Release Date: February 18, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Sylvania Platinum Ltd (SAPLF, Financial) reported a 17% increase in net revenue to $47.6 million, driven by a 3% improvement in production and a 6% rise in PGM basket prices.
- The company maintained a strong cash position with no debt, allowing it to pursue operational optimizations and growth opportunities.
- An interim dividend of 0.75p per share was declared, demonstrating the company's commitment to returning value to shareholders.
- The Taba joint venture is expected to diversify revenue streams by adding a significant chromite revenue stream, with first production anticipated in April-May 2025.
- Sylvania Platinum Ltd (SAPLF) remains in the lower percentile of the industry cost curve, despite increased costs, indicating efficient cost management.
Negative Points
- The cost of sales increased by 18%, driven by higher direct operating costs, including labor, power, and consumables.
- PGM feed tons were slightly down due to challenges such as lower dump feed tons at Moinui and a strategic stoppage at Lesedi.
- The company faces a challenging PGM price environment, which could impact future financial performance.
- There is a risk of supply pressure in the PGM market due to job cuts and reduced capital expenditure on growth projects.
- The company's cash balance has reduced due to capital projects, although this was anticipated as part of funding larger-scale growth projects.
Q & A Highlights
Q: It looks like electric vehicles don't work as expected, and there will be a movement to hybrids. Do you see this as a big driver to pick up PGMs again?
A: Unidentified_2: We believe that the initial growth rate for EVs was overestimated. With the introduction of hybrid vehicles, there is now more support for PGMs, which should lead to stronger demand and market improvement based on supply-demand fundamentals.
Q: Can you give some color on the criteria you use to repurchase shares? Will this be affected by the completion of the Taba JV project?
A: Unidentified_2: We continuously evaluate how to return value to shareholders through share repurchases or dividends, considering attractive growth opportunities. The Taba JV project has allocated capital, and we maintain a balance between dividends and share buybacks based on available capital and returns.
Q: What is your ability to increase iridium production given the demand from hydrogen fuel cells?
A: Unidentified_2: We have iridium and ruthenium in our basket, contributing significantly to our sales. Iridium accounts for 11-15% of our 6E contribution, and we expect future upside if prices improve due to the green energy transition and hydrogen economy.
Q: What is your view on the new low-cost supply coming online, and will it impact PGM prices? Also, what about the new expropriation bill in South Africa?
A: Unidentified_2: The new supply is a few years out, and current loss-making PGM ounces may not be around in 3-5 years. The expropriation bill is still contested, and we believe investments are protected under current laws and the constitution.
Q: Will the company maintain the current dividend levels?
A: Unidentified_2: We are committed to maintaining a stable dividend, often exceeding the minimum requirement of our dividend policy. We evaluate capital allocation needs and metal pricing to determine free cash flows, ensuring a stable dividend for investors.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
