Last close As at 05/08/2026
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▲ 0.60 (0.74%)
Market capitalisation
GBP211m
Research: Metals & Mining
Sylvania Platinum has announced a 50:50 joint venture (JV) with Limberg Mining Company to process platinum group metals (PGM) and chrome ores from Limberg’s historical tailings dumps and run-of-mine ore. The mine, located in the northern part of the western limb of the Bushveld Complex, will start producing from H225, could add to Sylvania’s production and will diversify its resource mix to include chrome concentrate. Sylvania is investing $32m in capital expenditure (of which 50% will be paid back by Limberg from JV cash flow after the start of production) and $5m in working capital from its large cash resources in exchange for c 6,500koz of forecast PGM and 200kt of chrome concentrate production. Management is forecasting an internal rate of return more than Sylvania’s minimum requirement of 20% pa and a three-year cash payback. Our forecasts and valuation are under review.
Written by
Rene Hochreiter
Sylvania Platinum |
Chrome ore and PGM treatment joint venture |
Joint venture agreement |
Metals and mining |
11 August 2023 |
Share price performance
Business description
Analyst
Sylvania Platinum is a research client of Edison Investment Research Limited |
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Sylvania Platinum has announced a 50:50 joint venture (JV) with Limberg Mining Company to process platinum group metals (PGM) and chrome ores from Limberg’s historical tailings dumps and run-of-mine ore. The mine, located in the northern part of the western limb of the Bushveld Complex, will start producing from H225, could add to Sylvania’s production and will diversify its resource mix to include chrome concentrate. Sylvania is investing $32m in capital expenditure (of which 50% will be paid back by Limberg from JV cash flow after the start of production) and $5m in working capital from its large cash resources in exchange for c 6,500koz of forecast PGM and 200kt of chrome concentrate production. Management is forecasting an internal rate of return more than Sylvania’s minimum requirement of 20% pa and a three-year cash payback. Our forecasts and valuation are under review.
Year end |
Revenue |
PBT* |
EPS* |
DPS |
P/E |
Yield |
06/22 |
152 |
81 |
20.6 |
10.3** |
5.6 |
11.2 |
06/23 |
134 |
67 |
18.3 |
5.8 |
4.0 |
7.9 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. **Normal dividend of 8.0p and windfall dividend of 2.25p.
The project, named the Thaba JV, will be funded and managed by Sylvania and is a significant step forward in expanding operations and entering the chrome concentrate market. The Thaba mine will be the first beneficiation facility of primary chrome ore in the northwestern part of the Bushveld Complex and will enable further growth opportunities in the region. Sylvania currently produces around 75koz of PGMs a year and chrome for its host mines. The JV will increase PGM production by c 9% (based on Sylvania’s share of the JV) and introduce 200kt of chrome concentrate for its own account.
Chrome concentrate prices have averaged around $285 per tonne since January 2023. In 2020, they averaged around $130 per tonne, then $165 per tonne in 2021 and $230 per tonne in 2022. Before 2020, chrome concentrate prices for South African products ranged between $80 and $120 per tonne. At $150 per tonne, which is the medium-term average before the high 2023 prices, Sylvania would benefit from a c $30m increase in annual revenue from FY26.
With a cash balance of $125m (at end-June 2023), Sylvania is well resourced to fund this project and to benefit from the high forecast return. Our recent valuation of Sylvania saw a downgrade to 118p per share due to the decline in current and forecast rhodium prices. The Thaba JV has the potential to reverse this by extending the life of the company’s PGM production, as well as adding chrome concentrate cash flows.
The Thaba JV will enable Sylvania to access valuable resources, expand its production capabilities and strengthen its distribution channels for target products, potentially driving value for the company and its stakeholders. Our forecasts and valuation are under review and we will publish an update in due course.
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Research: TMT
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