Sylvania Platinum Ltd. · LSE:SLP
Sylvania Platinum — Investor Presentation (January 2013)
31 slides from Sylvania Platinum's investor presentation, January 2013
Slide 1: Sylvania Platinum Limited Corporate Presentation January 2013
Sylvania Platinum Limited Corporate Presentation January 2013 1
Slide 2: Disclaimer
Disclaimer • Certain forward-looking statements may be contained in this presentation which include, without limitation, expectations regarding platinum prices, estimates of production, operating expenditure, capital expenditure and projections regarding the completion of capital projects as well as
Slide 3: Share structure and management
Share structure and management CAPITALISATION SUMMARY STRENGTHENED BOARD • Listed on AIM • Stuart Murray confirmed as new chairman • Domiciled in Bermuda and will take over on 1st April 2013 - Over 25 years of executive experience in the • Ticker symbol: SLP LN Southern African platinum sector • Bas
Slide 4: Our business
Our business Sylvania Dump Operations Other projects • Seven fully operational chrome tailings • Development projects on hold pending processing complexes improved market conditions - Millsell, Mooinooi ROM and Mooinooi Tailings - Volspruit open pit mine project at southern end of on the western lim
Slide 5: Corporate strategy
Corporate strategy Value creation Shareholder-friendly use of cash • Free cash flow generation • Drive growth in equity value through - Consistent production at 50-60koz/year cash flow generation allowing - Nearly all capex for this production rate sustainably high return of capital to already spent
Slide 6: Tailings dump operations approaching steady state after several years of growth
Sylvania’s tailings dump operations are now approaching steady state after several years of growth PGM production oz 60,000 40,000 Tweefontein 20,000 Doornbosch Mooinooi ROM Mooinooi Lannex Steelpoort Millsell 0 2010 2011 2012 2013E 2014E 2015E Note: Sylvania financial years run to 30 June 6 Source:
Slide 7: Cash costs trending towards steady state levels
Cash costs are trending towards steady state levels post ramp-up and impacts of industry-wide strikes Cash costs $/oz 1,500 1,000 Tweefontein 500 Doornbosch Mooinooi ROM Mooinooi Lannex Steelpoort Millsell 0 2010 2011 2012 2013E 2014E 2015E Source: internal forecasts 7
Slide 8: Committed capital expenditure decreasing to sustaining capital
Committed capital expenditure decreasing to sustaining capital on dump operations only Capex $M 30 21 20 20 13 10 8 Other¹ SDO 4 operations 3 SDO construction² 0 2010 2011 2012 2013E 2014E 2015E Note: ¹Everest North, Volspruit, and head office; ²includes tailings dams 8 Source: internal forecasts
Slide 9: Operations are now generating positive free cash flow
Operations are now generating positive free cash flow Cash balance¹ $M 80 Current market capitalisation 60 Basket +20% 40 Basket +10% Current basket price 20 Basket -10% Basket -20% 0 31/12/12 30/06/13E 31/12/13E 30/06/14E 31/12/14E 30/06/15E Note: ¹assumes no dividends; forecasts are as at 18/1/13
Slide 10: Dividend policy
Dividend policy POLICY AND COMMENTS DIVIDEND YIELD COMPARISON • Sylvania has recently formulated its dividend policy, which should be applied from calendar H2 2013 onwards • Provided the resultant company cash balance is greater than $8M, we undertake to recommend paying a minimum of 25% of the prev
Slide 11: Large valuation gap with global PGM producing peers
Large valuation gap with global PGM producing peers P/NAV EV/EBITDA EV/EBITDA Price/NAV¹ Calendarised 2013 500% 30 450 400 350 20 300 250 200 10 150 100 50 0 0 SLP PAL PTM ELR RBPWEZAQPSWC LMI AMS IMP NHM SLP AQP PAL SWC RBP AMS IMP NHM LMI LN US CN CN SJ SJ LN US LN SJ SJ SJ LN LN US US SJ SJ SJ SJ
Slide 12: Sylvania is in the lowest quartile on the cost curve
Sylvania is in the lowest quartile on the cost curve of African and North American producers Achieved net basket price Mine EBITDA Cash costs Note: column width corresponds to 2013 production of PGMs; excludes third party smelting operations; Lonmin and Amplats forecast to have negative mine EBITDA
Slide 13: Sylvania is forecast to have the highest EBITDA margin
Sylvania is forecast to have the highest EBITDA margin Note: excludes third party smelting operations Source: CIBC as of 18/1/13 13
Slide 14: Sylvania is forecast to have the best ROCE in the sector
Sylvania is also forecast to have the best ROCE in the sector at spot prices Return on capital employed¹ 15% 11.5 10 9.5 8.9 7.5 5.8 5 3.9 3.8 1.2 0 -1.1 -2.2 -5 SLP IMP AMS NHM SWC RBP AQP PAL LMI ELR LN SJ SJ SJ US SJ LN US LN CN Note: ¹Defined as 2013 total EBIT at spot commodity prices / last re
Slide 15: Sylvania's business model is lower risk than other South African PGM producers
Sylvania’s business model is lower risk than other South African PGM producers SAFETY STATISTICS COMMENTS • Our surface-based operations are exposed to fewer safety-related risks than other producers of PGMs • We target a lost-time injury rate of zero - 9th May 2012 marked a full year free of LTIs a
Slide 16: Higher ounce production per employee drives lower costs
Sylvania’s higher ounce production per employee drives lower costs and helps mitigate the impact of wage inflation PGM oz / man¹ 150 100 50 0 SLP LN AMS SJ RBP SJ NHM SJ AQP LN LMI LN ELR CN IMP SJ Note: ¹Defined as 2013 estimated PGM production divided by latest reported total employees (including
Slide 17: Achievements in 2012 and targets for 2013
Achievements in 2012 and targets for 2013 April 2012 • 6th plant (Mooinooi ROM) produced first ounces June 2012 • Exploration success at Harriet’s Wish August 2012 • Dividend of Ironveld shares to Sylvania shareholders September 2012 • 7th plant (Tweefontein) produced first ounces October 20
Slide 18: Summary
Summary • Shareholder-friendly corporate strategy - Operations generate positive free cash flow - Disciplined capital allocation • Unwarranted discount to peer group valuations • Low cost producer with highest margins and ROCE • Lower risk business model than miners • Targeting maiden cash dividend
Slide 19: Appendix
Appendix 19
Slide 20: Operations and projects situated in the Bushveld geological complex
Sylvania’s operations and projects are all situated in the Bushveld geological complex in South Africa 20
Slide 21: Sylvania dump operations process flow
Sylvania dump operations process flow ROM Feed MG2 ROM ROM Fines Crushing / Screening / HMS PGE Flotation Plant Waste Note: ROM feed only applicable at Mooinooi 21
Slide 22: Long-term production forecast for dump operations
Long-term production forecast for dump operations Production oz 80,000 60,000 40,000 Tweefontein Doornbosch Mooinooi ROM 20,000 Mooinooi Steelpoort Lannex 0 Millsell 20072008 2010 2012 2014 2016 2018 2020 2022 2024 2026 Note: although Sylvania plans to recover 600koz of PGMs over 10 years and 1Moz o
Slide 23: Long-term production forecast for whole company
Long-term production forecast for whole company, assuming PGM prices justify growth projects Production oz 300,000 Measured & indicated Inferred resources resources 200,000 Northern 5.0Moz Limb @ 1.3g/t1 Everest 0.6Moz North¹ @ 4.7g/t2 100,000 2.4Moz 0.7Moz Volspruit @ 1.3g/t3 @ 1.1g/t3 CTRP Dump Op
Slide 24: Growth projects in Northern Limb
Growth projects in Northern Limb Volspruit Everest North Northern Limb Harriet’s Wish Mine type Open pit Open pit and shallow Open pit (Plat Reef) Shallow (<1,300m) underground underground New type reef “F Reef” Processing Concentrator Existing Aquarius-owned Concentrator TBD Smelter and refinery fa
Slide 25: South Africa remains low risk relative to other mining jurisdictions
Despite recent events, South Africa remains low risk relative to many other mining jurisdictions Euromoney Risk Rating (Higher number = lower risk) 100 80 60 40 20 0 Source: http://www.euromoneycountryrisk.com/ as of 4th October 2012 25
Slide 26: Platinum: inventory draw to reduce stockpiles and lead to favourable pricing
Platinum: continuation of 2012 inventory draw will rapidly reduce stockpiles and lead to favourable pricing environment PLATINUM MARKET TRENDS 2013 MARKET DYNAMICS Supply • South African supply (75% of production) likely to be structurally lower following labour disruptions - Amplats recently announ
Slide 27: Palladium: strong supply and demand dynamics
Palladium: strong supply and demand dynamics should lead to favourable pricing environment PALLADIUM MARKET TRENDS 2013 MARKET DYNAMICS Supply • South African supply (38% of production) structurally lower following mine closures • Russian supply from Norilsk unlikely to grow due to recent stated foc
Slide 28: Rhodium: inventory build starting to be reversed
Rhodium: inventory build of past 4 years is now starting to be reversed RHODIUM MARKET TRENDS 2013 MARKET DYNAMICS Supply • South African supply (~80% of mined production) structurally lower following mine closures • Lower recycling levels at low prices Demand • Continued growth in global auto produ
Slide 29: Total prill split across the SDO when fully ramped up
When fully ramped up, total prill split across the SDO is approximately 58% Pt, 27% Pd, 15% Rh and <0.5% Au Gold 100% Rhodium 80 Palladium 60 40 Platinum 20 0 Millsell Steelpoort Lannex Mooinooi DoornboschTweefontein Note: Tweefontein is an estimate 29 Source: internal data
Slide 30: Shareholders and relationship with Samancor
Shareholders and relationship with Samancor SHAREHOLDER REGISTER SAMANCOR AGREEMENT • Solid contract in place regulating the extraction of both chrome and PGMs from all Samancor mining operations over life of mine • The operations are expected to continue at current levels or better into the foresee
Slide 31: Contact us
Contact us • Terry McConnachie +447775337175 • Louis Carroll +447969170622 • Nigel Trevarthen +27825742251 “Liberum Capital Limited (Nomad & Broker)” • Michael Rawlinson +442031002084 31
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