt and the new figure of 2.36gpt is up from a 2022 figure of 2.27gpt.

Production is expected to be at a rate of 1.8Mtpa from the north and south pits, with the project having a pre-tax net present value (NPV) of ZAR1.2 billion (US$69 million). This compares to a predicted NPV of  ZAR464 million ($27.3 million) in 2022. 

"The updated scoping study resulted in a significant increase in project pre-tax NPV to $69 million for a 14-year LOM, compared to $27.3 million NPV and nine-year LOM for the October 2022 study, while the IRR is slightly lower at 17%," chief executive Jaco Prinsloo said.

"Although the additional South body tonnes and rhodium revenue contributed to higher project revenue, the peak capital and all-in operating costs have increased, largely impacted by an improved understanding and updated costs for the processing plant and related infrastructure," he added.

Other projects

Elsewhere, the company has set an exploration target of 20-22.5Mt at its Hacra project, at an estimated 4E grade of between 2.18gpt and 3.32gpt, adding that the tonnage and grade ranges in this exploration target are conceptual in nature. This, it said, is due to the fact that there has been insufficient exploration to estimate a Mineral Resource.

At Aurora, the company said that following the initial 2022 MRE for the La Pucella target area, the reinterpretation of historical information has now been completed, which can facilitate a future work program.

La Pucella represents approximately 12% of the potential total strike length of Aurora.

"The results from the recently completed and ongoing studies continue to improve our understanding of the occurrence and value of resources at our respective exploration assets and provide guidance on where future efforts need to be focussed to optimise future value for the Company and all of its stakeholders," Prinsloo said.

PGMS Market

Prinsloo pointed to the PGM price environment, which has been depressed of late.

"While we have slowed down some of our exploration studies during the past year to align spend with the current PGM price environment, I am pleased with the steady progress we have made to improve the understanding of our respective exploration assets and to further optimise future potential," he said.

Platinum's worst crisis in decades has squeezed the four big producers in South Africa - Sibanye-Stillwater, Amplats, Impala and Northam Platinum - as they battle the sharp slump in the PGM dollar basket price, particularly palladium and rhodium.

With high interest rates and sluggish global growth undermining demand and adding to costs, the platinum price has fallen by one-quarter to less than $1,000/oz since February 2021.

Last month, during Shanghai Platinum Week, delegates heard that it was possible that PGM miners in South Africa may start to close mine shafts soon to rein in financial losses amid the sustained downturn in PGM prices.

Cost-cutting measures by the miners have included shedding jobs and curbing expenditures but not potential production cuts until recently, according to speakers. Sibanye-Stillwater blinked first when it said in April it would close its loss-making 4 Belt shaft at the Marikana platinum operations after failing to return it to profitability.