Sylvania’s core business is the retreatment of PGM-bearing chrome tailings. The group has a low-risk profile which is underpinned by skilled management, low costs, and a focus on cash generation and returns to shareholders.
Although the operations were not able to operate during the hard lockdown period, the Group has been in the fortunate position to continue to pay all employee salaries, which eased any potential financial burden on employees as a result of the pandemic.
Having commenced with scaled-down operations in May 2020, management has implemented various initiatives in order to safeguard employees. Sylvania supports the lockdown measures implemented by the Government and its priority is to protect the health and safety of its employees both during the lockdown and especially now that operations have recommenced.
The Sylvania Dump Operations produced 9,055 PGM ounces for the quarter, compared to 19,968 ounces in Q3, largely as a result of the COVID-19 national lockdown regulations placing operations on temporary care and maintenance for six weeks up to the end of April 2020.
Ramp-up operations commenced on a limited basis during May 2020 with operations only returning to full-scale during June 2020. PGM plant feed tons for the quarter reduced by 30%, while PGM plant feed grade reduced by 19% quarter-on-quarter and PGM recovery efficiencies decreased by 18% from Q3.
Lower PGM feed tons were primarily due to the operational downtime associated with the shutdown of operations as a result of the hard lockdown and interruptions during start-up and ramp-up post the hard lockdown period.
The suspension of underground mining by the host mine at the Mooinooi and Lannex operations due to the suppressed chrome market, as well as the impact of national lockdown on other host mine operations, resulted in a reduction of current arisings and RoM volumes at various operations that necessitated the increase in treatment rates of lower grade surface material.
Both the reported PGM feed grade and recovery efficiency decreases are associated with the increased amount of lower grade material treated and the lower ore recovery potential of the various surface sources being processed.
Various technical initiatives are in progress to improve process efficiencies at some Western operations and to improve the blend of feed material to increase PGM feed grades and recoveries, while the Eastern operations are already back at historic performance levels.
The total SDO cash costs increased in Rand and Dollar terms quarter-on-quarter by 96% and 68% respectively to ZAR17,008/ounce and $948/ounce (Q3: ZAR8,673/ounce and $565/ounce respectively) mainly as a result of the lower production and lower absorption of fixed costs.
While being in the fortunate position to continue paying all employee salaries during the lockdown period, even when unable to operate, this unfortunately did contribute to the higher operating unit costs.
The SDO incurred capital expenditure of ZAR16.8millionduring the quarter, an18%decrease which is largely aligned with Project Echo and other major capital project execution schedules, but also impacted by the reduced stay-in-business capital spend associated with the national lockdown period.
SYLVANIA DUMP OPERATIONS
Sylvania Dump Operations (SDO) comprises six chrome beneficiation and platinum group metal (PGM) processing plants, located on both the Eastern and Western Limb of the Bushveld Igneous Complex (BIC), treating a combination of current and historical chrome tailings at host-mine sites.
The SDO is the largest PGM producer from chrome tailings re-treatment in the industry with a current annual production capacity of c. 75koz -78koz (during steady state capacity and subject to supply from the host mine).
Chromite concentrate is produced and returned to the host mine at nominal cost, while PGMs in concentrate are recovered for Sylvania’s benefit and sold to smelters. The current operating model ensures low cost operations ($500 – $600/oz) and is cash generative.
Primary milling and flotation operations are currently at a steady state following several years of investment and growth. The implementation of Project ECHO further improves recovery efficiencies across all operations through the implementation of secondary milling and flotation circuits.
The SDO has exclusive rights to reprocess mine arisings and tailings dumps at current host mines, with a profitable operational life of approximately ten years, depending on the operation, and with potential to significantly extend the operating horizon as mining resources are continuously being converted to reserves at host mines.