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South Africa: Sylvania to Boost Production Before Year-End

Business Day (Johannesburg)

12 June 2008
Posted to the web 12 June 2008

Lebohang Thulo
Johannesburg

SYLVANIA Resources, which produces platinum from chrome tailings, is on schedule to start production at its Lannex and Elandsdrift-Mooinooi projects in the Bushveld Igneous Complex before year-end.

CEO Terry McConnachie said last week the company was looking to grow through the acquisition of surface tailings and run-of-mines fines treatment operations.


He said Sylvania was generating strong cash flow with adequate cash on its balance sheet to finance its growth strategy.

The cost of the Lannex and Elandsrift-Mooinooi extensions is R230m, with capacity expected to reach 70000 tons a month at each plant. This is expected to increase Sylvania's turnover and profit. Its turnover for the third quarter to March was R95,33m and pretax profit was R56,2m.

In line with increasing production, Sylvania also has two retreatment plants at advanced production ramp-up stage, with each plant performing at near maximum capacity. These are Millsell and Steelpoort, each with capacity to treat 35000 tons a month.

Although Sylvania is listed on the AIM and Australian Stock Exchange, McConnachie said a JSE listing was still a priority. "It is under serious consideration, but still in the early stages."

A listing would improve Sylvania's tradability and " enhance our ability to acquire assets".

Being a JSE-listed company would increase Sylvania's credibility in the country and help bring South African investors on board. Raising funds would also help the company reach its goal of an annual production of 70000oz of platinum group metals by 2010. It produced 10425oz of three platinum group metals and gold in the nine months to March.


Sylvania has an agreement with Samancor Chrome, which owns the dumps and the mining rights at the plants. According to the agreement, Sylvania retains the recovered platinum group metals and returns any recovered chrome to Samancor.

A recent addition to this agreement grants Sylvania the right to treat 300000 tons run-of-mines fines a year from Samancor Chrome's Broken Hill, Spitzkop and Buffelfontein chrome mines to produce chrome and platinum group metals.

At a trading price of $2000/oz, Sylvania hoped an increase in production, combined with rising platinum demand and supply-side constraints, would help the platinum producer reach its growth target.