A N N U A L R E P O RT
2 0 2 2
Embedding ESG
ENGAGEMENT | CONSULTATION | COMPLIANCE
REPORTING SCOPE
AND BOUNDARIES
CONTENTS
This 2022 annual report presents a review
of the operational and non-financial
performance of Sylvania Platinum Limited
(Sylvania, the Company or the Group) for
the 12 months ended 30 June 2022. The
report seeks to illustrate the Company’s
business model and investment case
through the application of capital in the
process of creating value.
The Company’s non-financial performance
is presented to provide stakeholders with
a broader understanding of the Company’s
influence, its impact and those issues
which, without careful consideration and
management, would materially affect
the prospects of the Company (material
issues). Our non-financial performance
reporting is guided by the parameters of
the Global Reporting Initiative (GRI), the
United Nations Sustainable Development
Goals (UNSDGs) and the Sustainability
Accounting Standards Board (SASB).
The consolidated financial statements, set
out on pages 36 to 82, were approved
on 7 September 2022. They include the
Company’s financial results and were
prepared in accordance with International
Financial Reporting Standards (IFRS) as
issued by the International Accounting
Standards Board (IASB). The consolidated
financial statements represent the ongoing
activities of the Sylvania Group.
Throughout the report, financial data is
reported in United States Dollars (USD),
unless otherwise stated. The Company is
quoted on the London Stock Exchange’s
AIM, and in accordance with the AIM Rules
for Companies (the AIM Rules), has chosen
to adopt the Quoted Companies Alliance
(QCA) Corporate Governance Code 2018
for Smaller Companies. In accordance
with the AIM Rules, this was adopted and
implemented from September 2018, and
a summary is available on the Company’s
website (www.sylvaniaplatinum.com). The
corporate governance statement may be
found on page 27 of this report.
Reporting Scope
IFC
Corporate profile and location
Vision, mission, values
Key performance features
Chairman’s letter
CEO’s review
ESG: Embedding our Strategy
Directors’ report
Corporate Governance Statement
Directors’ Responsibilities in
the preparation of the Financial
Statements
Independent auditor’s report
Consolidated statement of profit
or loss and other comprehensive
income
Consolidated statement of
financial position
Consolidated statement of
changes in equity
Consolidated statement of
cash flows
Notes to the consolidated
financial statements
Additional information for listed
public companies
Glossary of terms
Corporate directory
1
2
3
4
7
12
18
27
30
31
36
37
38
39
40
83
84
85
DISCLAIMER
To the best knowledge and belief of Sylvania
Platinum and its Directors (having taken all
reasonable care to ensure that such is the case),
the information contained in this document
is in accordance with the facts and does not
omit anything likely to affect the import of
such information, prepared in accordance with
applicable law and regulations.
SYLVANIA ANNUAL REPORT 2022
CORPORATE PROFILE AND LOCATION
Sylvania Platinum Limited is
a producer of platinum group
metals (PGMs) including
platinum, palladium and
rhodium. The Company’s core
business is the retreatment of
PGM bearing chrome tailings
material. The Company also
holds mining rights for a
number of PGM projects on
the Northern Limb of the
Bushveld Igneous Complex in
South Africa.
The Sylvania cash generating subsidiaries
are incorporated in South Africa with the
functional currency of these operations being
South African Rand (ZAR). Revenues from the
sale of PGMs are received in USD and then
converted into ZAR.
The Group’s reporting currency is USD as the
holding company is incorporated in Bermuda.
Corporate and general and administration
NORTHERN
costs are incurred in USD, Pounds Sterling
NORTHERN
(GBP) and ZAR.
LIMB
LIMB
In order to strengthen the Company’s
position as a low-risk specialist in the lower
cost production of PGMs, Sylvania operates
according to the following business priorities:
C
C
N
11
N
11
• identifying projects that balance low
B
operational and financial risk with the
A
B
potential for high margins;
A
• ensuring that the management teams
N
1
Mokopane
(Potgietersrus)
Mokopane
(Potgietersrus)
N
1
LOCATION OF OPERATIONS
AND PROJECTS
NORTHERN
LIMB
C
N
11
0
SCALE
50km
LEGEND
WESTERN
LIMB
Modimolle
(Nylstroom)
N
1
Rustenburg
1
3
2
N
4
N
14
Pretoria
Krugersdorp
Johannesburg
0
0
SCALE
SCALE
50km
50km
Polokwane
(Pietersburg)
Polokwane
(Pietersburg)
LOCALITY WITHIN
SOUTH AFRICA
EASTERN
EASTERN
LIMB
LIMB
4
4
7
7
5
5
6
6
NORTHERN
LIMB
RUSTENBURG LAYERED SUITE
Groblersdal
Groblersdal
Granites and allied rocks
Upper zone
Main zone
Critical, lower and marginal zones
N
4
Dullstroom
Merensky reef
Dullstroom
UG2 Chromitite layer
Platreef
Middelburg
Middelburg
Main roads
N
4
Mbombela
(Nelspruit)
Mbombela
(Nelspruit)
Nylsvlei RAMSAR
Polokwane
(Pietersburg)
RUSTENBURG LAYERED SUITE
RUSTENBURG LAYERED SUITE
B
A
Mokopane
(Potgietersrus)
N
1
EASTERN
LIMB
4
7
5
Granites and allied rocks
Granites and allied rocks
Upper zone
Upper zone
Main zone
Main zone
Critical, lower and marginal zones
Critical, lower and marginal zones
Merensky reef
Merensky reef
UG2 Chromitite layer
UG2 Chromitite layer
Platreef
Platreef
Main roads
Main roads
Main river
Main river
Sylvania
Sylvania
Sylvania Dump Operations
Sylvania Dump Operations
Younger cover rocks
Younger cover rocks
Younger alkaline intrusions
Middelburg
and carbonatities
Younger alkaline intrusions
and carbonatities
Groblersdal
Dullstroom
6
SLP
SLP
SDO
SDO
N
4
N
4
Mbombela
(Nelspruit)
LEGEND
LEGEND
Operating Sylvania complexes
Operating Sylvania complexes
1
1
2
2
3
3
Millsell (SDO)
Millsell (SDO)
Mooinooi – Dump and ROM (SDO)
Mooinooi – Dump and ROM (SDO)
Lesedi (SDO)
Lesedi (SDO)
Acquired: Nov ‘17
Previously Phoenix Platinum
Acquired: Nov ‘17
Previously Phoenix Platinum
Doornbosch (SDO)
Doornbosch (SDO)
Lannex (SDO)
Lannex (SDO)
Tweefontein (SDO)
Tweefontein (SDO)
4
4
5
5
6
6
C
Decommissioned operations
Decommissioned operations
7 Steelpoort (SDO)
7 Steelpoort (SDO)
Decommissioned: Jun ‘17
Decommissioned: Jun ‘17
N
11
Mineral projects
Mineral projects
Volspruit
A
Volspruit
A
Grasvally
B
Grasvally
B
B
Northern Limb projects
C
A
Northern Limb projects
C
Mokopane
(Potgietersrus)
N
1
Polokwane
(Pietersburg)
1
EASTERN
LIMB
Nylsvlei RAMSAR
Modimolle
(Nylstroom)
N
1
4
7
5
6
1
Groblersdal
RUSTENBURG LAYERED SUITE
Granites and allied rocks
Upper zone
Main zone
Critical, lower and marginal zones
Merensky reef
UG2 Chromitite layer
Platreef
Main roads
Main river
SLP
Sylvania
SDO
Sylvania Dump Operations
Younger cover rocks
Younger alkaline intrusions
and carbonatities
Operating Sylvania complexes
Millsell (SDO)
Mooinooi – Dump and ROM (SDO)
1
2
3
4
5
6
Lesedi (SDO)
Acquired: Nov ‘17
Previously Phoenix Platinum
Doornbosch (SDO)
Lannex (SDO)
Tweefontein (SDO)
Decommissioned operations
7 Steelpoort (SDO)
Decommissioned: Jun ‘17
Mineral projects
Volspruit
Grasvally
A
B
C
Northern Limb projects
0
SCALE
50km
LEGEND
RUSTENBURG LAYERED SUITE
Granites and allied rocks
Upper zone
Main zone
Critical, lower and marginal zones
Merensky reef
UG2 Chromitite layer
Platreef
Main roads
Main river
SLP
Sylvania
SDO
Sylvania Dump Operations
Younger cover rocks
Younger alkaline intrusions
and carbonatities
Operating Sylvania complexes
Millsell (SDO)
Mooinooi – Dump and ROM (SDO)
1
2
3
4
5
6
Lesedi (SDO)
Acquired: Nov ‘17
Previously Phoenix Platinum
Doornbosch (SDO)
Lannex (SDO)
Tweefontein (SDO)
Decommissioned operations
7 Steelpoort (SDO)
Decommissioned: Jun ‘17
Mineral projects
Volspruit
Grasvally
A
B
C
Northern Limb projects
N
4
N
14
Pretoria
Krugersdorp
Johannesburg
Middelburg
N
4
Dullstroom
N
4
Mbombela
(Nelspruit)
are always well resourced with the right
combination of skills;
• focusing on cash generation during uncertain
Nylsvlei RAMSAR
Nylsvlei RAMSAR
economic times; and
• continuously applying appropriate practices/
Modimolle
(Nylstroom)
Modimolle
(Nylstroom)
technology striving to maintain the Company
as a lower quartile producer.
N
1
N
1
The Company’s strong focus is on cash
generation which enables return in capital to
shareholders according to its dividend policy.
N
4
N
4
Pretoria
Pretoria
The Board has recommended the payment of
a dividend of 8p per Ordinary Share, payable
on 2 December 2022 after the Annual General
Krugersdorp
Meeting (AGM) to be held on 25 November
Krugersdorp
2022.
N
14
N
14
N
4
N
4
Johannesburg
Johannesburg
WESTERN
WESTERN
LIMB
LIMB
Rustenburg
Rustenburg
3
3
1
1
2
2
NORTHERN
LIMB
C
WESTERN
LIMB
N
11
B
A
N
1
Mokopane
(Potgietersrus)
Polokwane
(Pietersburg)
0
SCALE
50km
EASTERN
LIMB
Nylsvlei RAMSAR
Modimolle
(Nylstroom)
N
1
4
7
5
6
Groblersdal
Rustenburg
1
3
2
N
4
N
14
Pretoria
Krugersdorp
Johannesburg
Dullstroom
N
4
Mbombela
(Nelspruit)
Middelburg
N
4
Main river
WESTERN
Sylvania
SLP
LIMB
SDO
Sylvania Dump Operations
Younger cover rocks
Younger alkaline intrusions
and carbonatities
LEGEND
Operating Sylvania complexes
Millsell (SDO)
Mooinooi – Dump and ROM (SDO)
Rustenburg
1
2
3
4
5
6
Lesedi (SDO)
1
Acquired: Nov ‘17
3
2
Previously Phoenix Platinum
Doornbosch (SDO)
Lannex (SDO)
Tweefontein (SDO)
Decommissioned operations
7 Steelpoort (SDO)
Decommissioned: Jun ‘17
Mineral projects
Volspruit
Grasvally
A
B
C
Northern Limb projects
OVERVIEWSYLVANIA ANNUAL REPORT 2022 VISION, MISSION AND VALUES
V I S I O N
To be a leading mid-tier, lower unit cost,
PGMs producer.
M I S S I O N
To generate wealth for all of our stakeholders using safe and innovative
processes with a focus on PGMs while exploiting any value-adding
associated minerals.
V A L U E S
We value the
culture,
traditional rights
and society in which
we operate
Our actions will
support the
communities in
which we work
while honouring
their heritage and
traditions
We value
the safety and
health of all
We value the
fundamental rights
of people
We value honesty
and integrity
We respect
the environment
We treat all people
with dignity and
respect
Employees are at the
heart of our Company
We place their safety
and health above all
else in everything that
we do
We act in a manner
that is sustainable
and environmentally
responsible, applying
professional and
innovative methods
We act honestly and
show integrity by
continually striving
towards “doing what
we say we are going
to do” and showing
commitment towards
our accountabilities
of delivering high
performance
outcomes, thus
projecting an image
of professionalism
and meeting the
expectations of our
colleagues, investors,
business partners and
social partners
2
SYLVANIA ANNUAL REPORT 2022 KEY PERFORMANCE FEATURES
67,053
4E PGM ounces produced
$151.9 million
net revenue
$82.8 million
EBITDA
$56.2 million
group net profit
windfall dividend
2.25p
(paid in April 2022)
annual dividend declared
8p
$121.3 million
positive cash balance
Debt free
no pipeline financing
Share buy-back:
6,590,923
average price 85.93p
OPPORTUNITIES
MF2 expansion at Tweefontein
on track for commissioning; first production
contributions expected in December 2022;
After successful roll-out of MF2 and ultra-
fine screening circuits this technology is being
implemented at Lannex, to be commissioned
by end of 2023 calendar year;
Back-up power supply systems to be
installed at most essential operations;
Progress in identifying and sourcing
additional tailings resources to grow and
extend life of operations;
Working with partner to develop novel
chemical bonding process to create a
chromite ore pellet for FeCr smelters –
creating potential also to reduce energy
consumption
CHALLENGES
Lower PGM feed grades and recovery
potential have adverse effect on production
and operating costs
Lesedi operations suspended; operations
resumed after additional water supply and
new tailings dam installed
3
OVERVIEWSYLVANIA ANNUAL REPORT 2022 CHAIRMAN’S
LETTER
The safety and health of all our
employees is critical and that is why
we are so proud of our sustained
good safety performance during the
period. The quality of the people,
and the training and management
have all contributed to this continued
exceptional safety performance.”
Dear Shareholder
PERFORMANCE AND FINANCIALS
WHAT A YEAR! As FY2022 progressed and
Covid-19 eased, FY2022 was going to be
easier than FY2021 – right? However, we saw
riots in South Africa (SA); Russia’s invasion of
Ukraine; Covid-19 lockdowns in China; Supply
chain problems; Ongoing loadshedding; Global
interest rate hikes; Volatile Dollar metal prices
and an unstable SA Rand exchange rate: for a
business operator it’s enough to make many a
grown-up cry! Shareholders can rightly feel that
they were riding a roller coaster this last year.
NAVIGATING A CHALLENGING ENVIRONMENT
After the unprecedented disruption occasioned by the coronavirus
pandemic and governments’ attempts worldwide to contain its impact,
the Russian invasion of Ukraine reverberated across the global stage,
wreaking widespread economic havoc, particularly in the West’s
energy and food sectors. The South African operating environment,
which is host to our business, presented its own hurdles, compounding
the effects on the business of the global markets. These have taken
the shape of ongoing and escalating power supply instability; rapidly
rising costs of certain imports; a restive labour environment and a
government which is sluggish in its responses. Against this background,
your Chief Executive, Jaco, and his team deserve great praise for your
Company’s general performance over the past 12 months.
4
Sound management and prudent decisions during the period have kept
our results very acceptable for FY2022, despite a slight drop of circa 4%
in PGM production and a drop of 23% in the Dollar PGM basket price
received over the period compared to FY2021. Although tailings related
downtime at the Lesedi plant during HY1 and lower PGM feed grades
and recovery efficiencies associated with Run-of-Mine (ROM) material
received from the host mines at Mooinooi and Lannex accounted
for lower volumes, we still managed to produce 67,053 ounces and
generated approximately $56.2 million net profit for the financial year.
Efficiency and optimisation remain the cornerstone of our management
allowing the Company to deliver a solid financial performance. During
the period, the increase in unit cash costs was fuelled by the lower
PGM ounce production, ongoing higher electricity prices and mining
costs – the latter owing to a temporary host mine subsidy paid to
secure higher-grade feed material in the first half of the financial year.
Management is making a concerted effort to mitigate these impacts
wherever possible. The declining value of the ZAR against the USD
exacerbates the rising cost of imported consumables, fuel and power
and will continue to influence the cost of doing business in South Africa
for at least the medium term.
In the current labour environment, now more than ever it is important
for us to maintain exceptionally good relationships with our workforce.
Although this is an ongoing concern for the industry, we have been
very fortunate with a very stable and positive labour environment over
the years and Jaco and his team continue to work hard on this aspect
of the business, keeping lines of communication open and dealing with
SYLVANIA ANNUAL REPORT 2022 CHAIRMAN’S LETTER (continued)
matters promptly as they arise. Our employee profile differs from
that of the conventional South African underground mine, in that we
have a relatively small complement of 422 unionised members with
a high skill level. Given the current scenario, the decision to share in
the wellbeing of the Company has seen our employees enjoy a cash
distribution through the Employee Dividend Entitlement Plan (EDEP),
as implemented in the previous year, which has proven to be both
appropriate and wise.
Management will continue to focus on that which we are able to
control: direct operating costs, maintaining a safe, stable and efficient
production environment, and ensuring disciplined capital allocation and
spending controls, all of which will continue to be the main drivers of
our business. We also continue to run a conservative financial operating
structure.
Decisions taken in the year saw us increase stock levels such as steel
balls, ceramic beads and reagents. This has helped mitigate the logistics
supply chain disruptions that are being felt in the sector and has meant
that our operations were able to continue with minimal disruption.
The global logistics disruption has the potential to severely challenge
procurement operations and it takes careful and prudent financial
management to keep consumables and other stocks at appropriate
levels in-line with maintaining a conservative financial balance sheet.
SAFETY
The safety and health of all our employees is critical and that is why
we are so proud of our sustained good safety performance during the
period. The quality of the people, and the training and management
have all contributed to this continued exceptional safety performance.
We have come a long way with managing safety, and there can be no
doubt that the shift from an authoritarian, paternalistic approach, to
one which empowers our employees to take responsibility for their
own safety, and on proactively being aware of risks, was a timely and
key development in the workspace. Safety performances across our
operations have been excellent, as illustrated by the Doornbosch plant
which has just recorded a phenomenal ten years without a Lost-Time
Injury (LTI). Our ESG report, Embedding our Strategy, provides more
detail on safety and health, which is such a significant element of our
social performance.
COVID-19
The effects of Covid-19 on both employees and operations have
remained a key focus of the Company despite the further easing of
South Africa’s regulations during the period. As we emerge from this
pandemic, management will continue to monitor the situation and
ensure the health and well-being of the entire workforce. The Employee
Assistance Programme (EAP) implemented for all of Sylvania’s
employees, immediate family members, as well as those living in the
same household, will continue to assist our staff. The efficiency and
flexibility of our operations allowed the management team to effectively
navigate through the uncertainties associated with the pandemic.
A significant realisation has been the affirmation of our strategy to
provide sufficient working capital as a buffer to cater for unforeseen
circumstances and events. This has bolstered our ability to navigate
through these uncertainties. I believe it is a strategy that will serve us
well into the future.
S T R AT E G I C L E A D E R S H I P
POWER PROBLEMS & ELECTRICITY COSTS
The current power situation in South Africa remains a matter of
concern. With the growth of renewable energy and independent
power suppliers, domestic users and small businesses will in the future
have access to alternative power supply. For large industrial users like
mines and smelters however, the cost of adequate energy supplies from
renewable source remains prohibitive, and this is unlikely to change
significantly in the near future. The mines and large industrial plants have
historically had constructive and cooperative working relations with
the national power utility, and indeed the impact of loadshedding on
our operations has been somewhat limited. My sense is that there is a
recognition of the role these industries play in keeping SA Inc running.
However, the annual increase in electricity prices is damaging to large
electrical consumers, both us and our host mines included.
ENVIRONMENT, SOCIAL AND
GOVERNANCE (ESG)
This year, for the first time, we have prepared a standalone ESG report,
which should be read along with this annual report. Our ESG report,
Embedding our Strategy, seeks to present the Company’s operational
and non-financial performance to stakeholders in a meaningful way,
illustrating how we manage our material issues. In addition, we have
included in this annual report, an abridged version of our standalone
report.
As a value-driven Company, sustainability is fundamental to the way we
run our business, and it underpins our ESG strategy. We are committed
to making a positive contribution to the lives of our employees, the
industry and our host communities. As a Board, we are tasked with
balancing the interests of all stakeholders, which will inevitably impact
our management of ESG practices.
PROJECTS UPDATE
The new financial year will see the completion of our MF2 milling and
flotation project, Project Echo, and to date, I am pleased to report that
it has been a tremendous success. We are currently executing works
on both the Tweefontein MF2 and Lannex MF2 plants in a phased
approach as part of our capital project strategy and spend.
The next major phase of capital expenditure, being the construction of
additional tailings facilities, is now upon us. These necessary installations
enable the Sylvania Dump Operations (SDO) to both extend the SDO’s
life in addition to reprocessing older tailings in an orderly manner with
state-of-the-art impoundment. As a result of scheduling each of the
new dams construction and tie-ins to older facilities, there will be some
disruption to the production profile in FY2023 but these new dams will
result in continuing production levels over subsequent years.
GUIDANCE
Production performance for FY2023 is expected to improve slightly
with guidance of 68,000-70,000 ounces and targeted to rise above
70,000 ounces during FY2024.
EXPLORATION
Taking advantage of the improved outlook for PGMs in general (as
compared to the early years I chaired the Company), the Board
approved the spend of $2.3 million last year and has approved a further
$4.4 million for the coming year to upgrade the quality of geological
5
STRATEGIC LEADERSHIPSYLVANIA ANNUAL REPORT 2022 CHAIRMAN’S LETTER (continued)
information at its Volspruit project. Last year’s spend resulted in some
limited drilling undertaken and new geological interpretation of certain
zones in the portfolio. The new geological interpretation coupled with
the spend, builds upon work done in the past and is yielding some
noteworthy findings compared to the earlier work. The interpretation
work relating to last year’s drilling will be completed in Q1 of FY2023
and the new findings released to shareholders thereafter. Work for the
FY2023 year will continue to focus on looking at shallow “hot spots”
of higher PGM grade mineralisation on the Northern Limb properties.
This new strategy is expected to add value and is expected to yield a
positive outcome in FY2023 and beyond.
PELLETIZER
Some years ago, the Company partnered with a ‘binding technology’
player to co-develop a novel chemical bonding process which operates
at ambient pressure and temperature to create a chromite ore pellet
with physical attributes suitable for ferrochrome (FeCr) smelters but
with the anticipated added potential to markedly cut the smelters’
electrical energy consumption per ton of FeCr produced. The
technology is of interest to our host miner amongst others. In exchange
for funding development costs in the venture, Sylvania holds the licence
for any future chrome pellet production in South Africa.
ASSET SALE
Although formally a post year-end event, the unconditional sale of the
Grasvally Chrome Mine was welcome. The mine was included in the
purchase of a package of strategic surface property rights adjacent to
the Volspruit Project. The Company retains the rights it requires and
will see a modest profit on the sale, albeit over a period of time.
RETURNING VALUE TO SHAREHOLDERS
The Board is cognisant that the risks associated with the sorts of
disruptive events outlined in the opening paragraph of this statement
remain a major concern for shareholders. Whilst maintaining a
conservative balance sheet, returning capital to shareholders will
continue to be part of the Board’s strategic goals through both
dividends and share buybacks.
In the FY2022 year, dividends amounting to $22.7 million were paid
(comprising normal dividends of $14.6 million and windfall dividends
of $8.1 million) and share buybacks of 6.6 million shares with a value
of $7.1 million were undertaken. Six million shares were cancelled in
the year, resulting in 266,130,788 shares with voting rights in issue with
an additional 14 million shares held in Treasury as at 30 June 2022.
Considering the current cash balance, the cash generation potential, the
working capital requirements and capital expenditures for FY2023, the
Board has decided to declare an annual dividend of 8p per Ordinary
Share for the 2022 financial year, payable in December 2022. This
reflects the second year in a row that total dividend payments are
around half the prior financial year’s free cashflow.
The Company will continue to pay dividends in a prudent manner guided
by the six metrics of our policy. This approach has served us well and
enables us to better weather the impact of these challenging times. The
Board has committed itself to review the dividend policy in the new
financial year and will communicate any updates to shareholders in due
course. In addition, the Company will continue to implement further share
buybacks as the opportunity arises – our success in this area is on record.
6
IN CONCLUSION
Attending an industry lunch in May hosted by a leading PGM refiner and
fabricator, the key speaker declined to venture an opinion on rhodium
supply and demand (and hence price) going forward and caveated his
supply and demand predictions and prices for platinum and palladium
with questions about possible supply disruptions from Russia. I smiled
– if this speaker cannot be drawn on future prices, I pray nobody asks
me my opinion! Despite the uncertainties of FY2022, the average gross
4E PGM basket price for FY2022 was 23% lower than FY2021. Precious
metals are supposed to be considered a safe haven in uncertain times.
Wrong this time around! Russia is the largest producer of palladium –
essential for gasoline catalysts – and the price is down around a third
from its peak on 2021. For rhodium – what goes up definitely comes
down, although I for one remain a happy camper with a rhodium price
at ~$15,000 per ounce at this point.
Given the current global disorder, it has become increasingly difficult
to predict PGM prices. The levers that historically drove PGM demand
and prices – notably internal combustion engine (ICE) car production
– are becoming blurred as more technologies arrive for automotive
powertrains. Naysayers believe electric marks the end of the ICE and by
extension the death of PGM markets. They could not be more wrong.
Short-termist politicians who think the car market (that is now heading to
100 million units a year) is going to be all-electric by 2030 live in la-la land.
Certain of the new powertrain technologies are more PGM rich relative
to ICE! Also, the much-vaunted hydrogen economy of the future needs
PGMs – most probably buckets more than are currently produced. For
shareholders on this roller coaster – keep the seat belt fastened!
For Sylvania, we are however seeing signs that the chrome market is
picking up which benefits the plans of our host mines and will ultimately
flow through to us in the medium-term by way of higher quality ROM
and current arisings feed sources. We expect the weakening trend of
the Rand to the US Dollar to continue especially as the benefits which
accrue to the SA current account from the great commodity prices in
the prior year starts to wear off.
Sylvania’s management and employees have done a remarkable job
of navigating the last year. Despite the easing of Covid-19, FY2022
proved a tough year! My thanks go to all of them. To my fellow Board
members, my thanks for their hard work and resilience. The year also
saw substantial Board renewal. We bade farewell to Roger Williams at
the end of the half-year, after ten years of service to the Company. He is
sorely missed, but I welcome two new members: Adrian Reynolds and
Simon Scott, both already contributing diligently and wisely to your Board.
And of course, as always, my thanks go to Eileen Carr for her continued
support and guidance to the Board. Jaco Prinsloo and Lewanne Carminati,
your two Executive Directors, have done great service in their time on
the Board these past two years and I look forward to their contributions
as they continue to grow into their roles. I would also like to thank our
host mine’s management for their continued support as I am aware
they too face challenges of their own. And, to you, our shareholders, my
thanks for your sustained trust in us to lead your Company forward.
Stuart Murray
Chairman
SYLVANIA ANNUAL REPORT 2022 CEO’S
REVIEW
Our Doornbosch plant achieved ten
years LTI-free in June 2022 and was
awarded the ‘Best-in-class Safety
Performance’ commendation by
the Mine Metallurgical Managers
Association of South Africa.”
After a challenging year, I am pleased with
the solid production performance of the SDO
in delivering 67,053 4E PGM ounces. I thank
and commend the teams on their efforts and
notably our Tweefontein plant that achieved
monthly, quarterly, six-monthly and annual
production records during the period. Further,
our Doornbosch plant achieved ten years LTI-
free in June 2022 and was awarded the ‘Best-
in-class Safety Performance’ commendation by
the Mine Metallurgical Managers Association
of South Africa. The strong effort put in by all
production teams and the newly commissioned
MF2 circuit at Lesedi, as well as the
improvement in ROM PGM grade received from
the host mine in the second half of the year,
assisted the Company to deliver ounces in the
mid-range of its stated production target.
The Company continues to employ a shareholder-friendly strategy
in order to return attractive value to shareholders and remained
disciplined and diligent in terms of the application of its capital and
cash resources during the year. The Company paid both an annual
dividend of 4p per Ordinary Share for the FY2021 year, as well as a
windfall dividend of 2.25p per Ordinary Share during the period. All
capital projects were funded from cash generated from operations in
the amount of $16.4 million (ZAR249.6 million). We also conducted
another Share Buyback programme in which 6.6 million shares were
bought back in the market, equating to $7.1 million. Finally, in ending off
the financial year with the strong cash position holding $121.3 million
I am pleased to report that the Board has declared an annual cash
dividend of 8p per Ordinary Share.
With a 23% decrease in the average basket price received in
comparison to the previous period, attributable to the drop in
palladium and rhodium metals prices in particular, the Board will
continue to monitor and manage its cash position during the coming
year in order to ensure that the Company remains in a position with
sufficient cash reserves to cover working capital for the pipeline period,
finance capital projects, fund growth and exploration and mitigate any
potential future adverse impacts it may face.
The 2022 operational, financial and corporate results can be
summarised as follows:
HEALTH, SAFETY AND ENVIRONMENT
During the period under review the operations continued to focus on
health, safety and environmental compliance. The Group is proud to
report that there were no significant health or environmental incidents
reported during the year and that the Company remains fatality-free
since inception in 2006.
The Doornbosch operation achieved the significant industry milestone
of ten years LTI-free. Both Lesedi and Lannex have exceeded two-years
LTI-free and Tweefontein achieved a one-year LTI-free milestone during
7
STRATEGIC LEADERSHIPSYLVANIA ANNUAL REPORT 2022 CEO’S REVIEW (continued)
the year. Unfortunately, Mooinooi and Millsell both recorded one LTI each
when an employee on their plants fractured a finger during maintenance.
The Company continues to target zero harm to employees and every
injury that is recorded is fully investigated and corrective measures are
implemented to prevent any future reoccurrences.
Although South Africa emerged from a fifth wave of Covid-19 infections
in the country during H2 FY2022, the effects on a national level were
far milder than previously experienced. During the period under
review, the Company reported 77 cases of the virus, with all employees
returned to work. Sylvania has reported 142 infections since the start of
the pandemic.
During HY2 FY2022, lockdown regulations were eased with the
mandatory wearing of masks and limitations placed on gatherings,
amongst others, being lifted completely during the fourth quarter.
Sylvania continues to encourage responsible behaviour amongst all
employees. The Company continues to support vaccination to limit the
spread of the pandemic although is ever cognisant that this remains a
personal choice.
In acknowledgement of the toll that the pandemic has had on the
mental health and well-being of employees and their loved ones, the
Company implemented its Employee Assistance Programme (EAP).
The EAP is available to all employees and their immediate family
members, as well as those living in the same household. Although there
is a focus on treatment and prevention, the programme will enhance
the corporate culture of caring and wellness. It enables continuous
management and measurement of reported cases to assist in identifying
areas of concern to implement remedial measures, thereby monitoring
overall wellness risk within the organisation. Reporting lines are
confidential, and each case is treated with utmost discretion to protect
any subject’s right to privacy.
Through the collaborative efforts of management and all our employees,
we continuously strive to maintain high safety standards and a safe
working environment at all operating sites, with each plant continuing to
operate in accordance with legislated safety and occupational regulations
pertaining to the industry and country as a whole.
OPERATIONAL PERFORMANCE
The SDO met the mid-range of the Company’s stated guidance for
the financial year by delivering an annual production of 67,053 4E PGM
ounces.
PGM Plant Feed Tons were 4% lower than the previous period despite
facing challenges related to lower quality feed sources and blends
received from the host mines at the Western Operations during
the year, as well as the Lesedi tailings dam related stoppage during
HY1 FY2022. PGM feed grades increased slightly by 1% year-on-year
while recovery efficiencies decreased by 1%. This was associated with
the more oxidised ROM and current arisings material treated at the
Western Operations, with recovery for the combined SDO remaining
within the anticipated 52% to 54% range.
year and an increase in community upliftment expenditure. The effect
of high global inflation and uncertainty continues to directly impact the
cost of reagents, fuel and transport which also impact operating costs.
Engagement with the host mine continued during the year to address
the lower PGM grades in ROM and current arisings sources. As
announced in HY1 FY2022, various initiatives were undertaken to
investigate and evaluate potential alternative feed sources. Preferred ore
sources were identified, and improved ROM feed grades were observed
from April 2022 onwards, increasing considerably during the fourth
quarter particularly at the Mooinooi operation. The source and quality
of material being received from the host mine will continue to be a
focus to ensure production targets are maintained into the future.
Subsequent to the operational stoppage at the Lesedi operation
announced in our FY2021 Annual Report, various mitigatory measures
were undertaken by the Company to ensure safety at the plant, the
nearby communities and the environment. The anticipated ramp-
up to normal production levels during the second quarter of the
2022 financial year was hampered by general water shortages in the
area as well as some technical difficulties experienced in recovering
return-water from the emergency tailings deposition facility at Lesedi.
Additional boreholes and the commissioning of a newly constructed
tailings facility allowed for the plant to return to full operation during
HY2 FY2022. Together with optimisation of the new MF2 plant,
improving recovery efficiencies and resultant ounce production at the
plant will remain a focus of management.
The Company experienced localised power supply constraints to
operations during the year as a result of continuing vandalism and
cable theft at substations of the national power utility. This was also
affected by the re-implementation of loadshedding in the country.
Our power mitigation strategies are being implemented at the
most affected operations – as is explained in more detail in our
ESG report, Embedding our Strategy, released alongside this Annual
Report FY2022.
CAPITAL PROJECTS
Capital expenditure for the year increased 118% to $16.4 million
(ZAR249.6 million), in line with the roll-out of planned projects.
The MF2 expansion at Tweefontein is on track for commissioning by
the end of the 2022 calendar year and is expected to start contributing
PGM ounces from December 2022.
Based on the successful roll-out of MF2 and ultra-fine screening circuits
at various operations since 2017, to improve process and PGM recovery
efficiencies, a project was initiated to implement this technology at
Lannex, with commissioning scheduled towards the end of the 2023
calendar year.
Approximately ZAR66.5 million ($4.1 million) is budgeted in FY2023
for necessary expansion of the Company’s tailing facilities to ensure
integrity and capacity at the tailings deposition facilities and to cater for
the remaining sources that need to be processed.
The SDO cash cost per 4E PGM ounce increased by 11% in ZAR (the
functional currency) from ZAR9,779/ounce to ZAR10,899/ounce while
the USD cash cost increased 12% to $716/ounce against $637/ounce
in the prior year. The increase in costs was primarily driven by higher
electricity cost, reagent price increases during the second part of the
The Company has also budgeted to install new emergency backup
power generation capacity at two of its plants in order to reduce the
impact of power interruptions caused by instability of the national
and provincial supply grids. While the Company is fully committed to
reducing its carbon footprint in line with ESG objectives, standalone
8
SYLVANIA ANNUAL REPORT 2022 CEO’S REVIEW (continued)
emergency backup plants operating fully on renewable technologies
are not currently viable, but these will be introduced in future where
possible to lower diesel consumption and bolster supply capacity during
peak day time running hours.
As part of its commitment to further improve the viability of its
exploration projects at Volspruit and the Northern Limb projects,
to further unlock economic potential from these owned assets, the
Company anticipates spending approximately ZAR70.0 million
($4.4 million) during FY2023 to perform further resource optimisation
and exploration drilling as detailed in the mineral asset and development
section, as well as on the required regulatory Social and Labour Plan
(SLP) spend.
As alluded to by your Chairman, the Company is working together with
a ‘binding technology’ player towards the creation of chromite ore pellets
suitable for FeCr smelters. As the research and development progresses,
Sylvania will fund the development costs in exchange for holding the
license for any future chrome pellet production in the country.
FINANCIAL PERFORMANCE
When interpreting financial results, it is important to note that the
Group generates revenues in USD which are converted to ZAR and
incurs costs in ZAR, USD and GBP. The average USD:ZAR exchange
rate was ZAR15.21:$1 against the ZAR15.34:$1 recorded in the
previous period, and the spot price was ZAR16.38:$1 at 30 June 2022
(FY2021: ZAR14.36:$1).
The average gross basket price for PGMs in the financial year was
$2,890/ounce – a 23% decrease on the previous year’s basket price of
$3,762/ounce. The decrease in the overall PGM basket price was primarily
due to circa 33% decrease in rhodium prices from record highs recorded
during FY2021, and a circa 27% decrease in palladium prices.
Revenue on 4E ounces delivered decreased by 24% in dollar terms to
$142.5 million year-on-year (FY2021: $188.3 million) with revenue from
base metals and by-products contributing $12.4 million to the total
revenue (FY2021: $13.3 million). Net revenue, after adjustments for
ounces delivered in the prior year but invoiced in FY2022, decreased
26% on the previous year’s $206.1 million to $151.9 million.
Group cash costs increased by 19% year-on-year from $755/ounce
(ZAR11,590/ounce) to $897/ounce (ZAR13,643/ounce). Direct
operating costs increased 7% in ZAR (the functional currency) from
ZAR685.0 million to ZAR730.8 million and indirect operating costs
increased 14% from ZAR233.0 million to ZAR265.1 million. The
increase in indirect costs is mainly attributable to the increase in the
social responsibility cost of ZAR12.3 million (FY2021: ZAR3.6 million).
General and administrative costs, included in the Group cash costs, are
incurred in USD, GBP and ZAR and are impacted by exchange rate
fluctuations over the reporting period. These costs increased 20% to
$2.9 million in the reporting currency year-on-year mainly due to the
increase in administrative salaries and wages, legal and consulting fees.
All-in sustaining costs (AISC) increased by 16% to $1,052/ounce
(ZAR16,008/ounce) from $907/ounce (ZAR13,910/ounce). Similarly
all-in costs (AIC) increased by 28% to $1,256/ounce (ZAR19,109/
ounce) from $981/ounce (ZAR15,052/ounce) recorded in the previous
period as a result of the increase capital spend on strategic projects
and exploration.
S T R AT E G I C L E A D E R S H I P
Group EBITDA decreased 43% year-on-year to $82.8 million
(FY2021: $144.9 million). The taxation expense for the year was
$24.8 million (2021: $43.4 million) (as per the statement of profit
or loss and other comprehensive income and includes deferred
taxation movements and dividend withholding tax) and depreciation
amounted to $3.1 million.
The Group net profit for the year was $56.2 million
(FY2021: $99.8 million).
Capital spend for the year was ZAR249.6 million ($16.4 million)
(FY2021: ZAR115.4 million ($7.5 million)), primarily associated with
Lesedi, Mooinooi and Doornbosch tailings facilities, Lesedi and
Tweefontein MF2 projects, and stay-in-business capital in line with the
Company’s business plan for the year.
Basic earnings per share (EPS) decreased 44% to 20.62 US cents per
share from 36.65 US cents per share in FY2021.
The cash balance on 30 June 2022 was $121.3 million
(FY2021: $106.1 million), including $0.8 million in financial guarantees
(FY2021: $0.9 million). Cash generated from operations before working
capital movements was $85.2 million, with net changes in working
capital of $6.7 million mainly due to the movement in trade receivables
of $9.5 million. Net finance income amounted to $1.5 million and
$23.8 million was paid in income tax for the period, including dividend
withholding tax of $1.3 million.
At the corporate level, 6.6 million shares were bought back through the
Share Buyback for a cost of $7.1 million which was announced in Q4.
The Company cancelled 6.0 million Treasury Shares at the end of June
2022. A further 2.1 million shares were bought back from employees
which includes buybacks for tax purposes during the period totalling
$2.7 million. Dividends of $22.7 million were paid out and a further
$0.7 million was paid through the Employee Dividend Entitlement
Plan (EDEP).
The impact of exchange rate fluctuations on cash held at year end was a
$4.5 million loss due to the ZAR depreciating against the USD by 14%.
The Company remains debt free with a cash balance of $121.3 million,
allowing for continued funding of capital expansion projects as identified.
For more details on the financial performance of the Group, please
refer to the Directors’ Report and the accompanying consolidated
annual financial statements.
MINERAL ASSET DEVELOPMENT
The Group owns various mineral asset development projects on the
Northern Limb of the Bushveld Igneous Complex located in South
Africa, for which it has approved mining rights. New targeted studies
were commissioned during the 2021 financial year on both the
Volspruit and Northern Limb PGM opportunities to determine how
best to optimise the respective projects. Significant progress has been
made towards unlocking mineral potential on these projects to generate
value for shareholders.
Volspruit Project
Based on the historical resource statements for Volspruit, the in situ
grade of the project was relatively low and as a consequence, low
PGM concentrate grades would have necessitated the need for very
9
SYLVANIA ANNUAL REPORT 2022 CEO’S REVIEW (continued)
capital-intensive in-house smelting and refining facilities. This was one
of the primary reasons for the relatively slow progress on this project
in earlier years. Based on the improved metal prices in recent years and
an improved focus on unlocking the potential and further value from
existing assets, the Company initiated a resource optimisation study.
Earthlab Technical Division (Earthlab) which is a mining and exploration
specialist company, assisted the Company. The primary objective is to
improve the ore feed grades for the project to enable the production
of a higher grade, saleable PGM concentrate, eliminating the need for
expensive and complicated downstream processing infrastructure.
During the past year Earthlab has reviewed historical exploration
results of the Volspruit North Pit resource (South Pit resource not yet
optimised). A revised geological interpretation was applied which allows
for higher cut-off grades, reducing the Mineral Resource to a smaller
volume, but of a higher quality. Due to the alternative definition of
mineralised zones, estimated as separate domains, the 3E PGM grade
of the Mineral Resource Estimate increased and has enhanced the
economic potential of the North Pit, especially when combined with
the relatively low waste to reef stripping ratios anticipated.
The specific deliverables of the study include an upgraded JORC-
compliant Mineral Resource Statement and a Scoping Study Report
based on the updated Mineral Resource, which are expected to be
published during Q1. Based on preliminary findings we believe that
we would be able to further enhance the value of this project by
proceeding to a Pre-Feasibility Study during the next financial year to
allow for a JORC-compliant Ore Reserve and increased confidence in
the feasibility status of the entire mineral asset.
The investment for the permitting requirements in support of the
existing Mining Right continues with specialist technical teams currently
working on the authorisations. The authorisations include the Water
Use License for the mining and on-site processing of the ore, updating
of the Environmental Impact Assessment and the finalisation of the
amended SLP which will update the Local Economic Development
(LED) project that is included in the Mining Right held by the Company.
Northern Limb Projects
The Company currently holds approved Mining Rights for PGMs and Base
Metals for both the Hacra and Aurora project areas. Similar to Volspruit,
the historical Mineral Resource Estimates for the respective project areas
did not support an acceptable in situ grade, or the ore feed grade to
enable acceptable quality saleable PGM concentrates, and consequently
limited progress was made in earlier years to develop these projects.
In 2020, the Company together with Earthlab, initiated a targeted
review of the Hacra and Aurora PGM and Base Metal projects through
an infill drilling programme, re-evaluation of existing drillhole data, and
an optimisation study. This initial proof of concept study was aimed at
improving the resource classification and updating the Mineral Resource
Estimate over a specifically identified target area that represents
approximately 10% of the total strike length held under Mining Rights
by the Company. Further studies on the remaining project areas under
the Mining Right, including a scoping-level mining study evaluating a new
business case for the area is to follow completion of the initial phase.
The interpretation and modelling of the mineralisation over the initial
target area on the La Pucella property of the Far Northern Limb will
10
be completed shortly, and the updated Mineral Resource Estimate is
expected to be published at the end of Q1 FY2023.
Based on the preliminary findings we believe that we may be able to
further enhance the value of this project by subjecting this Mineral
Resource to a scoping-level mining study to evaluate a business case for
the La Pucella target area of the Mining Right during the next year.
In addition, a similar study philosophy is planned for the three additional
target areas on strike, and down to a depth of 200m below surface
during the next financial year, contributing towards increasing and
improving the overall near-surface Mineral Resources for the far
Northern Limb project.
Grasvally Chrome Opportunity
The Company reported on 11 July 2022 that all the conditions
precedent for the sale of 100% of the shares in, and claims against
Grasvally Chrome Mine (Pty) Ltd, to Forward Africa Mining (Pty) Ltd
(FAM) have been fulfilled and the sale became unconditional on 8 July
2022. As announced in the HY1 FY2022 report, sales proceeds of
ZAR100.0 million ($5.96 million as at 8 July 2022) will be paid in fifteen
equal quarterly instalments.
CORPORATE ACTIVITIES
Dividend Approval and Payment
On 6 September 2021, the Board declared a final dividend of 4p per
Ordinary Share, with a record date of 29 October 2021 and payment
date of 3 December 2021.
In addition to the annual dividend paid, the Board declared a windfall
dividend of 2.25p per Ordinary Share for the calendar year 2021.
Payment of the windfall dividend was made on 8 April 2022 to
shareholders on the register at the close of business on 4 March 2022.
The Board has now declared the payment of a cash dividend for
FY2022 of 8p per Ordinary Share, payable on 2 December 2022.
Payment of the dividend will be made to shareholders on the register
at the close of business on 28 October 2022 and the ex-dividend
date is 27 October 2022. The declaration of the dividend was done in
accordance with the six metrics of our dividend policy, namely:
• Liquidity and forecast cash requirements of the
business: the approximate six-month working capital cycle which
needs to be provided for.
• Debt: some negative covenants could restrict the payment of
dividends in the event the Company were to secure external funding.
• Capital expenditure initiatives: expansion capital required to
grow the business and continue to extend the life of the SDO.
• Metal prices and Rand / Dollar exchange rate: fluctuations
in prices can have a major impact on the Company’s results,
especially with lengthy payment terms.
• Legal considerations: Bermudan law permits a company
to declare or pay a dividend provided the liquidity and solvency
requirements are met; and
• Sustainability: The Company’s ability to continue annual dividend
payments.
SYLVANIA ANNUAL REPORT 2022 CEO’S REVIEW (continued)
The Board has committed to review the dividend policy in the new
financial year and any changes will be communicated to shareholders in
due course.
Further to the dividends paid to shareholders, in accordance with the
Company’s EDEP whereby eligible employees receive an equivalent
dividend paid on shares bought back by the Company in the market and
ring-fenced for the EDEP, a total of ZAR10.4 million ($0.7 million) was
paid out under the EDEP during the financial year.
Transactions in Own Shares
One of the Company’s strategic goals is to return capital to
shareholders and to continue to review opportunities to do so, as and
when they arise.
At the commencement of the financial year, shares in the Company
were valued at 120p per Ordinary Share and at the close of FY2022,
the share price had depreciated 27% to 88p per Ordinary Share,
largely influenced by the macroeconomic and geopolitical environment.
Although most of the factors influencing the share price are outside
of the Company’s control, management do monitor it closely and will
continue to manage the business in the best way possible to maximise
shareholder value.
Bonus shares over 2.4 million Ordinary Shares were exercised by
various persons displaying management responsibilities (PDMRs) and
employees which vested from bonus shares awarded to them in August
2018. 1.1 million of the vested bonus shares were repurchased to satisfy
the tax liabilities of PDMRs and certain employees, and an additional
0.8 million shares were bought back from various employees. All shares
awarded came from Treasury. In addition, the Company bought back
into Treasury a total of 0.3 million shares at the 30-day VWAP of
100.7725p per share from certain employees and a PDMR where the
shares had been awarded to the sellers under the Sylvania Platinum
Award Scheme permitted to be sold back during the specified periods
of March and September.
During H2 FY2022, the Company concluded its third Share Buyback
programme in which it bought back 6.6 million shares in the market at
the average price of 85.93p per share, equating to $7.1 million.
The Company was notified that three of its Non-Executive Directors,
namely Adrian Reynolds, Simon Scott and Eileen Carr, had each
purchased 20,000 Ordinary Shares in the Company on market during
the year. Consequently, Adrian’s and Simon’s shareholdings in the
Company total 20,000 Ordinary Shares each and Eileen’s shareholding
totals 70,000 Ordinary Shares, representing 0.007%, 0.007% and
0.026% of the Company’s total number of Ordinary Shares with
voting rights.
During the financial year, a total of 6.0 million Ordinary Shares held
in Treasury were cancelled. Following the above transactions, the
Company’s issued share capital is 280,155,657 Ordinary Shares, of
which a total of 14,024,869 Ordinary Shares are held in Treasury.
Therefore, the total number of Ordinary Shares with voting rights is
266,130,788.
Appointment of Directors
Sylvania announced during the financial year that it had appointed
Adrian Reynolds and Simon Scott as Independent, Non-Executive
Directors effective 1 August 2021 and 1 January 2022 respectively.
Roger Williams stepped down from his role as Non-Executive
Director effective 31 December 2021 after serving on the Board of the
Company since 2011.
As a result of the Directorate changes, and as part of a Board
succession plan, the following changes in committee roles were effected:
Eileen Carr was appointed Chair of the Audit Committee, Adrian
Reynolds was appointed Chair of the Remuneration Committee and
Simon Scott has become a member of the Audit Committee. Eileen
Carr’s role as Assistant Company Secretary is now being carried out by
a member of the Company’s in-house legal staff.
THANK YOU AND OUTLOOK
With the newly commissioned Lesedi MF2 in operation, improved ROM
feed grades at the Western Operations, together with the roll-out of
the Tweefontein MF2, I am confident that our operations will continue
to deliver a strong production performance. For that reason, Sylvania
will target an annual production of between 68,000 to 70,000 ounces
for the financial year ahead. Based on current resources and production
scheduling and the planned contribution of improvement projects
currently in execution, PGM production for FY2024 and FY2025 is
targeted to increase.
Whilst the dip in PGM prices over the past financial year has created
more volatility, looking forward I am optimistic about the uptick
displayed in the chrome market. Higher global cost inflation impacts are
firmly on the Company’s radar and thus we will continue to maintain
prudent cash management with disciplined capital allocation and control
as well as production cost control.
I thank our management and production teams, as well as all employees
for their continued efforts and support over the past year, and you, our
shareholders for your support. I look forward to keeping you abreast of
the Company’s developments as the year unfolds.
Jaco Prinsloo
Chief Executive Officer
11
STRATEGIC LEADERSHIPSYLVANIA ANNUAL REPORT 2022 ESG: EMBEDDING OUR STRATEGY
Released alongside this 2022 Annual Report is Sylvania’s first ESG
report, Embedding our Strategy, which outlines the operational
and non-financial performance of Sylvania Platinum Limited for
the 12 months ended 30 June 2022 and demonstrates how it is
addressing environmental, social and governance responsibilities to give
stakeholders a wider understanding of the Company’s influence and
impact on the environment, the communities in which it operates and
the economy of South Africa.
Sylvania’s ESG journey follows a pathway that began with identifying
and activating the drivers of ESG, gathering baseline information
on potential material risks to ensure that future targets are based on
verifiable information and assumptions. The transition phase included
designing an ESG strategy and reporting framework. Finally, ESG has
been embedded throughout Sylvania’s business strategy, identifying
and including ESG in the Sylvania strategic risk register. This ensures that
mitigation strategies for risks or opportunities linked to ESG elements
are prioritised.
As mandated by the Board, Sylvania’s Executive Committee
acknowledges its responsibility for ensuring the integrity of the ESG
report, and has applied diligence in the collection of data, defining
assumptions, as well as the preparation and presentation of the report.
It is the Company’s opinion that the Sylvania 2022 ESG Report is aligned
with global trends for sustainability reporting and addresses all material
matters linked to the Company’s core business. It offers a balanced view
of how the Company addresses impacts on society, the environment
and the economy in the short, medium and long term.
ENVIRONMENTAL PERFORMANCE
GHG Data (excluding scope 3) (tCO2e)
Scope 1: GHG emissions (tCO2e)
Scope 2: GHG emissions (tCO2e)
Estimate Annual Water Consumed
94,582.38
265.53
94,316.85
• 12,975,525 m3 total annual water consumed
• 89,011m3 consumed in product
Incidents (not necessarily reportable)
One Tailings Storage Facility (TSF) incident
Programmes Implemented
Laboratory test phase for greener technology to be used in
rehabilitation completed
SOCIAL PERFORMANCE
Lost-time injury frequency rate (LTIFR) 0.20 (per 200,000 hrs)
Fatalities
Fatality-free since inception
Women empowered in mining
20.9%
Contribution to hosting communities
ZAR 77 million
Employee Assistance
• Private Medical Aid
• Pension Funds
• Employee Assistance Programme implemented
Community Assistance
• Learnerships and Bursaries
• Preferential employment opportunities offered to local
community members
GOVERNANCE PERFORMANCE
Total economic contribution 1
Direct taxes paid 2
Indirect taxes paid 3
Regulatory Notices and/or
instructions issued
ZAR 2 billion
ZAR 440 million
ZAR 492 million
No DMRE MHSA Section 54 nor 55 instructions issued 4
Programmes Implemented
ESG Reporting Toolkit and Framework Policies drafted
1 Includes total payments to SARS, total salaries and total supplier spend.
2 Direct taxes include PAYE, income tax.
3 Indirect taxes include VAT, dividend withholding tax and mineral royalties tax.
4 `One DWS Directive issued for FY2022.
12
SYLVANIA ANNUAL REPORT 2022 S T R AT E G I C L E A D E R S H I P
13
HOW WE
OPERATE
Sylvania was not the first to treat mineral tailings dams in the mining
industry, however, was the first company to build a commercial chrome
tailings retreatment plant to beneficiate both PGMs and chrome from
historical tailings. The first operation, Millsell, was commissioned in
2007. Based on the relatively low risk of operations from a technological
standpoint and using chemicals much less hazardous than those used
in the reprocessing of gold (which uses cyanide, for example), we were
able to replicate the process and success to grow operations to the
current six operating plants.
Besides beneficiating both chrome and PGM minerals — which were
historically uneconomical to recover — Sylvania’s operations have the
further benefit of cleaning up smaller older tailings facilities (which were
often built to lower, and less stringent environmental standards) and
re-depositing new tailings in a more efficient and responsible way. The
new tailings facilities built by the Company in the last decade comply
with higher regulatory standards and have a significantly lower risk of
pollution than the older historic dams. In addition, they consolidate
many smaller facilities, often with a much larger footprint, into bigger,
more modern facilities that reduce the environmental footprint.
The PGM metals produced by the Company have a twice-over
positive impact on the environment and are crucial for the future: they
are key in terms of the reduction of emissions in terms of standards
of the alternative renewable energy sector and serve as a primary
component of autocatalytic converters which reduce contaminants in
automotive gases.
Sylvania prioritises safe, healthy working operations and minimising
environmental harm. The Company is guided by its values to
strengthen and support the communities it operates in, and work to
build a socially inclusive economy for all stakeholders, shareholders,
employees and hosting communities. Sylvania’s values run through
every aspect of the business
SYLVANIA ANNUAL REPORT 2022 ESG: EMBEDDING OUR STRATEGY (continued)
OUR COMMITMENT TO ESG
The mining and processing sector is increasingly in the spotlight
in terms of its potential operational hazards and its impact on
the environment, employees and communities. As a minerals
re-processor, the Company takes its responsibilities to the planet
and its people as seriously as it does its duties and obligations to
customers and shareholders. Sylvania believes that a sustainable
business in the industry is one with a diverse and inclusive workforce
where employees can thrive; and one which acts in a responsible
manner, reducing its impact on the environment and benefiting the
communities in which it operates. This approach aligns with the ten
principles for sustainable development outlined by the International
Council on Mining and Metals (ICMM), which integrate with the 17
United Nations Sustainable Development Goals (UNSDGs).
We value
the safety and
health of all
We value the
fundamental rights
of people
We value honesty
and integrity
We respect
the environment
We value the culture,
traditional rights and society in which we
operate
14
SYLVANIA ANNUAL REPORT 2022 ESG: EMBEDDING OUR STRATEGY (continued)
ENVIRONMENT
CLIMATE ACTION
Energy management is key to reducing carbon emissions and Sylvania
is continuously assessing and quantifying its energy needs, risks and
impact. South Africa is currently experiencing an energy crisis caused
inter alia by ageing infrastructure and a lack of alternative energy
producers, and the Company’s energy management activities this year
must be viewed in this context. Sylvania’s carbon transition journey
starts with establishing our current and future energy requirements,
securing the energy to drive operations, improving energy efficiency
and reducing energy intensity, and ultimately reducing and replacing
Scope 1 and Scope 2 energy sources with renewables. The Company
is in the process of preparing a Task Force on Climate-related Financial
Disclosures (TCFD)-baseline report that includes a strategic climate risk
assessment.
WATER SECURITY AND STEWARDSHIP
Water is a precious resource, and effective management of water
supply and usage is vital for Sylvania’s operations. Water shortages have
led to production and financial losses at some sites, necessitating the
testing of different approaches to securing, managing, monitoring and
controlling water consumption, many of which are looking promising.
The strategy is aligned with the South African mining sector and the
Department of Water and Sanitation (DWS) guidelines.
TAILINGS MANAGEMENT AND
REHABILITATION
Continuous reworking of mineral waste dumps and redepositing (or
recycling) tailings on the same or enhanced tailings storage facility (TSF)
is inherently good for the environment. The volume of mineral waste is
reduced through the extraction of chrome and PGMs, and there is less
potential of pollution from seepage or tailings spillages.
The Sylvania Dump Operations (SDO) are responsible for the rehabilitation
of the area impacted by business under the host mine’s mining rights.
The composition and physical properties of TSFs pose several challenges
to successful rehabilitation: the dry dusty conditions present difficulties
when planting and encouraging new vegetation to grow; and dust control
measures to reduce the impact on local communities and the environment
rely on costly chemicals and other methods.
However, working with environmental consultants and industry
specialists, the Company looked to develop an alternative method of
rehabilitation and/or capping. The research encompassed repurposing
the existing tailings material to remove the need for topsoil, along with
alternatives for water quality remediation. The aim of the research
and pilot test site is to create a fertile growing material with soil-like
characteristics and functions, giving Sylvania the option of creating new
‘topsoil’ from tailings and organic waste material. The technology is
being rolled out on site in a pilot mobile water treatment unit before
scaling up to fulfil Sylvania’s vision of greener technologies.
SOCIAL
FEMALE EMPOWERMENT
Sylvania is committed to increasing the representation of women
within the business. In the 2022 financial year, the Company
welcomed 92 new employees, 64 of whom were from host
communities, and 38 (41% of the total) were women. Female
representation is notably increasing at the junior management and
core and critical skills levels, which is likely to show up at higher
levels in future years. Female representation in junior management
has increased from 7.96% in 2021 to 8.53% in 2022. At the core
and critical skills levels, 11.43% of the workforce is female this
year, compared with 10.99% in 2021. The Company is increasing
the number of women in the current internship and learnership
intakes in various fields including fitting, electrical engineering,
instrumentation and other engineering trades. The 2022 intakes
include 80% and 15% female representation in the internships and
learnerships respectively.
WORKFORCE DIVERSITY AND LABOUR
PRACTICES
Sylvania has created structures and procedures to remove gender
and ethnicity barriers to progress. Women currently represent
20.9% of the workforce, with 81.5% of them also Historically
Disadvantaged Persons (HDPs). Sylvania is continually striving to
appoint more women and HDPs at senior levels. A well-supported
employee equity forum, with representatives from all levels of the
organisation, meets quarterly to discuss concerns around equity,
skills development and other matters, and to propose improvements
on an ongoing basis.
15
STRATEGIC LEADERSHIPSYLVANIA ANNUAL REPORT 2022 ESG: EMBEDDING OUR STRATEGY (continued)
providing two of those appointments from September 2022.
The current year programme has 24 participants, 44% of whom
are women.
COMMUNITIES, CUSTOMERS AND LOCAL
STAKEHOLDER RELATIONSHIPS
Engagement with employees and local communities is driven by
the Employment Engagement Forums and Community Liaison
Officers. In the 2022 financial year, a further 64 members of the
local community started working with Sylvania. The Company is also
actively involved in community outreach and upliftment programmes
with 58 projects at various stages of delivery, including a monthly
feeding scheme for home-based care and pre-primary schools and
investment in community education projects by providing schools
with guidelines, online learning material and textbooks, winter
clothes and sports kit and office furniture and laptops. A hosting
community is also reimbursed for the use of land to abstract
affected mine water for operational use and the Company has
sponsored a breast cancer awareness campaign.
GENDER-BASED VIOLENCE
Sylvania regards the elimination of gender-based violence (GBV) as a
priority across our operations and host communities. The Company
takes a zero-tolerance approach to GBV, while acknowledging
that many incidents go unreported. Initiatives to create awareness
in order to help prevent these incidents from occurring are run.
Sylvania launched an awareness campaign called ‘We Can Do
Something’, running over the past two years for 16 days between
November and December, and encouraged employees to speak up
and fight against GBV. The campaign was welcomed by all employees
and generated a lot of discussion. A similar campaign is planned for
every year going forward.
EMPLOYEE PARTICIPATION AND
REPRESENTATION
422 of the total workforce are members of recognised unions for
collective bargaining and labour matters. During FY2022, Sylvania
maintained “unavailable labour percentage levels” below industry
norms, specifically in terms of absenteeism, which was recorded at
levels less than 0.01%. No industrial actions occurred at any of the
Sylvania operations during the period.
In 2020, employees — key stakeholders in the business — received
the first distributions of the Employee Dividend Entitlement
Programme (EDEP). With the declaration of subsequent dividends
in the intervening period, employees have received further
distributions.
Sylvania has implemented a Whistle-blower Policy which protects
the interests of employees in instances where they genuinely disclose
information in accordance with the policy and national legislation.
EMPLOYEE SAFETY AND HEALTH
The business has been fatality-free since its inception. The health
and safety strategies are integrated with the host mines to effectively
identify, mitigate and respond to workplace-related health and safety
risks and ensure leaders have the right information to take risk-based
decisions. The Doornbosch operation celebrated ten years LTI-free
in June 2022 and received the ‘Best-in-class Safety Performance’
award from the Mine Metallurgical Managers Association of South
Africa. Two LTIs occurred in FY2022 at the Mooinooi and Millsell
plants however the LTI frequency rate (LTIFR) improved to 0.20 per
200,000 man-hours compared to 0.25 in FY2021. No occupational
illnesses were recorded in this reporting period and more than 99%
of employees were declared medically fit for duty.
An employee assistance programme was launched this year giving
access to a number of support services including financial, legal and
family support. Feedback from the service provider highlights that
the non-work-related issues affecting employees are linked mainly
to finance and family concerns. Individual employee discussions and
assistance are confidential, but feedback regarding the broader areas
of concern is monitored closely by management to identify trends and
establish focus workshops and lines of communication for assistance.
Sylvania provides the option of a medical aid or medical scheme
allowance to all employees. Following a promotional drive in 2022,
95% of all employees are now members of a recognised medical aid
scheme, up from 85.67% in 2021. The Company will continue to
encourage participation in medical aid schemes.
TRAINING AND DEVELOPMENT
As well as regular training for employees, delivered by Sylvania, the
host mine and external service providers, the Company also offers
training and development programmes to people living in the local
community. Community programmes focus on artisan-related trade
certification in disciplines such as fitting and turning and electrical
competencies. The Company also introduced a Milling & Floatation
training module in September 2019 with 63 participants. The success
of this training is measured not only on the number of people taking
part, but by how many of them find employment as a result. To
date 31 participants have found employment (49%), with Sylvania
16
SYLVANIA ANNUAL REPORT 2022 ESG: EMBEDDING OUR STRATEGY (continued)
GOVERNANCE
PROCESS AND CODE OF CONDUCT
Sylvania’s senior leadership team, under the guidance of the CEO,
is responsible for taking key strategic and tactical decisions that may
impact ESG aspects at a project and operational level. ESG is embedded
into the business with relevant decisions taken at monthly operational
meetings, quarterly technical reviews, monthly risk and safety executive
committee meetings and monthly social and ethics executive committee
meetings. In 2022 the Company developed an ESG Reporting Toolkit to
establish a set of criteria and baseline data to help map Sylvania’s ESG
Journey. In addition, SHE and ESG Framework policies were drafted,
aligned with the expectations of stakeholders and focused on legal
compliance and the management of business risks.
SUSTAINED RESOURCES, GROWTH AND
DIVERSIFICATION
While the current dump, current arisings and ROM feed sources at
the host mines are available to the Group for the life of the mine,
retreating dump material is not an infinite activity. To ensure a long-
term sustainable future production profile the Company is continuously
exploring additional feed sources and engaging with third parties with
the potential resources to form strategic partnerships that add life to
the operations. Furthermore, in order to increasingly recover more
metal from existing resources and improve efficiencies, the Company
continues to research, develop and implement new technology and
circuit modifications such as the additional MF2 modules (Project
ECHO expansion) rolled out across the Group in recent years.
In terms of the Company’s various mineral assets, significant progress has
been made during the past 12 to 18 months to unlock potential value in
Sylvania’s owned projects where the Company holds approved Mining
Rights. Through engaging with reputable specialist consultants in the field
and a very innovative approach the Company managed to improve the
confidence in the resources for both the Volspruit project and Northern
Limb assets which enables the Company to advance to a pre-feasibility
phase for the Volspruit project during the next financial year.
The Company has also partnered to co-develop a novel chemical
bonding process to create a chromite ore pellet suitable for
ferrochrome (FeCr) smelters with the anticipated added potential
to cut the smelters electrical energy consumption per ton of FeCr
produced. Sylvania funds the development costs in the venture and
holds the licence for any future chrome pellet production in South
Africa. This research and development project is expected to yield
positive results and if successful may enable the Company to diversify
into other areas and commodities.
STAKEHOLDERS AND ENGAGEMENT
Relationships with stakeholders enables Sylvania to be accountable,
and to provide a foundation for its business planning and strategy and
inform on its key issues. The material results of stakeholder engagement
programmes are presented in quarterly, interim and annual reports, and
integrated into day-to-day operations.
Relevant authorities need to legally permit the Company to undertake
various activities at every step of the process – from exploration to
rehabilitation and closure. The permits incorporate binding commitments
and obligations that must be monitored to ensure compliance. This
is crucial, as delays in acquiring permits or failing to comply with their
conditions and commitments can have significant financial, operational,
legal and reputational consequences. Apart from a DWS directive
regarding the decommissioning of the Lesedi TSF in 2021 no other
directive or instructions of a material nature was issued to Sylvania.
ECONOMIC CONTRIBUTION
At its peak in 1980, mining was the largest industry in South Africa,
was responsible for 21% of GDP and employed nearly 800,000
people. By 2016 it had fallen to sixth place, but still contributed 8% of
GDP and employed almost 500,000 people — with PGM businesses
accounting for over 40% of this workforce. However, unemployment
in South Africa is high, especially amongst younger age groups. Sylvania
works to change this: it invests in community training programmes and
its recruitment initiatives focus on the communities surrounding its
operations. More than two-thirds of new employees in FY2022 were
from hosting communities.
17
STRATEGIC LEADERSHIPSYLVANIA ANNUAL REPORT 2022 DIRECTORS’ REPORT
Your Directors present their report on the
consolidated entity (the Group) consisting of
Sylvania Platinum Limited (the Company or
Sylvania) and the entities it controlled at the
end of, or during, the financial year ended
30 June 2022. Sylvania is a limited company
incorporated and domiciled in Bermuda. Unless
otherwise stated, the consolidated financial
information contained in this report is presented
in USD.
DIRECTORS
The names of the Directors who held office during, or since the end of,
the financial year and until the date of this report, are as follows:
SA Murray
JJ Prinsloo
L Carminati
(Independent Non-Executive Chairman)
(Chief Executive Officer)
(Chief Financial Officer)
RA Williams –
resigned 31 December 2021
(Independent Non-Executive Director)
E Carr
(Independent Non-Executive Director)
A Reynolds –
appointed 1 August 2021
S Scott –
appointed 1 January 2022
(Independent Non-Executive Director)
(Independent Non-Executive Director)
The Directors of Sylvania were in office from 1 July 2021 unless
otherwise stated.
INFORMATION ON DIRECTORS
SA Murray
Mr Murray has over 30 years of Executive experience in the Southern
African platinum sector, commencing his career at Impala Platinum’s
Refineries in 1984. He held a number of positions at Impala Platinum,
Rhodium Reefs, Barplats, and Middelburg Steel and Alloys, before
joining Aquarius Platinum Limited in 2001 as Chief Executive Officer,
holding that position until 2012. He was a Non-Executive Director of
Talvivaara Mining Company Plc, the former Finnish nickel miner, and is
the Chairman of Imritec Limited, an aluminium by-products recycler.
Special responsibilities
• Independent Non-Executive Chairman of the Board; and
• Member of the Remuneration Committee
E Carr
Ms Carr joined the Board of Sylvania Platinum Limited on 1 May 2015,
is a Chartered Certified Accountant with an MSc in Management from
London University and a SLOAN Fellow of London Business School.
Ms Carr has over 30 years of experience within the resources sector
having worked worldwide on a host of large-scale mining operations.
She was appointed Finance Director of Cluff Resources in 1993
and has, since that time, held several Executive Directorships in the
resources sector, including CFO for Monterrico Metals plc, the AIM-
listed copper exploration company developing the Rio Blanco project
in Peru. Her first Non-Executive role was for Banro Corp in 1998 and,
more recently, she has been a Non-Executive Director for Bacanora
Lithium plc. Currently Ms Carr is the Non-Executive Chair of Oriole
Resources plc.
Special responsibilities
• Chair of the Audit Committee
A Reynolds
Mr Reynolds joined the Board as from 1 August 2021 and has
over 40 years’ experience in the mining and minerals industry,
commencing his Directorship career in 2010 at Morila, a Randgold
Resources subsidiary. He is currently a Director of Resolute Mining
Limited and has previously held Directorship positions at Somilo
SA (a Randgold Resources subsidiary), Aureus Mining Limited, Digby
Wells Environmental, Geodrill Limited, Acacia Mining Plc, GT Gold
Corporation and Mkango Resources Limited. Mr Reynolds is a fellow
of the Institute of Materials, Minerals and Mining as well as of the
Geological Society of South Africa. He is a registered Professional
Natural Scientist and holds a Masters of Science in Geology obtained
from Rhodes University in 1979, as well as a Graduate Diploma in
Engineering obtained from the University of Witwatersrand in 1987.
Special responsibilities
• Chair of the Remuneration Committee
• Member of the Audit Committee
S Scott
Mr Scott joined the Board on 1 January 2022 and has over 25 years’
experience in mining and resources, including over 15 years in the
Southern African platinum sector. He is currently also an Independent
Non-Executive Director of First Quantum Minerals Limited and
AngloGold Ashanti Holdings plc and has previously held Executive
Directorship positions at Lonmin plc, Aveng Limited, Anglo-American
Platinum Limited, JP Morgan Chase and Chubb Holdings Limited.
18
SYLVANIA ANNUAL REPORT 2022 DIRECTORS’ REPORT (continued)
Mr. Scott is a Chartered Accountant and professional member of the
South African Institute of Chartered Accountants. He holds both a
Bachelor of Accountancy and Bachelor of Commerce degree obtained
from the University of Witwatersrand and has also completed a
Management Development Programme at the University of Cape Town.
Special responsibilities
• Member of the Audit Committee
JJ Prinsloo
Mr Prinsloo was appointed as CEO and admitted to the Sylvania Board
in March 2020. Since January 2012, he has served in senior positions
at Sylvania, initially as Executive Officer: Operations and as Managing
Director of the South African Operations from March 2014, until his
appointment to his current position. Prior to joining Sylvania, Jaco was
principal metallurgist at Anglo American for Anglo Operations Limited,
which followed eight years at Anglo American Platinum Limited from
2002 in various senior metallurgical positions across the group. During
the past 24 years in the mining industry, he has been exposed to various
operational and technical aspects of both the South African as well as
international mining landscape and he has gained experience in both the
precious and base metals sectors.
Jaco is a metallurgical engineer and holds a Bachelor of Engineering in
Metallurgy from Pretoria University, a Postgraduate Diploma in Business
Administration and an MBA from the Gordon Institute of Business
Science (UP).
Special responsibilities
• Chief Executive Officer
L Carminati
Ms Carminati is a qualified Chartered Accountant and holds a
Postgraduate Certificate in Mining Tax. She joined Sylvania in 2009
and in 2011 was appointed as Executive Officer: Finance for the South
African operations before being appointed CFO and admitted to the
Sylvania Board in March 2020. She has gained substantial and diverse
experience in the various aspects of financial management at a senior
level, with a particular focus on compliance, governance and financial
reporting. She has also taken a leadership role in corporate finance
transactions.
Special responsibilities
• Chief Financial Officer
COMPANY SECRETARY
The Company Secretary role is held by Conyers Corporate Services
(Bermuda) Limited, and they are assisted by an in-house legal
appointment.
PRINCIPAL ACTIVITIES
The principal activity of the Group is the low-cost extraction of PGMs
from chrome dumps and current arisings, as well as investment in
mineral exploration. Further information is provided in the CEO’s review.
BUSINESS REVIEW
PRINCIPAL RISKS AND UNCERTAINTIES
The Group is exposed to a variety of risks both in the mining and
exploration industry as well as various other non-industry specific risks.
The Board and the Audit Committee guides risk management and the
alignment thereof with the Group’s risk and overall strategy; however,
risk management is the responsibility of all employees.
The Board and management recognise that the risk profile is dynamic
and evolving, hence risk assessments are performed on an ongoing
basis by those members of the management team responsible for risk
management. Identified risks are linked to the Group’s business plan
and strategy to ensure that the necessary mitigating measures are put
in place. A risk register is maintained for all principal risks, which is
reviewed and considered by the Board and management on a regular
basis. A minimum of two formal risk workshops are held annually and
risks are considered in all safety, operations and executive meetings.
Short-term and long-term risks and the effect thereof on the Group’s
business plan and strategy is assessed, including extraordinary risks such
as the Covid-19 pandemic and the recent Russian invasion of Ukraine.
Principal risks described below are known risks. However, the Company
acknowledges that risks may also exist that the Board and management
are not aware of. The disclosure below is not in any particular order of
importance or relevance and immaterial risks are not noted.
Environmental, social and governance risk
Environmental
Risk and impact:
Global climate change which causes extreme weather conditions and
impacts businesses worldwide has been particularly notable. It has been
recognised that uncontrolled carbon emissions will have permanent
and disastrous effects on planet earth. It was emphasised at COP26
in October 2021 that global warming needed to be constrained to
1.5 degrees Celsius, which in turn emphasised the importance of the
shift from fossil fuels to renewable energy by corporate companies.
19
CORPORATE GOVERNANCESYLVANIA ANNUAL REPORT 2022 DIRECTORS’ REPORT (continued)
Extreme droughts in some regions contrasted by severe floods in
other regions, increased numbers of thunderstorms and extreme wind
conditions are but a few examples of natural disasters which have
occurred more often in recent times, all of which could potentially
affect the Group’s performance adversely if these occur in the
regions where the operations are situated. For example, the Group’s
operational activities are highly dependent on water. A water shortage
could potentially affect the operations negatively and a rise in cost
to procure water could cause an increase in the cost base, with a
consequent negative effect on profit margins.
Mitigation:
The environmental variables and effects thereof are outside of the
control of the Board and management. However, the Board and
management monitor the effect thereof on the business continuously
and as far as possible identify potential risks upfront to minimise the
impact. Energy and water efficient ways of product processing are
continuously investigated. The Board and management put a strong
emphasis on complying with environmental laws and regulations, health
and safety rules as well as investing in all the communities in which the
Group operates.
The Group’s focus on ESG compliance and reporting has increased
during the past financial year, of which detail can be found in the
separate ESG section of the Annual Report.
Social
Health, safety and employee wellbeing
Risk and impact:
The nature of the Group’s business inherently holds certain risks. Health
and safety of all employees is a key focus area of the Company and
underpins the sustainability of the Company. It is also a measurable key
performance indicator (KPI) for management. Disruptions due to health
and safety incidents could potentially affect the Company’s profitability
and could also present a reputational risk for the Company.
Over the past two years, the Covid-19 pandemic was on the forefront
of health and safety protocols. The South African government
announced a state of disaster on the 15th of March 2020 which was
followed by a period of hard lockdown which was later relaxed to a
partial state of lockdown with some restriction lifted. Although various
vaccination programmes were rolled out with great success, the short-
and long-term effects of the pandemic were evident in numerous
aspects of society, of which the full extent is still unknown.
Mitigation
Although the national state of disaster was lifted earlier in the year, the
Company still emphasises the safety of all employees. The Company
does encourage employees to utilise the vaccination programmes and
supports employees as far as possible. However, vaccination remains a
personal choice.
Management and the Board still monitor the wellbeing of employees,
including mental health, and various support programmes are available
to help employees and their families if required.
Commodity price and exchange rate fluctuations
Risk and impact:
The Group’s cash generating ability, growth prospects and profitability
is dependent on the metal prices as well as the USD/ZAR exchange
rate. The Group’s operations are based in South Africa with a ZAR cost
base, while the bulk of the revenue stream is USD based which exposes
the Group to the volatility of the ZAR/USD exchange rate. Payments
from smelters are received in both USD and ZAR.
Metal prices as well as the exchange rates are subject to high levels of
volatility influenced by a number of factors that are beyond the control
of the Board and management, including political uncertainty, supply and
demand and changes in the market. These factors have been particularly
volatile in the past financial year as a result of Russia’s invasion of
Ukraine as well as the long-term effects of the Covid-19 pandemic and
inflation pressures on the global economy.
The PGM basket price has been lower over the past financial year,
which directly impacted the Group’s revenue and profitability. However,
the Group still maintains a strong cash position as a result of the
effective management of the Group’s low-cost model and sound cash
management.
Mitigation:
In order to identify potential risks, the Board and management monitor
the market in which the Group operates. Short-, medium- and long-
term financial planning is undertaken to ensure that the Group’s risk is
managed at an acceptable level. Stringent cost control is a key focus area
and cost-saving strategies are investigated and reviewed regularly. New
areas of development are constantly investigated to identify potential
new sources and current production processes and procedures are
continuously monitored to ensure optimal efficiencies and recovery
optimisation.
The Group makes use of external advisors to ensure optimal
management of foreign exchange exposure. Cash is held in ZAR for the
operational and capital expenditure and surplus cash is converted to
USD to limit the impact of the exchange rate fluctuations.
Sustained Resources, growth and diversification
Risk and impact:
The retreatment of dump material has a finite life and the processing
of current arisings alone results in lower margins as a result of the
depletion of high-grade minerals.
Although the Group is constantly working on improving extraction
efficiencies and capitalising on economies of scale, diversification
remains important to ensure the longevity of the Group.
20
SYLVANIA ANNUAL REPORT 2022 DIRECTORS’ REPORT (continued)
Mitigation:
The dumps at the majority of plants have sufficient dump resources
to support production for several years. The current arisings obtained
from the operational host mines partially mitigate the risk of resource
depletion. Both these feed sources are available to the Group for the
full extent of the life of mine. The addition of the MF2 projects during
the period as well as in the near future support the ounce production
and will also extend the life of the SDO.
Investigations into additional and new resources are conducted on an
ongoing basis and the realisation of any of the sources will extend the
life of the SDO or lead to the building or acquisition of new plants.
Further research and development projects show positive results which
may enable the Group to diversify into other commodities.
The Board continued the work commenced in the prior financial year
to improve the resource statements and optimise the mining model
of the exploration assets during the reporting period. Initial test work
appears promising and the independent reports on these assets will
assist the Board to make informed decisions on how to further extract
value from the Volspruit, Aurora and Hacra projects while still aligning
with the Sylvania low-cost business model.
Capital management
Risk and impact:
The selection of capital projects to sustain current- and expand
on future operations – is key to the Group. Capital projects and
spend must be in line with the Group’s overall strategy and support
the business model. Due to the nature of the capital projects,
mismanagement could potentially lead to financial and other losses to
Sylvania.
Mitigation:
For any new projects, a detailed business case is required, supported
by an advanced project management plan. The progress of the project
according to the pre-determined milestones are monitored closely
and any deviations are identified and addressed as soon as possible.
The measurement of cost against budget is emphasised to avoid
unnecessary overspend.
Any capital expansion projects are funded out of surplus cash although
pipeline finance is available.
Cyber security
Risk and impact:
Although the goal of digital technology and cloud-based solutions is to
safeguard businesses against data compromises, it does open the door
for new and often unknown threats. Additionally, external factors like
loadshedding interfere with connectivity which could cause system
disruptions and essential data being lost or compromised.
The Group is exposed to various risks including, but not limited
to cyber-attacks and ransomware, business interruptions, fraud,
failing hardware and sabotage on IT infrastructure which could all
potentially lead to financial loss. The remote work environment at
the plants increases the risk of and exposure to IT breaches and data
compromises.
Mitigation:
The Group conducts regular cyber vulnerability tests and IT and cyber
security forms part of both the internal and external audit review
procedures. Penetrations tests, amongst others, are performed to
identify potential weaknesses upfront in order for the Group to
respond appropriately to any current threats.
All systems are upgraded to the most recent versions to avoid exposure
to unauthorised internal and external access. The Group makes use of
an external consultant to advise on new developments and potential
risks in the unique environment in which the Group operates. Regular
back-ups are made, and testing of the efficiency thereof is done on an
ongoing basis. Disaster recovery and cyber security policies are updated
and reviewed regularly, and any changes thereto communicated.
Emphasis is put on employee awareness and the upskilling of employees
with regards to cyber risk and the desired processes and procedures to
be followed.
Human capital
Retention of key staff and succession planning
Risk and impact:
The Group is reliant on a small team with a specialised skill set to
ensure the success of the Company. Corporate intelligence and the
continuation thereof is a key factor for operational excellence. A fast
turnover in management might affect employee morale negatively.
The lack of a succession plan for both key management and the Board
can potentially lead to the unnecessary disruption of the operations and
potentially lead to a loss of investor confidence.
Mitigation:
The Group creates a supportive work environment for all employees
with emphasis on employee health which is supported by the employee
assistance plan that was rolled out during the period. The Company
incentivises key management through the granting of bonus share
awards, regular salary benchmarking and opportunities to further any
relevant studies.
Succession planning is a focus area of the Board and the Remuneration
Committee and forms part of the Executive strategy workshops.
21
CORPORATE GOVERNANCESYLVANIA ANNUAL REPORT 2022 DIRECTORS’ REPORT (continued)
GROUP FINANCIAL RESULTS
Results for the year
Average 4E Gross basket price
Net Revenue
Group cash cost
Group cash cost
Gross profit
General administration costs
Profit before income tax expense
Group EBITDA
Cash generated from operations
(before working capital changes)
Changes in working capital
Net finance income received
Taxation paid
Net increase/(decrease) in cash and cash equivalents 1
Cash and cash equivalents, end of year
Production
Plant feed
Total 3E and Au
PGM plant recovery
Capital expenditure
Property, plant and equipment
Exploration and evaluation assets
Total capital expenditure
1 Before foreign exchange movements
$/oz
$ 000
ZAR/oz
$/oz
$ 000
$ 000
$ 000
$ 000
$ 000
$ 000
$ 000
$ 000
$ 000
$ 000
T
Oz
%
$ 000
$ 000
$ 000
2022
2021
+- % Change
2,890
151,944
13,643
897
83,201
(2,860)
80,929
82,768
85,203
(6,735)
1,512
(23,832)
19,694
3,762
206,112
11,590
755
143,068
(2,375)
143,213
144,860
145,649
(31,876)
1,573
(47,111)
38,692
121,282
106,135
(23)
(26)
18
19
(42)
20
(43)
(43)
(42)
(79)
(4)
(49)
(49)
14
2022
2021
+- % Change
2,393,355
2,700,685
67,053
53
14,498
1,907
16,405
70,043
54
6,104
1,415
7,519
(11)
(4)
(2)
138
35
118
22
SYLVANIA ANNUAL REPORT 2022 DIRECTORS’ REPORT (continued)
Net Revenue
Cash
Net Revenue decreased 26% year-on-year mainly due to the 23%
decrease of the gross basket price from $3,762/ounce in FY2021 against
$2,890/ounce recorded in the current year.
Cash costs
Cash costs for the Group increased 18% year-on-year to ZAR13,643/
ounce compared to ZAR11,590/ounce in the previous year. The
increase is attributable to higher electricity and mining costs as well
as the sharp increase in the cost of reagents, fuel and transport due
to the high global inflation rate and rising fuel cost. An increase in the
administrative salaries, wages and legal fees, Directors’ fees as a result
of the appointment of an additional Non-Executive Director as well as
the increase in international travel cost after the upliftment of the travel
restrictions due to the Covid-19 pandemic further contributed to the
higher Group cash cost.
General and administration
The general and administration cost increased by 20% year-on-year.
The increase relates mainly to overseas travel as the Directors were
allowed to travel abroad after the Covid-19 restrictions were lifted, legal
expenses and Directors’ fees due to the appointment of an additional
Non-Executive Director, as well as an increase in administrative salaries
and wages. General and administrative costs are incurred in USD,
GBP and ZAR and are impacted by exchange rate fluctuations over
the reporting period. These costs increased 9% year-on-year in the
reporting currency.
Mining and income tax
Income tax paid for the financial year amounted to ZAR362.0 million
($23.8 million) compared to ZAR721.2 million ($47.1 million) for the
previous financial year, as a result of decreased taxable profits at the
operations and after mining capital allowances. Income tax is paid in
ZAR on taxable profits generated at the South African operations.
Mineral royalty tax of ZAR105.3 million ($6.9 million) was paid for the
financial year against ZAR126.9 million ($8.3 million) in the prior year.
Profit
The consolidated profit before tax of the Group at 30 June 2022 was
$81.0 million (FY2021: $143.2 million), a 43% decrease on the prior year.
Decreased revenue due to the lower basket prices compared to the
prior year as well as marginally lower ounce production, contributed
to the decrease in profits. Group EBITDA decreased by 43% from
$144.9 million to $82.8 million.
Capital
Capital spend increased during the current financial year from
$7.5 million in the prior year to $16.4 million in the current year. Capital
expenditure was mainly incurred at the TSF constructions at Mooinooi,
Lesedi and Doornbosch, the MF2 projects at Tweefontein and Lesedi,
the emergency tailings dam at Lesedi as well as stay-in-business (SIB)
capital, in line with the Company’s plan for the year.
The cash balance on 30 June 2022 was $121.3 million
(FY2021: $106.1 million), including $0.8 million in financial guarantees
(FY2021: $0.9 million). Cash generated from operations before working
capital movements was $85.2 million, with net changes in working
capital of $6.8 million mainly due to the movement in trade receivables
of $9.5 million. Net finance income amounted to $1.5 million and
$23.8 million was paid in income tax for the period, including dividend
withholding tax of $1.3 million. Major spend items include $1.9 million
(FY2021: $1.4 million) on exploration activities as well as $14.5 million
(FY2021: $6.1 million) on capital projects and SIB for the SDO plants.
At the corporate level, 6.6 million shares equating to $7.1 million,
were bought back through the Share Buyback programme which was
announced in Q4. The Company cancelled 6.0 million Treasury Shares
at the end of June 2022 and the remaining 0.6 million shares will be
cancelled post the reporting period. A further 2.1 million shares were
bought back from employees and PDMRs, including those shares
bought back for tax purposes, totalling $2.7 million. Dividends of
$22.7 million were paid out and a further $0.7 million was paid through
the Employee Dividend Entitlement Plan (EDEP).
The impact of exchange rate fluctuations on cash held at year end was a
$4.5 million loss due to the ZAR depreciating against the USD by 14%.
The Company remains debt free with a cash balance of $121.3 million,
allowing for the continued funding of capital expansion projects
as identified.
For more details on the financial performance of the Group, please
refer to the accompanying consolidated annual financial statements.
REVIEW OF OPERATIONS AND EXPLORATION
A detailed review of operations and exploration activities has been
included in the CEO’s review.
CORPORATE MATTERS
Dividend approval and payment
On 8 September 2021, the Board declared a final dividend of 4p per
Ordinary Share, with a record date of 29 October 2021 and payment
date of 3 December 2021.
In addition to the annual dividend paid, the Board declared a windfall
dividend of 2.25p per Ordinary Share for the calendar year 2021.
Payment of the windfall dividend was made on 8 April 2022 to
shareholders on the register at the close of business on 4 March 2022.
The Board has now declared the payment of a cash dividend for
FY2022 of 8p per Ordinary Share, payable on 2 December 2022.
Payment of the dividend will be made to shareholders on the register at
the close of business on 28 October 2022 and the ex-dividend date is
27 October 2022.
23
CORPORATE GOVERNANCESYLVANIA ANNUAL REPORT 2022 DIRECTORS’ REPORT (continued)
Further to the dividends paid to shareholders, in accordance with the
Company’s EDEP whereby eligible employees receive an equivalent
dividend paid on shares bought back by the Company in the market and
ring-fenced for the EDEP, a total of ZAR10.4 million ($0.7 million) was
paid out under the EDEP during the financial year.
Transactions in own shares
One of the Company’s strategic goals is to return capital to
shareholders and continue to review opportunities to do so, as and
when they arise.
At the close of FY2021, shares in the Company were valued at
120p per Ordinary Share and at the close of FY2022, the share price
had depreciated 36% to 88p per Ordinary Share due to inflation, global
trends and the impact of the Russian invasion of Ukraine.
Options over 2,385,000 Ordinary Shares were exercised by various
persons displaying management responsibilities (PDMRs) and employees
which vested from bonus shares awarded to them in August 2018.
1,066,850 of the vested bonus shares were repurchased to satisfy
the tax liabilities of PDMRs and certain employees, and an additional
806,580 shares were bought back from various employees. All shares
awarded came from Treasury. In addition, the Company bought back
a total of 263,724 shares at the 30-day VWAP of 100.7725 pence per
share from certain employees and a PDMR where the shares had been
awarded to the sellers under the Sylvania Platinum Award Scheme
permitted to be sold back during the specified periods of March
and September.
During H2 FY2022, the Company concluded its third Share Buyback
programme in which it bought back 6,590,923 shares in the market at
the average price of 85.93 pence per share, equating to $7.1 million.
The Company was notified that three of its Non-Executive Directors,
namely Adrian Reynolds, Simon Scott and Eileen Carr, had each
purchased 20,000 Ordinary Shares in the Company from the market.
Consequently, Adrian’s and Simon’s shareholding in the Company total
20,000 Ordinary Shares each and Eileen’s shareholding totals 70,000
Ordinary Shares, representing 0.007%, 0.007% and 0.026% of the
Company’s total number of Ordinary Shares with voting rights.
Company’s issued share capital is 280,155,657 Ordinary Shares, of
which a total of 14,024,869 Ordinary Shares are held in Treasury.
Therefore, the total number of Ordinary Shares with voting rights
is 266,130,788.
Appointment of directors
Sylvania announced during the financial year that it had appointed
Adrian Reynolds and Simon Scott as Independent, Non-Executive
Directors effective 1 August 2021 and 1 January 2022 respectively.
Roger Williams stepped down from his role as Non-Executive
Director effective 31 December 2021 after serving on the Board of the
Company since 2011.
As a result of the Directorate changes, and as part of a Board
succession plan, the following changes in committee roles were effected:
Eileen Carr was appointed Chair of the Audit Committee, Adrian
Reynolds was appointed Chair of the Remuneration Committee and
Simon Scott has become a member of the Audit Committee. Eileen
Carr’s role as Assistant Company Secretary is now being carried out by
a member of the Company’s in-house legal staff.
Likely developments and expected results
Additional comments on production forecasts and operating cash costs
are included in the operational performance and outlook section in the
CEO’s review.
Environmental legislation
The Group is subject to significant environmental legal regulations
in respect of its exploration and evaluation activities in South Africa.
There have been no known significant breaches of these regulations and
principles by the Group and its operations.
Meetings of Directors
During the financial year under review, there were three formal
Directors’ meetings, a budget review meeting and five information/
strategy sessions. All other matters that required formal Board
resolutions were dealt with via written circular resolutions and through
the holding of conference calls. In addition, the Directors met on
an informal basis at regular intervals during the year to discuss the
Group’s affairs.
During the financial year, a total of 6.0 million Ordinary Shares held
in Treasury were cancelled. Following the above transactions, the
The number of formal meetings of the Group’s Board of Directors
attended by each Director was:
Board meetings
Audit Committee meetings
Remuneration Committee
meetings
Information/strategy
meetings
Number of
meetings
eligible to
attend
Number of
meetings
attended
Number of
meetings
eligible to
attend
Number of
meetings
attended
Number of
meetings
eligible to
attend
Number of
meetings
attended
Number of
meetings
eligible to
attend
Number of
meetings
attended
SA Murray
J J Prinsloo
L Carminati
RA Williams 1
E Carr
A Reynolds
S Scott
3
3
3
2
3
3
1
3
3
3
2
3
3
1
–
4
4
2
4
4
2
–
4
4
2
4
4
2
2
–
–
1
2
2
1
2
–
–
1
2
2
1
5
5
5
2
5
5
2
5
5
5
2
5
5
2
1 Resigned effective 31 December 2021
24
SYLVANIA ANNUAL REPORT 2022 DIRECTORS’ REPORT (continued)
Directors’ interest in shares and options
The following relevant interests in the shares and options of the Company or related body corporate were held by the Directors as at the reporting date:
Shares and options
2022
SA Murray
J J Prinsloo
L Carminati
E Carr
A Reynolds
S Scott
Common Shares
1,050,000
1,372,394
1,244,331
70,000
20,000
20,000
Directors and key management personnel
The key management personnel of the Group are the Directors of the Company and those Executives that report directly to the Chief Executive
Officer or as determined by the Board. Details of Directors and key personnel remuneration is as follows:
Short Term Benefits
Share-Based
payment
Equity2
2022
Directors
SA Murray
J J Prinsloo
L Carminati
RA Williams – resigned 31 December 2021
E Carr
AJ Reynolds – appointed 1 August 2021
S Scott – appointed 1 January 2022
Sub-total
Other key management
Total
Cash salary/
Consulting
fees
$
–
318,999
289,886
–
26,500
–
–
635,385
1,734,634
2,370,019
1 Cash bonuses were awarded to Directors and key personnel based on individual performance.
2 Share-based payments include shares issued and bonus shares granted.
Bonus1
Directors’
fees
shares/bonus
shares2
$
–
61,253
56,193
–
–
–
–
117,446
232,863
350,309
$
125,000
75,000
75,000
42,500
80,000
71,250
37,500
506,250
–
506,250
$
–
79,725
69,810
–
–
–
–
149,535
266,723
416,258
Total
$
125,000
534,977
490,889
42,500
106,500
71,250
37,500
1,408,616
2,234,220
3,642,836
25
CORPORATE GOVERNANCESYLVANIA ANNUAL REPORT 2022 DIRECTORS’ REPORT (continued)
Indemnification and insurance of directors and officers
During the year, the Company paid premiums in respect of a contract
insuring all Directors and Officers of the Company against liabilities
incurred as Directors or Officers. Due to confidentiality clauses in
the contract the amount of the premium has not been disclosed.
The Company has no insurance policy in place that indemnifies the
Company’s auditors.
Going concern
The Group identified the principal risks and uncertainties related to the
Russian invasion of Ukraine, the floods in Kwa-Zulu Natal and the
Covid-19 pandemic. Management has produced forecasts and budgets
that have been sensitised to reflect plausible downside scenarios for the
global volatile economy.
The Russian invasion of Ukraine that commenced in February 2022 had
a widespread economic impact worldwide. These events contributed to
global uncertainty with resultant lower commodity prices and a weaker
Rand. However the Group operates in an essential industry with a low-
risk business model which supports business continuity. The Group is in
a fortunate position of being cash strong which mitigates the impact and
market risk both short- and long term.
The series of floods that occurred in South-Africa during the second
quarter of the reporting period, did not occur in the geographical areas
where the Group’s operations are located. The Group does not rely on
importation and does not procure from affected areas, and hence was
not impacted by the negative knock-on effects of the floods.
After considering the aforementioned, the financial position, operational
performance, budgets and forecasts as well as the timing of cash flows
and sensitivity analyses, the Directors are satisfied that the Company
and the Group have adequate resources to continue in operational
existence for at least 12 months from date of signing the financial
statements.
Events after the reporting period
On 8 July 2022 the sale of Grasvally Chrome Mine (Pty) Ltd, as
described in note 26 of the financial statements, became effective.
The Directors are not aware of any further matters or circumstances
arising since the end of the reporting period, not otherwise dealt
with in the financial statements, which significantly affects the financial
position of the Group or the results of its operations.
Statement as to disclosure of information to auditors
The Directors who were in office on the date of approval of these
financial statements have confirmed, as far as they are aware, that there
is no relevant audit information of which the auditors are unaware.
Each of the Directors has confirmed that they have taken all the steps
that they ought to have taken as Directors in order to make themselves
aware of any relevant audit information and to establish that it has been
communicated to the auditor.
Signed in accordance with a resolution of the Directors
The impact of the Covid-19 pandemic has stabilised since the last
reporting period. The Directors are monitoring the pandemic and will
take the necessary precautionary measures to ensure the safety of
employees where a risk is identified.
Jaco Prinsloo
Chief Executive Officer
7 September 2022
The Group has sufficient cash reserves and resources to continue to
meet its obligations even in the event if operations were to be placed
on care and maintenance for 12 months.
26
SYLVANIA ANNUAL REPORT 2022
CORPORATE GOVERNANCE STATEMENT
INTRODUCTION
The Company is quoted on AIM and has adopted the Quoted
Companies Alliance (QCA) Corporate Governance Code 2018 (the
Code) for Smaller Companies. In accordance with the AIM Rules this
was adopted and implemented from September 2018 and is disclosed
on the Company’s website (https://www.sylvaniaplatinum.com/
governance/corporate-governance).
The Board is committed to maintaining the highest standards of
corporate governance throughout its operations and to ensuring that
all its practices are conducted transparently, ethically and efficiently
to ultimately deliver long-term value to shareholders. The Board
examines all aspects of its business to ensure an effective and efficient
management framework as recommended by the Code.
The Board and management continue to review, analyse and improve
the Company’s procedures resulting in the continued success of the
Company and increasing shareholder value. Good and transparent
communication is key to promoting shareholder confidence and
building trust.
The Company provides a summary of its current Corporate
Governance Code compliance as guidance, as detailed below.
The Board, guided by the Chairman, reviews the Group strategy and
business plan on a regular basis to ensure medium- and long-term value
for stakeholders. The Board communicates the Group strategy to, and
connects with shareholders, through formal platforms to promote
trust in the Group and the Board. The shareholders are granted the
opportunity to respond to these engagements to promote open
communication channels. The Group Vision, Mission and Values are the
foundation of this strategy, summarised below:
Vision:
Mission:
To be the leading mid-tier, lower unit cost, PGMs
producing company.
To generate wealth for all our stakeholders using safe
and innovative processes with a focus on PGMs while
exploiting any value-adding associated minerals.
The Executive Board members lead by example in living the values
and promoting the culture of the Group, which facilitate improved
performance, reduce and mitigate risk and create sustainable growth.
Group results are disclosed on the Group website on a quarterly
basis, supported by more detailed reports bi-annually, promoting
transparency.
THE BOARD OF DIRECTORS
The Board is responsible for providing leadership aligned with the
Company’s culture and ethical values, creating an environment where
strategy, performance, risk management and sustainability is equally
valued and balanced to optimise results. The Board is responsible
for the management of the Company by developing, reviewing and
approving the Company’s strategy, budgets and corporate actions.
Regular Board meetings are held to review strategy, planning,
operational and financial performance. Furthermore, the Board ensures
that its obligations to shareholders and other stakeholders are met and
that good relationships are maintained.
The Board comprises six members, representing a balance of sector
expertise, financial and market experience and personal attributes. The
composition of the Board and the respective skills supports the delivery
of the Company’s strategy and business plan. The Board is made up
of: the Independent Non-Executive Chairman, three Independent
Non-Executive Directors and two Executive Directors. The details of
the Board members are outlined in the Directors’ report. There is a
clear division of responsibilities at the head of the Group through the
separation of the positions of the Chairman and the Chief Executive
Officer and the roles and responsibilities of the Board members are
clearly defined.
The Board currently comprises:
SA Murray
Independent Non-Executive Chairman
JJ Prinsloo
Chief Executive Officer
L Carminati
Chief Financial Officer
E Carr
Independent Non-Executive Director
Values:
• We value the safety and health of all
A Reynolds
Independent Non-Executive Director
• We value the fundamental rights of all people
S Scott
Independent Non-Executive Director
• We value honesty and integrity
• We respect the environment
• We value the culture, traditional rights and society in
which we operate
In achieving the above Vision and Mission, the Board and management
operate according to four focus areas:
• Maintaining safe and profitable production
• Progressing Research & Development as well as Exploration Projects
• Strengthening License to Operate
• Growth Opportunities
The Board met eight times during the reporting period. Three formal
Board meetings, one budget meeting and four strategy and information
update meetings were held.
The Board receives detailed information packs ahead of all Board
meetings on all operational, financial and corporate activities to enable
them to make informed decisions when necessary.
The Board has not appointed a Senior Independent Director but will
do so if and when it is appropriate considering the Company’s size
and stage.
27
CORPORATE GOVERNANCESYLVANIA ANNUAL REPORT 2022 CORPORATE GOVERNANCE STATEMENT (continued)
SHAREHOLDER RELATIONS AND
EXPECTATIONS
The Audit Committee met four times during the year to consider the
following agenda items:
The Company is committed to communicate with shareholders through
investor roadshows, individual meetings, on-line, through RNS and on
the Company’s website. The interactions are conducted quarterly as
well as in line with the half-year end annual reporting cycles. The goal is
to maintain an open and transparent relationship with shareholders on
the strategy and performance of the Company.
Board appointments, succession planning, corporate governance, risk
management and sustainability matters are dealt with by the full Board
of Directors. In addition, the Directors have established Audit and
Remuneration Committees to address specific areas in more detail.
AUDIT COMMITTEE
The Audit Committee has been established to assist the Board in
fulfilling its obligations in respect of financial reporting and results, other
public announcements where applicable, the internal and external audit
process and the control environment.
Following the resignation of Roger Williams, Eileen Carr was appointed
as Chair of the Audit Committee. Adrian Reynolds and Simon Scott
joined the Audit Committee on 1 August 2021 and 1 January 2022
respectively. Detail of the Committee members qualifications and
experience is detailed in the Directors’ report.
The role of the Audit Committee includes, amongst other, the below:
• monitor and review the integrity of the financial reporting of the
Company, reviewing significant financial reporting judgments;
• review the Company’s insurances on behalf of the Board, noting that
the Company’s risks in general are addressed by the Board itself;
August 2021
• The Annual Report for the year ended 30 June 2021;
• External Audit Report on the Group Annual Financial Statements for
the year ended 30 June 2021;
• Going concern;
• Impairment;
• Internal audit update;
• IT governance update; and
• Whistle-blower feedback
November 2021
• External auditor’s strategy and planning report for the Half year
review;
• Directors and Officers Liability Insurance;
• Internal audit update;
• IT governance update;
• ESG reporting update; and
• Whistle-blower feedback
February 2022
• Half year results and report to 31 December 2021;
• External audit report on half year;
• monitor, review and oversee the external audit function including
• Half year Impairment and going concern assessments;
matters concerning appointment and remuneration, independence
and non-audit services;
• monitor, review and oversee the internal audit function and the
financial control system;
• Internal audit update;
• IT governance update; and
• Whistle-blower feedback
• monitor and review compliance with the Company’s Code of
May 2022
Conduct and Whistle-blower Policy; and
• External audit strategy and plan for the 30 June 2022 year-end audit;
• perform such other functions as assigned by law, the Company’s
• Exploration assets and projects update;
Byelaws, or the Board.
The Audit Committee invites representatives of the external auditor,
management and on occasion the internal auditor to all committee
meetings. PwC is the Company’s external auditors for a second
consecutive year and the Audit Committee is satisfied that the Group’s
auditors are independent.
• Internal audit update;
• IT governance update; and
• Whistle-blower feedback
All announcements released via RNS, including quarterly, half year and
annual results are approved by the entire Board.
28
SYLVANIA ANNUAL REPORT 2022 CORPORATE GOVERNANCE STATEMENT (continued)
REMUNERATION COMMITTEE
RISK ASSESSMENT AND INTERNAL CONTROLS
The purpose of the Remuneration Committee is to determine
and agree with the Board the framework or broad policy for the
remuneration of the Company’s Chairperson, Executive Directors and
senior management.
The Remuneration Committee comprises Adrian Reynolds as Chair
and Stuart Murray. During the year the Remuneration Committee met
twice and invited Eileen Carr, the CEO as well as Simon Scott to attend.
The Remuneration Committee assists the Board to determine the
remuneration arrangements and contracts of the Executive Directors
and senior employees. It also reviews the Board and Executives’ key
performance indicators, as well as performance related pay and bonus
share allocations. No Director is involved in reviewing their own
remuneration. Directors’ interest in shares is set out in the Directors’
report. Succession planning for Senior Executives is reviewed annually.
The Independent Non-Executive Directors may, if needed, seek
independent professional advice, at the Group’s expense, in the
execution of their duties.
NOMINATIONS COMMITTEE
The role of the Nominations Committee is undertaken by the full
Board of Directors. The Nominations Committee is charged with
finding suitable candidates for nomination for appointment to the Board
of Directors.
STAKEHOLDER AND SOCIAL RESPONSIBILITIES
All stakeholders are engaged with on a regular basis, whether formally
or informally. Two-way communication ensures that healthy and
transparent relationships, built on trust and integrity, are maintained
with all stakeholders. The Company is committed to “doing what we
say we are going to do” and show commitment towards delivering high
performance outcomes portraying an image of professionalism.
Refer to the Company website https://www.sylvaniaplatinum.com/ and
our ESG Report for more detail on the various engagements with our
employees and communities in which the Company operates.
Details of the principal risks are disclosed in the Directors’ report.
The Board and management perform ongoing risk assessments which
are tracked in a risk register and discussed regularly at operational and
strategic risk workshops. The Board also considers financial indicators
including solvency and liquidity. The Group’s ability to continue as a
going concern is formally assessed bi-annually and as part of the annual
budgeting process. Further consideration of the Group’s solvency and
liquidity ratios are performed when dividend payments are made.
The Group does not have a separate internal audit function to consider
the design and effectiveness of the control environment. However,
an external independent firm has been engaged to assist with the
evaluation and testing of the control environment and to identify
possible vulnerabilities. The planning and reporting of the Group’s
internal audit function is monitored by the Audit Committee and the
Board of Directors, and the internal auditors are invited to the Audit
Committee meetings on an ad hoc basis. The internal audit function is
also discussed with the external auditors during the year end and half
year reporting periods.
The Group’s financial support function is responsible for intermittently
testing the control environment. Management at various organisational
levels are responsible for ensuring that the integrity of the control
environment remains of a high level and to highlight any possible
shortcomings. The Board considers the internal controls and
procedures in place to be appropriate for the size, complexity and risk
profile of the Group.
By order of the Board
Jaco Prinsloo
Chief Executive Officer
7 September 2022
29
CORPORATE GOVERNANCESYLVANIA ANNUAL REPORT 2022
DIRECTORS’ RESPONSIBILITIES
IN THE PREPARATION OF THE FINANCIAL STATEMENTS
The Directors are responsible for preparing the annual report and the
financial statements in accordance with applicable law and regulations.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company’s website.
The Directors have elected to prepare the Group financial statements
under the International Financial Reporting Standards (IFRS).
Legislation in Bermuda governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
International Accounting Standard 1 requires that financial statements
present fairly for each financial year the Group’s financial position,
financial performance and cash flows. This requires the faithful
representation of the effects of transactions, other events and
conditions in accordance with the definitions and recognition criteria
for assets, liabilities, income and expenses set out in the International
Accounting Standards Board’s ‘Framework for the Preparation and
Presentation of Financial Statements’. In virtually all circumstances, a fair
presentation will be achieved by compliance with all applicable IFRSs.
The Directors are also responsible for:
• properly selecting and applying accounting policies;
• presenting information, including accounting policies, in a manner
that provides relevant, reliable, comparable and understandable
information;
• providing additional disclosures when compliance with the specific
requirements in IFRSs is insufficient to enable users to understand
the impact of particular transactions, other events and conditions on
the entity’s financial position and financial performance; and
• making an assessment of the Group’s ability to continue as a going
concern.
The Directors are responsible for keeping adequate accounting records
that are sufficient to show and explain the Group’s transactions and
disclose with reasonable accuracy at any time the financial position of
the Group. They are also responsible for safeguarding assets of the
Group and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
DIRECTORS’ RESPONSIBILITY STATEMENT
We confirm that to the best of our knowledge:
1.
2.
the financial statements, prepared in accordance with International
Financial Reporting Standards, give a true and fair view of the assets,
liabilities, financial position, profit or loss and cash flows of the
Group and the undertakings included in the consolidation taken as a
whole; and
the sections of the annual report include a fair review of the
development and performance of the business and the position of
the Group and the undertakings included in the consolidation taken
as a whole, together with a description of the principal risks and
uncertainties that they face.
By order of the Board
Jaco Prinsloo
Chief Executive Officer
7 September 2022
30
SYLVANIA ANNUAL REPORT 2022
INDEPENDENT AUDITOR’S REPORT
To the Shareholders of Sylvania Platinum Limited
OUR AUDIT APPROACH
OUR OPINION
Overview
In our opinion, the consolidated financial statements present fairly, in all
material respects, the consolidated financial position of Sylvania Platinum
Limited (the Company) and its subsidiaries (together the Group) as
at 30 June 2022, and its consolidated financial performance and its
consolidated cash flows for the year then ended in accordance with
International Financial Reporting Standards.
What we have audited
Sylvania Platinum Limited’s consolidated financial statements set out on
pages 36 to 82 comprise:
• the consolidated statement of financial position as at 30 June 2022;
• the consolidated statement of profit or loss and other
comprehensive income for the year then ended;
• the consolidated statement of changes in equity for the year then
ended;
• the consolidated statement of cash flows for the year then ended;
and
• the notes to the consolidated financial statements, which include a
summary of significant accounting policies.
BASIS FOR OPINION
We conducted our audit in accordance with International Standards
on Auditing (ISAs). Our responsibilities under those standards are
further described in the Auditor’s responsibilities for the audit of the
consolidated financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Independence
We are independent of the Group in accordance with the Independent
Regulatory Board for Auditors’ Code of Professional Conduct
for Registered Auditors (IRBA Code) and other independence
requirements applicable to performing audits of financial statements
in South Africa. We have fulfilled our other ethical responsibilities in
accordance with the IRBA Code and in accordance with other ethical
requirements applicable to performing audits in South Africa. The IRBA
Code is consistent with the corresponding sections of the International
Ethics Standards Board for Accountants’ International Code of Ethics
for Professional Accountants (including International Independence
Standards).
Materiality
Group
scoping
Key audit
matters
Overall group materiality
• $4,000,000, which represents 5% of
consolidated profit before income tax
expense.
Group audit scope
• We conducted full scope audit
procedures at 2 components and audits
of material financial statement line items
at 8 components based on their financial
significance to the consolidated financial
statements.
Key audit matters
• Rehabilitation provision
As part of designing our audit, we determined materiality and assessed
the risks of material misstatement in the consolidated financial
statements. In particular, we considered where the directors made
subjective judgements; for example, in respect of significant accounting
estimates that involved making assumptions and considering future
events that are inherently uncertain. As in all of our audits, we also
addressed the risk of management override of internal controls, including
among other matters, consideration of whether there was evidence of
bias that represented a risk of material misstatement due to fraud.
Materiality
The scope of our audit was influenced by our application of materiality.
An audit is designed to obtain reasonable assurance whether the
financial statements are free from material misstatement. Misstatements
may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of the
consolidated financial statements.
Based on our professional judgement, we determined certain
quantitative thresholds for materiality, including the overall group
materiality for the consolidated financial statements as a whole as set
out in the table below. These, together with qualitative considerations,
helped us to determine the scope of our audit and the nature, timing
and extent of our audit procedures and to evaluate the effect of
misstatements, both individually and in aggregate on the financial
statements as a whole.
31
FINANCIAL STATEMENTSSYLVANIA ANNUAL REPORT 2022 INDEPENDENT AUDITOR’S REPORT (continued)
Overall group materiality
$ 4,000,000
How we determined it
Rationale for the
materiality benchmark
applied
5% of consolidated profit before income
tax expense.
We chose profit before tax as the
benchmark because, in our view, it
is the benchmark against which the
performance of the Group is most
commonly measured by users, and is a
generally accepted benchmark. We chose
5% which is consistent with quantitative
materiality thresholds used for profit-
oriented companies in this sector.
How we tailored our group audit scope
We tailored the scope of our audit in order to perform sufficient
work to enable us to provide an opinion on the consolidated financial
statements as a whole, taking into account the structure of the Group,
the accounting processes and controls, and the industry in which the
Group operates.
The consolidated financial statements are a consolidation of the
Company and 20 subsidiaries (18 subsidiaries were considered a
component for purposes of our group audit scope). Financially
significant components were identified based on scoping benchmarks
such as their contribution to key financial statement line items which
included consolidated profit before income tax expense, consolidated
revenue and consolidated total assets and the risks associated with
the entity.
Based on our scoping assessment, we conducted full scope audits on 2
components and audits of material financial statement line items for 8
components. For the components that were considered to be financially
inconsequential, we performed group wide analytical procedures in
order to obtain sufficient appropriate audit evidence in respect of the
consolidated financial statements.
The group engagement team performed audit procedures over the
consolidated financial statements, the consolidation process, financial
statement disclosures and significant accounting positions taken by
the group to be able to conclude whether sufficient appropriate audit
evidence had been obtained as a basis for our opinion on the Group
financial statements as a whole.
32
SYLVANIA ANNUAL REPORT 2022 INDEPENDENT AUDITOR’S REPORT (continued)
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements
of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter
Rehabilitation provision
Refer to the following disclosures in the consolidated financial
statements as it relates to the key audit matter:
• Note 4 – Significant accounting judgements, estimates and
assumptions;
• Note 6 – Significant accounting policies;
• Note 22 – Provisions.
As at 30 June 2022, the group’s rehabilitation provision amounted to
$ 5,936,804.
Management reviews the site closure, restoration and environmental
obligations using experts to provide support in its assessment.
The review incorporates the effects of changes in local laws and
regulations and management’s expected approach to restoration and
rehabilitation for each individual site.
In determining the present value of the total rehabilitation provision,
management apply significant judgement and make assumptions
relating to:
• extent and costs associated with rehabilitation activities;
• inflation rates; and
• change in discount rates.
We considered the determination of the rehabilitation provision
to be a matter of most significance to the current year audit due to
the following:
• The calculation of these provisions requires management judgement
in estimating the costs associated with rehabilitation activities;
• These calculations also require management to determine an
appropriate rate to discount future costs to their net present value.
How our audit addressed the key audit matter
Through our discussions with management and inspection of underlying
calculations, we gained an understanding of the methodology applied by
management in determining the rehabilitation provisions.
• We assessed the reasonableness of management’s process to
determine the rehabilitation provisions by comparing management’s
process with that used in the industry and found the process used by
management to be materially consistent with industry practice.
• We assessed the objectivity, competence, capabilities, and experience
of management’s experts through inspection of Curriculum Vitae
(CV’s) and membership certificates from professional bodies where
applicable.
• We assessed the appropriateness of the underlying cost assumptions
used by management in their calculation by evaluating whether costs
underpinning the provisions represent management and the experts’
best estimate of expenditure.
• We independently assessed the appropriateness of the discount
and inflation rates used in the estimation of the present value of the
future costs associated with rehabilitation and restoration activities.
We found the discount rate used by management to be within an
acceptable range. Although our estimate of the inflation rate differed
from management’s assumption, the impact thereof was assessed to
not be material.
• We tested the mathematical accuracy of the model used by
management by performing an independent recalculation and
comparing the results of our calculation with management’s
calculations. We noted no material differences.
33
FINANCIAL STATEMENTSSYLVANIA ANNUAL REPORT 2022
INDEPENDENT AUDITOR’S REPORT (continued)
OTHER INFORMATION
The directors are responsible for the other information. The other
information comprises the information included in the document
titled “Sylvania Platinum Limited Annual Report 30 June 2022” and
“Sylvania Platinum Limited Environment, Social and Governance Report
Embedding Our Strategy 30 June 2022”. The other information does
not include the consolidated financial statements and our auditor’s
report thereon.
Our opinion on the consolidated financial statements does not cover
the other information and we do not and will not express an audit
opinion or any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements,
our responsibility is to read the other information identified above
and, in doing so, consider whether the other information is materially
inconsistent with the consolidated financial statements or our
knowledge obtained in the audit, or otherwise appears to be materially
misstated.
If, based on the work we have performed, we conclude that there is
a material misstatement of this other information, we are required to
report that fact. We have nothing to report in this regard.
RESPONSIBILITIES OF THE DIRECTORS FOR
THE CONSOLIDATED FINANCIAL STATEMENTS
The directors are responsible for the preparation and fair presentation
of the consolidated financial statements in accordance with International
Financial Reporting Standards, and for such internal control as the directors
determine is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether due to fraud
or error.
In preparing the consolidated financial statements, the directors are
responsible for assessing the Group and the Company’s ability to
continue as a going concern, disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting unless
the directors either intend to liquidate the Group and/or the Company
or to cease operations, or have no realistic alternative but to do so.
AUDITOR’S RESPONSIBILITIES FOR THE
AUDIT OF THE CONSOLIDATED FINANCIAL
STATEMENTS
Our objectives are to obtain reasonable assurance about whether the
consolidated financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s
report that includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in accordance
with ISAs will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the
basis of these consolidated financial statements.
As part of an audit in accordance with ISAs, we exercise professional
judgement and maintain professional scepticism throughout the audit.
We also:
• Identify and assess the risks of material misstatement of the
consolidated financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks,
and obtain audit evidence that is sufficient and appropriate to
provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit
in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the Group’s and the Company’s internal control.
• Evaluate the appropriateness of accounting policies used and the
reasonableness of accounting estimates and related disclosures made
by the directors.
• Conclude on the appropriateness of the directors’ use of the
going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or
34
SYLVANIA ANNUAL REPORT 2022 INDEPENDENT AUDITOR’S REPORT (continued)
conditions that may cast significant doubt on the Group’s and the
Company’s ability to continue as a going concern. If we conclude that
a material uncertainty exists, we are required to draw attention in
our auditor’s report to the related disclosures in the consolidated
financial statements or, if such disclosures are inadequate, to modify
our opinion. Our conclusions are based on the audit evidence
obtained up to the date of our auditor’s report. However, future
events or conditions may cause the Group and/or Company to cease
to continue as a going concern.
• Evaluate the overall presentation, structure and content of the
consolidated financial statements, including the disclosures, and
whether the consolidated financial statements represent the
underlying transactions and events in a manner that achieves fair
presentation.
• Obtain sufficient appropriate audit evidence regarding the financial
information of the entities or business activities within the group to
express an opinion on the consolidated financial statements. We are
responsible for the direction, supervision and performance of the
group audit. We remain solely responsible for our audit opinion.
We communicate with the directors regarding, among other matters,
the planned scope and timing of the audit and significant audit findings,
including any significant deficiencies in internal control that we identify
during our audit.
We also provide the directors with a statement that we have complied
with relevant ethical requirements regarding independence, and to
communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where
applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with the directors, we determine
those matters that were of most significance in the audit of the
consolidated financial statements of the current period and are
therefore the key audit matters. We describe these matters in our
auditor’s report unless law or regulation precludes public disclosure
about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably
be expected to outweigh the public interest benefits of such
communication.
PricewaterhouseCoopers Inc.
Director: MM Mokone
Registered Auditor
Johannesburg, South Africa
Date: 8 September 2022
* The examination of controls over the maintenance and integrity of the Group’s website is beyond the scope of the audit of the financial statements. Accordingly, we accept no
responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.
35
FINANCIAL STATEMENTSSYLVANIA ANNUAL REPORT 2022
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2022
Revenue
Cost of sales
Royalties tax
Gross profit
Other income
Other expenses
Operating profit before net finance costs and income tax expense
Finance income
Finance costs
Profit before income tax expense
Income tax expense
Net profit for the period
Other comprehensive income/(loss)
Items that are or may be subsequently reclassified to profit and loss:
Foreign operations – foreign currency translation differences
Total other comprehensive loss (net of tax)
Total comprehensive income for the year
Earnings per share attributable to the ordinary equity holders of the Company:
Basic earnings per share
Diluted earnings per share
The notes on pages 40 to 82 form part of these consolidated financial statements.
Note(s)
2022
$
2021
$
9
151,944,273
206,112,444
10(b)(c)
(61,823,181)
(54,767,603)
(6,920,404)
(8,276,344)
83,200,688
143,068,497
10(a)
82,132
1,146,710
10(b)(c)
(3,608,140)
(2,334,764)
79,674,680
141,880,443
10(d)
10(d)
1,711,371
1,705,366
(457,363)
(373,236)
80,928,688
143,212,573
11
(24,777,844)
(43,406,522)
56,150,844
99,806,051
20
(17,747,559)
24,461,386
(17,747,559)
24,461,386
38,403,285
124,267,437
Cents
Cents
12
12
20.62
20.40
36.65
35.92
36
SYLVANIA ANNUAL REPORT 2022 CONSOLIDATED STATEMENT OF FINANCIAL POSITION
F I N A N C I A L S T A T E M E N T S
AS AT 30 JUNE 2022
ASSETS
Non-current assets
Exploration and evaluation expenditure
Property, plant and equipment
Other financial assets
Total non-current assets
Current assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Inventories
Current tax asset
Assets held for sale
Total current assets
Total assets
EQUITY AND LIABILITIES
Shareholders' equity
Issued capital
Reserves
Retained profit/(Accumulated losses)
Total equity
Non-current liabilities
Borrowings
Provisions
Deferred tax liability
Total non-current liabilities
Current liabilities
Trade and other payables
Borrowings
Liabilities directly associated with the assets classified as held for sale
Total current liabilities
Total liabilities
Total liabilities and shareholders’ equity
The notes on pages 40 to 82 form part of these consolidated financial statements.
Note(s)
2022
$
2021
$
13
14
15
16
17
15
18
46,087,453
45,351,817
46,298,978
39,915,437
283,450
298,864
92,669,881
85,566,118
121,282,425
106,135,435
52,939,589
68,612,119
1,029,205
885,593
4,258,960
3,838,147
24(b)
3,486,226
4,329,860
182,996,405
183,801,154
26
3,771,661
4,216,190
186,768,066
188,017,344
279,437,947
273,583,462
19
20
21
22
11
23
21
26
2,801,557
2,861,557
38,663,288
65,314,647
209,221,487
175,776,721
250,686,332
243,952,925
35,031
70,956
5,936,804
4,539,937
11,614,765
11,154,515
17,586,600
15,765,408
11,110,196
13,652,017
48,957
212,651
11,159,153
13,864,668
5,862
461
11,165,015
13,865,129
28,751,615
29,630,537
279,437,947
273,583,462
37
FINANCIAL STATEMENTSSYLVANIA ANNUAL REPORT 2022 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2022
Share
premium
reserve
Reserve
for own
shares
Issued
capital
Retained
earnings
Share-
based
payment
reserve
Foreign
currency
translation
reserve
Non-
controlling
interest
reserve
Equity
reserve
$
$
$
$
$
$
$
$
Total
Equity
$
Balance as at 01 July 2021
2,861,557 173,609,067
(8,840,725) 175,776,721
4,420,761
(34,353,949)
(39,779,293) (29,741,213) 243,952,925
Profit for the period
Total other
comprehensive loss
Total comprehensive income/
(loss) for the period
Share transactions
– Shares issued
– Treasury shares acquired
– Share based payments
– Share options and
bonus shares exercised
–
–
–
–
–
–
–
– Shares cancelled
(60,000)
Dividends declared and paid
–
–
–
–
–
–
–
–
–
– (9,865,070)
–
650,871
60,000
–
–
–
–
56,150,844
–
56,150,844
–
–
–
–
–
–
(22,706,078)
–
–
–
–
–
901,269
(650,871)
–
–
–
(17,747,559)
(17,747,559)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
– 56,150,844
– (17,747,559)
– 38,403,285
–
–
– (9,865,070)
–
–
–
901,269
–
–
– (22,706,078)
Balance at 30 June 2022
2,801,557 173,609,067 (17,994,924)
209,221,487
4,671,159
(52,101,508)
(39,779,293)
(29,741,213) 250,686,332
The notes on pages 40 to 82 form part of these consolidated financial statements.
FOR THE YEAR ENDED 30 JUNE 2021
Issued
capital
$
Share
premium
reserve
$
Reserve
for own
shares
$
Share-based
payment
reserve
Retained
earnings
Foreign
currency
translation
reserve
Non-
controlling
interest
reserve
$
$
$
$
Equity
reserve
$
Total Equity
$
Balance as at 01 July 2020
2,868,457 173,609,067 (7,616,128) 96,084,007
3,937,489 (58,815,335) (39,779,293) (29,741,213) 140,547,051
Profit for the period
Total other
comprehensive income
Total comprehensive income
for the period
Share transactions
– Shares issued
– Treasury shares acquired
– Share based payments
– Share options and
bonus shares
– Shares cancelled
Dividends declared and paid
–
–
–
–
–
–
–
(6900)
–
–
–
–
–
–
–
–
–
–
–
99,806,051
–
–
–
–
24,461,386
– 99,806,051
– 24,461,386
–
– (1,602,765)
62,707
308,561
6,900
–
–
–
–
–
–
–
791,833
(308,561)
–
–
–
–
–
–
–
–
–
(20,113,337)
–
–
–
–
–
–
–
–
–
–
–
99,806,051
24,461,386
– 124,267,437
–
–
–
–
–
–
(1,602,765)
854,540
–
–
– (20,113,337)
Balance at 30 June 2021
2,861,557 173,609,067 (8,840,725) 175,776,721
4,420,761 (34,353,949) (39,779,293) (29,741,213)
243,952,925
The notes on pages 40 to 82 form part of these consolidated financial statements.
38
SYLVANIA ANNUAL REPORT 2022 CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED 30 JUNE 2022
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Cash generated from operations
Finance income
Finance costs
Taxation paid
Net cash inflow from operating activities
Cash flows from investing activities
Purchase of plant and equipment
Proceeds from sale of property, plant and equipment
Payments for exploration and evaluation capitalised
Loan to related party: Tizer
Loan to Forward Africa Mining
Assets held for sale cash
Net cash outflow from investing activities
Cash flows from financing activities
Repayment of borrowings
Payment of lease liabilities
Payment for treasury shares
Dividends paid
Net cash outflow from financing activities
Net increase in cash and cash equivalents
Effect of exchange fluctuations on cash held
Cash and cash equivalents at the beginning of reporting period
Cash and cash equivalents at the end of the reporting period
The notes on pages 40 to 82 form part of these consolidated financial statements.
Note(s)
2022
$
2021
$
24(a)
24(a)
160,657,030
173,210,207
(68,726,242)
(59,436,882)
91,930,788
113,773,325
1,604,100
1,607,930
(91,841)
(34,574)
24(b)
24(a)
(23,831,718)
(47,111,379)
69,611,329
68,235,302
(14,497,650)
(6,104,381)
3,006
–
13
(1,907,396)
(1,414,699)
25(a)
25(a)
25(b)
(70,767)
(702,728)
7,148
(65,534)
–
(1,228)
(17,168,387)
(7,585,842)
(117,635)
(59,697)
(160,577)
(80,288)
(9,865,070)
(1,602,765)
(22,706,078)
(20,113,337)
(32,748,480)
(21,956,967)
19,694,462
38,692,493
(4,547,472)
11,566,330
106,135,435
55,876,612
121,282,425
106,135,435
39
FINANCIAL STATEMENTSSYLVANIA ANNUAL REPORT 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. REPORTING ENTITY
Sylvania Platinum Limited (“Sylvania” or “the Company”) is a limited company incorporated and domiciled in Bermuda whose shares are publicly
traded on the Alternative Investment Market (AIM) of the London Stock Exchange. Sylvania’s registered office is at Clarendon House, 2 Church Street,
Hamilton HM11, Bermuda. These consolidated financial statements comprise the Company, its subsidiaries (collectively the Group) and investments in
joint arrangements.
The principal activity of the Group during the financial year was mineral retreatment projects and investment in mineral exploration. Operational focus
during the financial year was concentrated on the retreatment plants.
2. BASIS OF ACCOUNTING
These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS). It was authorised
for issue by the Company’s board of Directors on 7 September 2022.
Details of the Group’s significant accounting policies are included in note 6.
The related changes to significant accounting policies are described in note 5.
3. FUNCTIONAL AND PRESENTATION CURRENCY
The presentation currency of the Group’s consolidated financial statements is in US Dollars. The functional currency of the parent entity is US Dollars.
All amounts have been rounded to the nearest US Dollar, unless otherwise indicated.
4. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
In preparing these consolidated financial statements, management has made judgements and estimates that affect the application of the Group’s
accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are continuously evaluated, including expectations of future events that are believed to be reasonable under the
circumstances. Revisions to estimates are recognised prospectively.
JUDGEMENTS, ASSUMPTIONS AND ESTIMATION UNCERTAINTIES
Information about assumptions and estimation uncertainties at 30 June 2022 that have a significant risk of resulting in a material adjustment to the
carrying amounts of assets and liabilities in the next financial year is included in the following notes:
• Note 14 – impairment of property, plant and equipment: determining the fair value of cash generating units;
• Note 22 – provision for restoration and rehabilitation and decommissioning of plant and equipment: in determining the provision as
there are numerous factors that will affect the ultimate liability payable;
• Note 13 – exploration and evaluation assets: determining whether future economic benefits are likely either from future exploration, sale or
where activities have not reached a stage which permits a reasonable assessment of the existence of reserves;
• Note 11 – deferred tax asset: judgement whether a deferred tax asset should be recognised on the statement of financial position.
Note 14 – Impairment of property, plant and equipment
The Group assesses each asset or cash generating unit (CGU) at the end of each reporting period to determine whether any indication of impairment
exists. Where an indicator of impairment exists, a formal estimate of the recoverable amount is made, which is considered to be the higher of the fair
value less costs of disposal and value in use. These assessments require the use of estimates and assumptions such as long-term commodity prices,
discount rates, operating costs, future capital requirements, exploration potential, closure and rehabilitation costs and operating performance.
These estimates and assumptions are inherently uncertain and could change over time, which may impact the recoverable amount of assets and/or
CGUs. Refer to note 14.
Fair value is determined as the price that would be received to sell an asset in an orderly transaction between market participants at measurement
date. Fair value for mineral assets is generally determined as the present value of estimated future cash flows arising from the continued use of the
asset, using assumptions that an independent market participant may take into account. Cash flows are discounted to their present value using a pre-
tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Management has assessed its
cash generating units as being an individual mine site or retreatment plant, which is the lowest level for which cash inflows are largely independent of
those of other assets. Refer to note 14 for further details on assumptions and estimates in relation to impairment.
40
SYLVANIA ANNUAL REPORT 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
4. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS (continued)
JUDGEMENTS, ASSUMPTIONS AND ESTIMATION UNCERTAINTIES (continued)
Note 14 – Impairment of property, plant and equipment (continued)
Key assumptions used in the assessment of impairment of assets
The recoverable amounts of the Group’s retreatment plants have been based on cash flow projections as at 30 June 2022. The internal financial model
is based on the known and confirmed resources for each plant.
The discounted cash flow model is sensitive to changes in the available resources, discount rates, commodity price and operating costs. Changes in key
assumptions could cause the carrying value of assets to exceed their recoverable amounts. Sensitivities were performed on key assumptions resulting
in sufficient headroom.
Resources – The resources for each plant, including the PGM grade and expected recoveries that have been modelled are based on extensive test
work, sampling and surveying. Where the useful life of a plant is possibly longer than the material currently available to be processed, alternative feed
sources have been considered and the likelihood of these materialising assessed by management.
Discount rate – The discount rate reflects management’s estimate of the time value of money and the risk associated with the plants. A range
between 12.35% and 17.5% was used for the pre-tax discount rate (2021: range between 10.63% and 15%).
Commodity price – The Group has used forecast long-term commodity prices obtained from a reputable publication, $2,200/oz (2021: $1,138) for
platinum, $800/oz (2021: $2,703/oz) for palladium and $10,000/oz (2021: $11,000) for rhodium. Sensitivities have also been run at lower prices.
Operating costs – Operating costs are calculated on a Rand/ton basis, known contractor rates and planned labour.
Exchange rates – Platinum group metals are priced in USD. The USD/ZAR exchange rate used in the discounted cash flow model long-term:
ZAR/$15.00 (2021: 14.40 ZAR/$1).
Note 22 – Provision for restoration and rehabilitation and decommissioning of plant and equipment
The Group assesses its restoration and rehabilitation and decommissioning of plant and equipment provision annually. Significant estimates and
assumptions are made in determining the provision as there are numerous factors that will affect the ultimate liability payable. These factors include
estimates of the extent and costs of rehabilitation activities, technological changes, regulatory changes, cost increases as compared to the inflation rates,
and changes in discount rates. These uncertainties may result in future actual expenditure differing from the amounts currently provided.
Long term CPI
Pre-tax discount rate
Decrease in total environmental rehabilitation provisions as a result of a 1% increase in discount rate ($)
Increase in total environmental rehabilitation provisions as a result of a 1% decrease in discount rate ($)
30 June 2022
30 June 2021
7.00%
10.630%
4.43%
8.995%
30 June 2022
30 June 2021
464,245
420,302
292,701
323,786
The 1% change applied in the sensitivity analysis was deemed appropriate and reasonable in relation to movements in market rates.
If the change in estimate results in an increase in the restoration and rehabilitation liability and therefore an addition to the carrying value of the asset,
the Group is required to consider whether this is an indication of impairment of the asset as a whole and test for impairment in accordance with IAS 36.
The provision at the reporting date represents management’s best estimate of the present value of the future rehabilitation costs required.
41
FINANCIAL STATEMENTSSYLVANIA ANNUAL REPORT 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
4. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS (continued)
JUDGEMENTS, ASSUMPTIONS AND ESTIMATION UNCERTAINTIES (continued)
Note 13 – Exploration and evaluation assets
The application of the Group’s accounting policy for exploration and evaluation expenditure requires judgement in determining whether future
economic benefits are likely either from future exploitation or sale for activities that have not reached a stage which permits a reasonable assessment
of the existence of reserves (refer to accounting policy note 6 (k)).
The determination of a Joint Ore Reserves Committee (JORC) resource or South African Code for Reporting of Exploration Results, Mineral
Resources and Mineral Reserves (SAMREC) is itself an estimation process that requires varying degrees of uncertainty depending on sub-classification
and these estimates directly impact the point of deferral of exploration and evaluation expenditure. The deferral policy requires management to make
certain estimates and assumptions about future events or circumstances, in particular, whether an economically viable operation can be established.
Estimates and assumptions made may change if new information becomes available. If, after expenditure is capitalised, information becomes available
that suggests that the recovery of expenditure is unlikely, the amount capitalised is written off to profit or loss in the period in which the new
information becomes available.
Key assumptions used in the assessment of impairment of exploration and evaluation assets
An impairment assessment of the exploration and evaluation assets was done based on an independent valuation by a third party. The valuations
were based on the differing levels of confidence per project. The Early Stage Projects were valued using a Cost and Market comparable approach,
whilst the advanced Projects were valued using a Cost, Market comparable and Discounted Cash-flow approach. Sensitivities were performed on key
assumptions resulting in sufficient headroom.
Discount rate – Ranges between 12.35% and 17.5% was used for the pre-tax discount rate (2021: range between 10.63% and 15%).
Commodity price – The Group has used forecast long-term commodity prices obtained from a reputable publication, $2,200/oz (2021: $1,138/oz)
for platinum, $800/oz (2021: $2,703/oz) for palladium and $10,000/oz (2021: $11,000) for rhodium.
Platinum group metals are priced in USD. The USD/ZAR exchange rate used in the discounted cash flow model long-term: ZAR/$15.00
(2021: 14.40 ZAR/$1).
Note 11 – Deferred tax asset
Judgement is required in determining whether deferred tax assets are recognised on the statement of financial position. Deferred tax assets, including
those arising from unutilised tax losses and requires management to assess the likelihood and timing that the Group will generate sufficient taxable
earnings in future periods, in order to utilise recognised deferred tax assets. Estimates of future taxable income are based on forecasted cash flows
from operations and the application of existing tax laws in each jurisdiction. To the extent that future cash flows and taxable income differ significantly
from estimates, the ability of the Group to realise the deferred tax assets recorded at the reporting date could be impacted.
Additionally, future changes in tax laws in the jurisdictions in which the Group operates could limit the ability of the Group to obtain tax deductions in
future periods.
5. CHANGES IN SIGNIFICANT ACCOUNTING POLICIES
A number of new or amended standards became effective for the current reporting period. Where these were applicable, the group did not have to
change its accounting policies nor make retrospective adjustments as a result of adopting these standards.
New accounting standards, amendments to accounting standards and interpretations issued which are relevant to the group, but not yet effective
on 30 June 2022, have not been adopted. It is expected that where applicable, these standards and amendments will be adopted on each respective
effective date. The group continuously evaluates the impact of these standards and amendments. The effect of the implementation of the new,
amended or revised standards are not expected to have a material impact, although assessments of the effect of the implementation of these new,
amended or revised standards are ongoing.
42
SYLVANIA ANNUAL REPORT 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
6. SIGNIFICANT ACCOUNTING POLICIES
(A) BASIS OF CONSOLIDATION
(i) Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those returns through its power over the entity.
Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continues to be consolidated
until the date when such control ceases.
The financial statements of the subsidiaries are prepared for the same reporting period as the holding company, using consistent accounting policies.
(ii) Non-controlling interests
Where ownership of a subsidiary is less than 100%, a non-controlling interest/s exists. A change in ownership interest of a subsidiary, without a loss of
control, is accounted for as an equity transaction.
(iii) Loss of control
If the Group loses control over a subsidiary, it derecognises the assets and liabilities of the subsidiary, the carrying amount of any non-controlling
interest and other components of equity, including the cumulative translation differences recognised in equity. The consideration received and any
investment retained is recognised at fair value and any resulting surplus or deficit is recognised in profit or loss. The holding company’s share of the
components previously recognised in other comprehensive income is reclassified to profit or loss or retained earnings, as appropriate.
(iv) Joint arrangements
Under IFRS 11 Joint Arrangements investments in joint arrangements are classified as either joint operations or joint ventures. A joint arrangement
is classified as a joint operation, when the jointly controlling parties, known as the ‘joint operators’, have rights to the assets and obligations for the
liabilities relating to the arrangement.
The Group recognises its direct right to the assets, liabilities, revenues and expenses of joint operations and its share of the jointly held or incurred
assets, liabilities, revenues and expenses. These have been incorporated in the financial statements under the appropriate headings.
(v) Transactions eliminated on consolidation
All intra-group balances, transactions and any unrealised gains and losses resulting from intra-group transactions and dividends are eliminated.
(B) REVENUE RECOGNITION
Revenue is recognised and measured at the fair value of the consideration received or receivable to the extent it is probable that the economic
benefits will flow to the Group and the revenue can be reliably measured.
Revenue from contracts with customers
Revenue is recognised when the control of the goods has passed to the buyer and the costs incurred or to be incurred in respect of the transaction
can be measured reliably. Control of ownership is considered to pass to the customer at the time of delivery of the goods to the customer.
For PGM concentrate sales, the sales are initially recognised at the date of delivery. Adjustments to the sales price occur based on movements in
the metal market price up to the date of final pricing. Final pricing is based on the monthly average market price in the month prior to the month of
settlement. The period between initial recognition and final pricing is typically four months. Revenue is initially recorded at the estimated fair value of
the consideration receivable.
The revenue adjustment mechanism embedded within sales arrangements has the characteristics of a commodity derivative. Accordingly, the fair value
of the final sales price adjustment is re-estimated continuously and changes in fair value recognised as an adjustment to revenue in profit or loss and
trade receivables in the statement of financial position. In all cases, fair value is determined with reference to month end prices. Foreign exchange gains
and losses on the translation of revenue is recognised in profit and loss.
43
FINANCIAL STATEMENTSSYLVANIA ANNUAL REPORT 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
6. SIGNIFICANT ACCOUNTING POLICIES (continued)
(C) INTEREST INCOME
For all financial assets measured at amortised cost, interest income is recorded using the effective interest method. The ‘effective interest rate’ (EIR)
is the rate that exactly discounts the estimated future cash payments or receipts through the expected life of the financial instrument or a shorter
period, where appropriate, to the gross carrying amount of the financial asset or liability. Interest income is included in finance income in profit or loss.
(D) BORROWING COSTS
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get
ready for its intended use or sale are capitalised as part of the cost of the respective assets.
Borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection
with the borrowing of funds.
(E) LEASES
At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys
the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to
control the use of an identified asset, the group uses the definition of a lease in IFRS 16.
Group as a lessee
At commencement or on modification of a contract that contains a lease component, the Group allocates the consideration in the contract to each
lease component on the basis of its relative stand-alone prices.
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost,
which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial
direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it
is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term, unless
the lease transfers ownership of the underlying asset to the Group by the end of the lease term or the cost of the right-of-use asset reflects that
the Group will exercise a purchase option. In that case the right-of-use asset will be depreciated over the useful life of the underlying asset, which
is determined on the same basis as those of property, plant and equipment. In addition, the right-of-use asset is periodically reduced by impairment
losses, if any, and adjusted for certain re-measurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the
interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate. Generally, the Group uses its
incremental borrowing rate as the discount rate.
The Group determines its incremental borrowing rate by obtaining interest rates from various external financing sources and make certain
adjustments to reflect the terms of the lease and type of the asset leased.
Lease payments included in the measurement of the lease liability comprise the following:
• fixed payments, including in-substance fixed payments;
• variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date.
The lease liability is measured at amortised cost using the effective interest method. It is re-measured when there is a change in future lease payments
arising from a change in index or rate, or if there is a revised in-substance fixed lease payment.
When the lease liability is re-measured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded
in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
The Group presents right-of-use assets that do not meet the definition of investment property in ‘property, plant and equipment’ and lease liabilities in
‘borrowings’ in the statement of financial position.
44
SYLVANIA ANNUAL REPORT 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
6. SIGNIFICANT ACCOUNTING POLICIES (continued)
(E) LEASES (continued)
Leases of low-value assets
The Group has elected not to recognise right-of-use assets and lease liabilities for leases where the underlying asset value is $5,000 and below when it
is new. The Group recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.
Group as a lessor
When the Group acts as a lessor, it determines at lease inception whether each lease is a finance lease or an operating lease. Leases in which the
Group does not transfer substantially all the risks and benefits of ownership of an asset are classified as operating leases. The Group recognises lease
payments received under operating leases as income on a straight-line basis over the lease term as part of ‘Other Income’.
(F) EMPLOYEE BENEFITS
Wages, salaries, annual leave and sick leave
Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave due to be settled wholly within 12 months
of the reporting date are recognised in other payables in respect of employees’ services up to the reporting date. They are measured at the amounts
expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the leave is taken and are measured
at the rates paid or payable.
(G) SHARE-BASED PAYMENT TRANSACTIONS
Equity settled transactions
The Group provides benefits to employees (including senior executives) of the Group in the form of share-based payments, whereby employees
render services in exchange for shares (equity-settled transactions).
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/
or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (the vesting period).
The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i) the extent to which the vesting
period has expired and (ii) the Group’s best estimate of the number of equity instruments that will ultimately vest. No adjustment is made for the
likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date.
The charge or credit recognised in profit or loss for a period represents the movement in cumulative expense recognised as at the beginning and end
of that period.
The Group does not subsequently reverse the amount recognised for services received from an employee if the vested equity instruments are
later forfeited, except for awards where vesting is only conditional upon a market condition or non-vesting condition. These are treated as vested
irrespective of whether or not the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions
are satisfied.
If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified, if the original
terms of the award are met. In addition, an expense is recognised for any modification that increases the total fair value of the share-based payment
arrangement, or is otherwise beneficial to the employee, as measured at the date of modification. If an equity-settled award is cancelled, it is treated
as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is
substituted for the cancelled award and designated as a replacement award on the date that it is granted, the cancelled and new awards are treated as
if they were a modification of the original award, as described in the previous paragraph.
Where an award is settled net of withholdings tax and the number of equity instruments equal to the monetary value of the tax obligation is withheld,
the entire transaction is classified as equity settled. The payments made are accounted for as a deduction from equity except to the extent that the
payment exceeds the fair value of the equity instruments withheld.
The dilutive effect of outstanding shares and bonus shares issued is reflected as additional share dilution in the computation of earnings per share
(refer note 12)
45
FINANCIAL STATEMENTSSYLVANIA ANNUAL REPORT 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
6. SIGNIFICANT ACCOUNTING POLICIES (continued)
(H) FOREIGN CURRENCY TRANSLATION
The functional currency of the parent company as well as the presentation currency of the Group is US dollars. Each entity in the Group determines
its own functional currency and items included in the financial statements of each entity are measured using that functional currency.
Transactions and balances
Transactions in foreign currencies are initially recorded by the Group entities at their respective functional currency by applying the exchange rates
ruling at the date the transaction first qualifies for recognition. Monetary assets and liabilities denominated in foreign currencies are retranslated at the
functional currency rate of exchange ruling at the reporting date. All resulting exchange differences are taken to the statement of profit or loss and
other comprehensive income.
Group companies
As at the reporting date on consolidation, the assets and liabilities of foreign subsidiaries are translated into the presentation currency of the Group at
the rate of exchange ruling at the reporting date and their statements of profit and loss and other comprehensive income are translated at the average
exchange rate for the year. The exchange differences arising on the translation for consolidation are recognised in other comprehensive income.
Monetary assets and liabilities that are receivable from or payable to a foreign subsidiary and for which settlement is neither planned nor likely to
occur in the foreseeable future, forms part of the net investment in a foreign operation and the resulting exchange differences are recognised in other
comprehensive income. The repayment of such a balance is not considered to be a partial disposal and the cumulative exchange differences recognised
in other comprehensive income is not reclassified to profit or loss, until the foreign entity is disposed of.
(I) INCOME TAX
Income tax expense comprise of current and deferred tax. It is recognised in profit or loss except to the extent that it relates to a business
combination or items recognised directly in equity or in other comprehensive income.
Current tax
Current tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to the taxation authorities.
The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date, in the countries
where the Group operates and generates taxable income.
Current tax relating to items recognised directly in other comprehensive income or equity is recognised in other comprehensive income or equity and
not in profit or loss. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations
are subject to interpretation and establishes provisions where appropriate.
Deferred tax
Deferred tax is recognised on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting
purposes.
Deferred tax assets and liabilities are recognised for all taxable temporary differences, except:
• temporary differences on the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the
transaction, affects neither the accounting profit nor taxable profit or loss;
• in respect of taxable temporary differences associated with investments in subsidiaries and associates, when the timing of the reversal of the
temporary differences can be controlled by the holding company or investor and it is probable that the temporary differences will not reverse in the
foreseeable future; and
• in respect of deductible temporary differences associated with investments in subsidiaries and associates, deferred tax assets are recognised only to
the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which
the temporary differences can be utilised.
46
SYLVANIA ANNUAL REPORT 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
6. SIGNIFICANT ACCOUNTING POLICIES (continued)
(I) INCOME TAX (continued)
Deferred tax (continued)
Deferred tax assets are recognised for the carry forward of unused tax credits and any unused tax losses, to the extent that it is probable that taxable
profit will be available against which the carry forward of unused tax credits and unused tax losses can be utilised.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable
that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are
reassessed at the end of each reporting period and are recognised to the extent that it has become probable that future taxable profits will be
available to allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is
settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. Deferred tax assets
and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes
relate to the same taxable entity and the same taxation authority.
Royalties, resource rent taxes and revenue-based taxes
Royalties, resource rent taxes and revenue-based taxes are accounted for under IAS 12 when they have the characteristics of an income tax. This is
considered to be the case when they are imposed under government authority and the amount payable is based on taxable income – rather than
based on quantity produced or as a percentage of revenue – after adjustment for temporary differences. For such arrangements, current and deferred
income tax is provided on the same basis as described above for other forms of taxation. Obligations arising from royalty arrangements that do not
satisfy these criteria are recognised as current liabilities and included in expenses.
(J) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost, less accumulated depreciation and accumulated impairment losses, if any.
The initial cost of an asset comprises its purchase price or construction cost, any costs directly attributable to bringing the asset into operation, the
initial estimate of the rehabilitation obligation and, for qualifying assets, borrowing costs. The purchase price or construction cost is the aggregate
amount paid and the fair value of any other consideration given to acquire the asset. The capitalised value of finance leases is also included as
right-of-use assets within property, plant and equipment.
Upon completion of construction, the assets are transferred into property, plant and equipment or properties. When a construction project moves
into the production stage, the capitalisation of certain construction costs cease and costs are either regarded as part of the cost of inventory or
expensed.
Depreciation
Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets as follows (for the current and comparative periods):
• property – five years
• mining property – ten years
• plant – ten years
• leasehold improvements – three years
• computer equipment and software – three years
• furniture and fittings – six years
• office equipment – five years
• equipment – five years
• motor vehicles – five years
• construction in progress – not depreciated
• leased assets – over the period of the remaining lease
47
FINANCIAL STATEMENTSSYLVANIA ANNUAL REPORT 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
6. SIGNIFICANT ACCOUNTING POLICIES (continued)
(J) PROPERTY, PLANT AND EQUIPMENT (continued)
Depreciation (continued)
An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic
benefits are expected from its use. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal
proceeds and the carrying amount of the asset) is included in profit or loss when the asset is derecognised.
The asset’s residual values, useful lives and methods of depreciation/amortisation are reviewed at each reporting period, and adjusted for prospectively
if appropriate.
Major maintenance and repairs
Expenditure on major maintenance refits or repairs comprises the cost of replacement assets or parts of assets and overhaul costs. Where an asset or
part of an asset that was separately depreciated and is now written off is replaced, and it is probable that future economic benefits associated with the
replacement item will flow to the Group, the expenditure is capitalised.
Where part of the asset was not separately considered as a component, the replacement value is used to estimate the carrying amount of the
replaced assets which is immediately written off. All other day to day maintenance costs is expensed as incurred.
(K) EXPLORATION AND EVALUATION ASSETS
Exploration and evaluation activity involve the search for mineral resources, the determination of technical feasibility and the assessment of commercial
viability of an identified resource. Exploration and evaluation expenditures in relation to each separate area of interest are recognised as an exploration
and evaluation asset in the year in which they are incurred when the following conditions are satisfied:
(i)
the rights to tenure of the area of interest are current; and
(ii) at least one of the following conditions is also met:
• the exploration and evaluation expenditures are expected to be recouped through successful development and exploration of the area of
interest, or alternatively, by its sale; or
• exploration and evaluation activities in the area of interest have not at the reporting date, reached a stage which permits a reasonable
assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the
area of interest are continuing.
Exploration and evaluation assets are initially measured at cost and include acquisition of rights to explore, gathering exploration data through
geophysical studies, exploratory drilling, trenching and sampling and associated activities and an allocation of depreciation and amortisation of assets
used in exploration and evaluation activities. General and administrative costs are only included in the measurement of exploration and evaluation
costs where they are related directly to operational activities in a particular area of interest.
Where a decision has been made to proceed with development in respect of a particular area of interest and once JORC or SAMREC compliant
reserves are established, the relevant exploration and evaluation assets are tested for impairment and the balance is then transferred to mine
‘construction in progress’. No amortisation is charged during the exploration and evaluation phase.
Upon transfer of ‘exploration and evaluation assets’ into ‘construction in progress’, all subsequent directly attributable expenditure on the construction,
installation or completion of infrastructure facilities is capitalised.
The Group assesses at each reporting date whether there is an indication that an asset (or cash-generating unit (CGU)) may be impaired. If any
indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s or CGU’s recoverable amount.
An asset’s recoverable amount is the higher of an asset’s or CGU’s fair value less costs of disposal and its value in use and is determined for an
individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which
case the asset is tested as part of a larger CGU.
48
SYLVANIA ANNUAL REPORT 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
6. SIGNIFICANT ACCOUNTING POLICIES (continued)
(K) EXPLORATION AND EVALUATION ASSETS (continued)
When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered to be impaired and is written down to its
recoverable amount. In calculating value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. In determining fair value less costs of
disposal, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used.
These calculations are corroborated by valuation multiples, quoted share prices for publicly traded subsidiaries or other available fair value indicators.
The Group bases its impairment calculation on detailed budgets and forecast calculations which are prepared separately for each of the Group’s CGUs
to which the individual assets are allocated. Impairment losses are allocated to reduce the carrying amounts of the assets in the CGU on a pro rata basis.
Impairment losses of continuing operations are recognised in profit or loss in those expense categories consistent with the function of the impaired asset.
An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist
or may have decreased. If such indication exists, the Group estimates the asset’s or CGU’s recoverable amount. A previously recognised impairment
loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss
was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying
amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is
recognised in profit or loss. An impairment loss in respect of goodwill is not reversed.
Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying amount of an exploration and
evaluation asset may exceed its recoverable amount. The recoverable amount of the exploration and evaluation asset (for the cash generating unit(s) to
which it has been allocated being no larger than the relevant area of interest) is estimated to determine the extent of the impairment loss (if any).
Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but
only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss
been recognised for the asset in previous years.
(L) FINANCIAL INSTRUMENTS
(i) Recognition and initial measurement
Trade receivables and debt securities issued are initially recognised when they are originated. All other financial assets and financial liabilities are initially
recognised when the Group becomes a party to the contractual provisions of the instrument.
A financial asset (unless it is a trade receivable without a significant financing component) or a financial liability is initially measured at fair value plus or
minus, for an item not at fair value through profit or loss (“FVTPL”), transaction costs that are directly attributable to its acquisition or issue.
A trade receivable without a significant financing component is initially measured at the transaction price.
(ii) Classification and subsequent measurement
Financial assets
On initial recognition, a financial asset is classified and measured either at: amortised cost; FVOCI for equity investment; or FVTPL.
Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing financial assets, in
which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:
• it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
• its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
On initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect to present subsequent changes in the
investment’s fair value in OCI. This election is made on an investment-by-investment basis.
49
FINANCIAL STATEMENTSSYLVANIA ANNUAL REPORT 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
6. SIGNIFICANT ACCOUNTING POLICIES (continued)
(L) FINANCIAL INSTRUMENTS (continued)
(ii) Classification and subsequent measurement (continued)
Financial assets (continued)
All financial assets not classified as measured at amortised cost or FVOCI as described above are measured at FVTPL.
On initial recognition, the Group may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost
or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.
Financial assets – Business model assessment
The Group makes an assessment of the objective of the business model in which a financial asset is held at a portfolio level because this best reflects
the way the business is managed and information is provided to management. The information considered includes:
• the stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether management’s strategy
focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the
duration of any related liabilities or expected cash outflows or realising cash flows through the sale of the assets;
• how the performance of the portfolio is evaluated and reported to the Group’s management;
• the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are
managed;
• how managers of the business are compensated – e.g., whether compensation is based on the fair value of the assets managed or the contractual
cash flows collected; and
• the frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and expectations about future sales activity.
Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales for this purpose, consistent
with the Group’s continuing recognition of the assets.
Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.
Financial assets – Assessment whether contractual cash flows are solely payment of principal and interest
For the purposes of this assessment, ‘principal’ is defined as the fair value of the financial asset on initial recognition. ‘Interest’ is defined as
consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time
and for other basic lending risks and costs (e.g., liquidity risk and administrative costs), as well as a profit margin.
In assessing whether the contractual cash flows are solely payments of principal and interest, the Group considers the contractual terms of the
instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing amount of contractual cash
flows such that it would not meet this condition. In making this assessment, the Group considers:
• contingent events that would change the amount or timing of cash flows;
• terms that may adjust the contractual coupon rate, including variable-rate features;
• prepayment and extension features; and
• terms that limit the Group’s claim to cash flows from specified assets (e.g., non-recourse features).
A prepayment feature is consistent with the solely payments of principal and interest criterion if the prepayment amount substantially represents
unpaid amounts of principal and interest on the principal amount outstanding, which may include reasonable additional compensation for early
termination of the contract. Additionally, for a financial asset acquired at a discount or premium to its contractual par amount, a feature that permits or
requires prepayment at an amount that substantially represents the contractual par amount plus accrued (but unpaid) contractual interest (which may
also include reasonable additional compensation for early termination) is treated as consistent with this criterion if the fair value of the prepayment
feature is insignificant at initial recognition.
50
SYLVANIA ANNUAL REPORT 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
6. SIGNIFICANT ACCOUNTING POLICIES (continued)
(L) FINANCIAL INSTRUMENTS (continued)
(ii) Classification and subsequent measurement (continued)
Financial assets – subsequent measurement and gains and losses
Financial assets at amortised cost These assets are subsequently measured at amortised cost using the effective interest method. The
amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and
impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss.
Equity investments at FVOCI
These assets are subsequently measured at fair value. Dividends are recognised as income in profit or loss
unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and
losses are recognised in OCI and are never reclassified to profit or loss.
Financial assets at FVTPL
These assets are subsequently measured at fair value. Subsequent movements in fair value are recognised in
profit or loss. Any gain or loss on derecognition is recognised in profit or loss.
Financial liabilities – Classification, subsequent measurement and gains and losses
Financial liabilities are classified and measured at amortised cost. Financial liabilities are subsequently measured at amortised cost using the effective
interest method. Interest expense and foreign exchange gains and losses are recognised in profit or loss. Any gain or loss on derecognition is also
recognised in profit or loss.
(iii) Derecognition
Financial assets
The Group derecognises a financial asset when: (i) the contractual rights to the cash flows from the financial asset expire; or (ii) it transfers the
rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are
transferred; or (iii) the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the
financial asset.
The Group enters into transactions whereby it transfers assets recognised in its statement of financial position, but retains either all or substantially all
of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognised.
Financial liabilities
The Group derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire. The Group also derecognises a
financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability
based on the modified terms is recognised at fair value.
On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid (including any non-cash
assets transferred or liabilities assumed) is recognised in profit or loss.
(iv) Impairment
Financial instruments
The Group recognises loss allowances for ECLs on financial assets measured at amortised cost.
For trade receivables, the simplified approach permitted by IFRS 9 is applied, which requires lifetime ECLs to be recognised from initial recognition of
the trade receivables.
For all other financial assets, the general expected credit loss model is used. This means that the probability of default occurring in the next 12 months
is considered, together with the loss which may arise from such events of default, unless there has been a significant increase in credit risk. Financial
assets at amortised cost are stated net of the loss allowance in the statement of financial position. Such financial assets are written off when there is no
reasonable expectation of recovery.
51
FINANCIAL STATEMENTSSYLVANIA ANNUAL REPORT 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
6. SIGNIFICANT ACCOUNTING POLICIES (continued)
(L) FINANCIAL INSTRUMENTS (continued)
(iv) Impairment (continued)
Financial instruments (continued)
When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECLs, the
Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative
and qualitative information and analysis, based on the Group’s historical experience and informed credit assessment and including forward-looking
information such as macro-economic conditions, economic growth and inflationary outlook in the short term.
The Group assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days past due. The Group considers a
financial asset to be in default when:
• the borrower is unlikely to pay its credit obligations to the Group in full, without recourse by the Group to actions such as realising security (if any is
held); or
• the financial asset is more than 90 days past due.
The Group considers the bank balances to have low credit risk when the banks credit risk rating is equivalent to P-3 or higher per Moody
Investor Service.
Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument.
12-month ECLs are the portion of ECLs that result from default events that are possible within the 12 months after the reporting date (or a shorter
period if the expected life of the instrument is less than 12 months).
The maximum period considered when estimating ECLs is the maximum contractual period over which the Group is exposed to credit risk.
Measurement of ECLs
ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference
between the cash flows due to the entity in accordance with the contract and the cash flows that the Group expects to receive).
ECLs are discounted at the effective interest rate of the financial asset.
Credit-impaired financial assets
At each reporting date, the Group assesses whether financial assets carried at amortised cost are credit-impaired. A financial asset is ‘credit- impaired’
when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.
Evidence that a financial asset is credit-impaired includes the following observable data:
• significant financial difficulty of the borrower;
• a breach of contract such as a default or being more than 90 days past due;
• the restructuring of a loan or advance by the Group on terms the Group would not consider otherwise;
• it is probable that the borrower will enter bankruptcy or other financial reorganisation.
Presentation of allowance for ECL in the statement of financial position
Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets.
Write off
The gross carrying amount of a financial asset is written off when the Group has no reasonable expectations of recovering a financial asset in its
entirety or a portion thereof. The Group has a policy of writing off the gross carrying amount when the financial asset is 180 days past due.
52
SYLVANIA ANNUAL REPORT 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
6. SIGNIFICANT ACCOUNTING POLICIES (continued)
(L) FINANCIAL INSTRUMENTS (continued)
(v) Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group
currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and settle the
liability simultaneously.
(M) TRADE AND OTHER RECEIVABLES
Trade receivables (relating to the sale of PGM concentrate) is measured at fair value through profit or loss from the date of recognition up to date of
settlement, as it fails the IFRS 9 amortised cost requirement of cash flows representing solely payment of principal and interest. The fair value changes
due to non-market variability (that is, changes based on quantity and quality of the contained metal) are considered to be variable consideration within
the scope of IFRS 15 as Sylvania’s right to consideration is contingent upon the physical attributes of the contained metal. The historic and current year
differences between the initial assay and final assay are not significant. Therefore, the variable consideration is not considered to be constrained.
The fair value changes due to market variability (that is, changes in the commodity prices and exchange rates) are not in the scope of IFRS 15 and
are therefore not presented as revenue from contracts with customers. The changes in commodity prices are accounted for as other revenue and
disclosed separately from revenue from contracts with customers and changes in exchange rates are accounted for as other income or expenses.
Trade and other receivables (including trade receivables not relating to the sale of PGM concentrate) are measured at amortised cost. Impairment of
receivables measured at amortised cost is determined using the expected credit loss model (note 28).
(N) INVENTORIES
Inventories are valued at the lower of cost and net realisable value.
Costs incurred in bringing each product to its present location and condition, are accounted for as follows:
• raw materials purchased are measured on a first-in, first-out basis; and
• finished goods and work in progress – cost of direct materials and labour and a proportion of manufacturing overheads based on normal operating
capacity but excluding borrowing costs.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs
necessary to make the sale.
(O) PROVISIONS
Where applicable, provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable
that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount
of the obligation.
When the Group expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognised
as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the statement of
comprehensive income net of any reimbursement.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the risks specific to the liability.
When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
Rehabilitation provision
The Group records the present value of estimated costs of legal and constructive obligations required to restore operating locations in the period in
which the obligation is incurred. The nature of these restoration activities includes dismantling and removing structures, rehabilitating mines and tailings
dams, dismantling operating facilities, closure of plant and waste sites, and restoration, reclamation and re-vegetation of affected areas.
53
FINANCIAL STATEMENTSSYLVANIA ANNUAL REPORT 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
6. SIGNIFICANT ACCOUNTING POLICIES (continued)
(O) PROVISIONS (continued)
Rehabilitation provision (continued)
The obligation generally arises when the asset is installed or the ground/environment is disturbed at the production location. When the liability is
initially recognised, the present value of the estimated costs is capitalised by increasing the carrying amount of the related mining assets to the extent
that it was incurred by the development/construction of the mine. Over time, the discounted liability is increased for the change in present value based
on the discount rates that reflect current market assessments and the risks specific to the liability.
The periodic unwinding of the discount is recognised in profit or loss as a finance cost. Changes in rehabilitation costs relating to the asset will be
recognised as additions or charges to the corresponding assets and rehabilitation liability when they occur. Additional disturbances as a result of
producing inventories are treated as a cost of producing inventories and recognised in profit or loss when sold.
For closed sites, changes to estimated costs are recognised immediately in profit or loss.
(P) CASH AND CASH EQUIVALENTS
Cash and cash equivalents include notes and coins on hand, restricted balances held with Standard Bank and highly liquid financial assets with original
maturities three months or less, which are subject to insignificant risk of changes in their fair value, and are used by the Group in the management of its
short-term commitments.
(Q) ASSETS HELD FOR SALE
Non-current assets, or disposal groups comprising assets and liabilities, are classified as held-for-sale if it is highly probable that they will be recovered
primarily through sale rather than through continuing use.
Such assets, or disposal groups, are generally measured at the lower of their carrying amount and fair value less costs to sell. Any impairment loss
on a disposal group is allocated first to goodwill, and then to the remaining assets and liabilities on a pro rata basis, except that no loss is allocated to
inventories, contractual rights under insurance contracts, financial assets, deferred tax assets, employee benefit assets, investment property (measured
at fair value) or biological assets (measured at fair value), which continue to be measured in accordance with the Group’s other accounting policies.
Impairment losses on initial classification as held-for-sale and subsequent gains and losses on remeasurement are recognised in profit or loss.
Once classified as held-for-sale, property, plant and equipment are no longer amortised or depreciated.
(R) ISSUED CAPITAL
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a
deduction, net of tax, from the proceeds.
Treasury shares (employee share plan shares) are deducted from equity and no gain or loss is recognised in profit and loss on purchase, sale, issue or
cancellation of the Group’s own equity instruments.
(S) EARNINGS PER SHARE
Basic earnings per share is calculated as net profit or loss attributable to members of the holding company, divided by the weighted average number of
ordinary shares.
Diluted earnings per share are calculated as net profit or loss attributable to members of the holding company, adjusted for:
• the after-tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and
• other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares,
• divided by the sum of the weighted average number of ordinary shares and dilutive potential ordinary shares.
54
SYLVANIA ANNUAL REPORT 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
7. NEW STANDARDS AND INTERPRETATIONS
FUTURE ACCOUNTING STANDARDS
Certain IFRSs and IFRICs have recently been issued or amended but are not yet effective and have not been adopted by the Group as at the annual
reporting period ended on 30 June 2022. None of these are expected to have a significant impact on the Groups’ consolidated financial statements.
8. SEGMENT REPORTING
SEGMENT INFORMATION
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker (CODM), who is
responsible for allocating resources and assessing performance of the reportable operating segments. The CODM is identified as the Board. Segments
reported are based on the Group’s operations and performance is evaluated on PGM ounce production and operating costs.
In applying IFRS 8 Operating Segments, judgements have been made by the CODM with regards to the identification of reportable segments of the
group. These judgements are supported by the nature of the operations, the type of commodity and the location of the operations. The segments, as
described below, are managed separately based on commodity, location and support function grouping.
Sylvania Dump Operations
This reportable segment comprises the six tailings operational plants located in the Western as well as Eastern Limb. Segment performance is
evaluated on PGM ounce production. The six plants have similar economic characteristics and follow the same processes and methods of production
and delivery and similar products are delivered under the same off-take agreements.
Exploration projects
This reportable segment comprises the Group’s exploration projects, being the open cast mining project as well as Northern Limb exploration project.
Other segments
“Other” segment comprises corporate, administration and other expenditure not allocated to the reported segments. These have been appropriately
aggregated into this segment.
The following tables present revenue and profit information as well as certain assets and liability information regarding reportable segments for the
years ended 30 June2022 and 30 June 2021:
30 June 2022
Segment assets
Capital expenditure*
Other assets**
Segment liabilities
Segment revenue
Net profit/(loss) for the year after tax
Included within the segment results:
Depreciation
Direct operating costs
Royalties tax
Other items:
Income tax expense
Foreign exchange loss on revenue
Reportable segments
Exploration
projects
All other
segments
Consolidated
$
$
$
SDO
$
190,598,062
53,485,435
34,488,308
278,571,805
41,862,164
48,166,856
1,805,613 (a)
91,834,633
5,318,579
8,860,674
32,682,695 (b)
186,737,172
731,244 (c)
28,751,615
–
1,711,371
153,655,644
10,751
(2,799,652)(d)
56,150,844
148,735,898
19,159,697
151,944,273
58,939,745
2,974,782
58,850,728
6,920,404
23,462,055
795,783
–
–
–
2,975,577 (e)
58,850,728 (f)
6,920,404
795
–
–
–
–
1,315,789
–
24,777,844
795,783
17,250,816
55
Capital expenditure additions during the year
14,508,884
1,907,396
834,536
* Capital expenditure consists of property, plant and equipment.
**Other assets consist of trade receivables $51,646,827, cash and cash equivalents $121,268,556, inventory $4,258,962 and other receivables $2,304,941.
FINANCIAL STATEMENTSSYLVANIA ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
8. SEGMENT REPORTING (continued)
SEGMENT INFORMATION (continued)
Other segments (continued)
30 June 2021
Segment assets
Capital expenditure*
Other assets**
Segment liabilities
Segment revenue
Net profit/(loss) for the year after tax
Included within the segment results:
Depreciation
Direct operating costs
Other items:
Income tax expense
Foreign exchange loss on revenue
Reportable segments
Exploration
projects
All other
segments
Consolidated
$
$
$
SDO
$
179,909,519
52,192,874
41,481,069
273,583,462
35,611,522
47,723,662
1,932,070 (a)
85,267,254
144,297,997
4,469,212
39,548,999 (b)
188,316,208
20,136,737
8,708,113
785,687 (c)
29,630,537
206,112,443
103,375,207
–
1,705,367
207,817,810
(797)
(3,568,359)(d)
99,806,051
2,850,600
60,193,346
40,763,743
(1,070,452)
797
–
–
–
–
–
2,851,397 (e)
60,193,346 (f)
2,642,780
43,406,523
–
(1,070,452)
7,528,507
Capital expenditure additions during the year
5,955,062
1,414,699
158,746
* Capital expenditure consists of property, plant and equipment. During the year, the CODM made the decision to reallocate some motor vehicles from all other segments to
the SDO segment as it is in line with the nature of the operations. As a result of this motor vehicles amounting to $1,573,746 were reclassified from ‘All other segments’ to the
SDO segment.
** Other assets consist of trade receivables $68,119,392, cash and cash equivalents $106,127,515, inventory $3,838,147 and other receivables $10,231,330.
Major items included in corporate/unallocated
(a) Capital expenditure
Property, plant and equipment
(b) Other assets
Cash and cash equivalents
Other financial assets
Other receivables
(c) Liabilities
Borrowings
Other
Trade payables
56
2022
$
2021
$
1,805,613
1,805,613
1,932,070
1,932,070
31,952,430
38,271,833
47,950
682,315
885,593
391,573
32,682,695
39,548,999
63,286
543,467
124,491
731,244
151,771
545,003
88,913
785,687
SYLVANIA ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
8. SEGMENT REPORTING (continued)
SEGMENT INFORMATION (continued)
Other segments (continued)
Major items included in corporate/unallocated
(d) Unallocated income and expenses
Administrative salaries and wages
Auditor’s remuneration
Consulting fees
Depreciation
Finance income
Finance cost
Foreign exchange loss
Legal expenses
Other income
Overseas travelling expenses
Loss/(Profit) on disposal of property, plant and equipment
Share-based payments
Income tax expense
Dividend tax
VAT write off
Other
Reconciliations of total segment amounts to corresponding amount for the Group
(e) Depreciation
Included within cost of sales
Included within general and administrative costs
(f) Cost of sales
Direct operating costs
Total segment revenue
Revenue
Finance income
2022
$
2021
$
1,826,460
1,502,133
155,844
176,189
116,905
86,379
113,332
128,396
(1,711,371)
(1,705,366)
457,364
983
136,043
(82,132)
101,268
3,006
595,511
10,770
373,236
(20,912)
34,625
(76,258)
–
(36,947)
568,344
8,878
1,315,789
2,633,902
(61,715)
(241,262)
6,865
(48,248)
2,799,652
3,568,359
2,975,577
2,851,397
116,905
128,396
3,092,482
2,979,793
58,850,728
60,193,346
58,850,728
60,193,346
151,944,273
206,112,444
1,711,371
1,705,366
153,655,644
207,817,810
57
FINANCIAL STATEMENTSSYLVANIA ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
8. SEGMENT REPORTING (continued)
SEGMENT INFORMATION (continued)
Other segments (continued)
Revenue generated in South Africa
Finance income by geographical location is detailed below:
Mauritius
South Africa
Total finance income
Total revenue
The sales of concentrate are to two customers. Revenue is split according to customer as detailed below:
Customer 1
Customer 2
Analysis of location of non-current assets:
South Africa
Total non-current assets
9. REVENUE
Disaggregated revenue information
Revenue from contracts with customers – PGM sales
Other sales – provisionally-priced sales
2022
$
2021
$
151,944,273
206,112,444
8,763
–
1,702,608
1,705,366
1,711,371
1,705,366
153,655,644
207,817,810
130,401,718
145,693,762
21,542,555
60,418,682
151,944,273
206,112,444
92,669,881
85,566,118
92,669,881
85,566,118
2022
$
2021
$
151,963,950
177,808,889
(19,677)
28,303,555
151,944,273
206,112,444
Other sales comprise subsequent movements in provisionally priced sales of $0.02 million (2021: $28.3 million). Foreign exchange gains and losses
relating to provisionally priced sales are recognised in “Other income” or “Other expenses”.
58
SYLVANIA ANNUAL REPORT 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
10. INCOME AND EXPENSES
(a) Other income
Foreign exchange income on revenue
Scrap sales
Rent received
(b) Cost of sales and other expenses
Includes the following specific expenses:
Included in cost of sales:
Depreciation – property, plant and equipment
Electricity cost
Consumables
Share-based payments operations
Included in other expenses:
Consulting
Other depreciation – property, plant and equipment
Foreign exchange (gain)/loss
Foreign exchange loss on revenue
Insurance
Lease payments
Public relations
Share registry expenses
Directors’ fees
Travel
Computer expenses
Professional fees
(c) Staff costs
Salaries and wages included in cost of sales
Salaries and wages included in other expenses
Share-based payments admin
(d) Net finance income
Interest income on other financial assets
Interest on cash and cash equivalents
Other interest
Finance income
Interest expense on borrowings
Unwinding of discount on rehabilitation provision
Interest on leases
Other interest paid
Finance cost
Net finance income
2022
$
–
27,784
54,348
82,132
2021
$
1,070,452
27,933
48,325
1,146,710
2,975,577
2,851,397
7,457,168
5,194,788
6,488,261
3,777,188
305,758
286,196
195,411
116,905
982
795,783
217,584
2,721
76,791
76,101
532,750
101,268
139,224
46,015
152,689
128,396
(20,912)
–
164,779
3,637
104,712
98,399
479,000
–
98,994
69,288
20,117,033
18,501,555
1,803,509
1,482,970
595,511
505,637
22,516,053
20,490,162
152,414
97,353
1,558,573
1,608,013
384
–
1,711,371
1,705,366
(3,735)
(13,240)
(365,523)
(289,985)
(10,858)
(77,247)
(20,637)
(49,374)
(457,363)
(373,236)
1,254,008
1,332,130
59
FINANCIAL STATEMENTSSYLVANIA ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
11. INCOME TAX
Income tax recognised in profit or loss
Current tax:
Current year tax
Recognition in respect of current income tax of previous year
Deferred tax:
Relating to recognition, origination and reversal of temporary differences
Change in rate
Normal income tax
Dividends withholding tax
Total tax expense
The prima facie income tax expense on pre-tax accounting profit or loss from operations reconciles to the income
tax expense in the financial statements as follows:
Accounting profit before income tax
Tax expense at rate of 28%
(Non-taxable income)/Non-deductible expenses
Adjustment in respect of prior year
Change in tax rate
Benefit of tax losses and temporary differences not brought to account
Income tax expense
2022
$
2021
$
22,850,836
40,044,898
–
40,326
733,609
687,397
(122,390)
–
23,462,055
40,772,621
1,315,789
2,633,901
24,777,844
43,406,522
80,928,688
143,212,573
22,660,032
40,099,520
786,922
–
(122,390)
137,491
512,556
42,106
–
118,439
23,462,055
40,772,621
Sylvania Platinum Limited is a Bermudan incorporated company and has no tax liability under that jurisdiction with respect to income derived.
The tax rate used for the current tax in the above reconciliation is the current corporate tax rate of 28% payable by South African entities on taxable
profits under South African tax law.
The tax rate used for the deferred tax in the above and below reconciliation is the future corporate tax rate of 27% which will be payable by South
African entities on taxable profits under South African tax law. The rate change is as a result of the announcement on 23 February 2022 by the
Finance Minister in the Budget Speech that there will be a reduction in the South African corporate income tax rate from 28% to 27% for years of
assessment ending on or after 31 March 2023 (i.e. for years of assessment beginning on or after 1 April 2022 with the possible exception where a
financial year has changed). The rate change has been substantively enacted.
60
SYLVANIA ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
11. INCOME TAX (continued)
Deferred tax assets comprise:
Unrealised gains and losses on foreign exchange
Rehabilitation provision
Other temporary differences *
Deferred tax liabilities comprise:
Exploration and evaluation assets
Property, plant and equipment
Other temporary differences *
Deferred tax liabilities net
Deferred tax recognised in the Statement of Financial Position
Deferred tax asset
Deferred tax liability
Deferred tax liabilities net
*Made up of temporary differences on leases, pre-payments and property plant and equipment.
2022
$
2021
$
(5,122,306)
(4,655,472)
(1,961,234)
(1,037,239)
(60,233)
(653,448)
–
7,512,883
7,512,883
11,204,339
9,998,084
41,316
(10,293)
11,614,765
11,154,515
–
–
(11,614,765)
(11,154,515)
11,614,765
11,154,515
The Group has estimated tax losses arising in South Africa of $5,919,865 (2021: $5,881,814) and unredeemed capital expenditure of $12,749,849
(2021: $11,579,164) that are available indefinitely for offset against future taxable profits of the company in which the losses arose.
Unrecognised deferred tax assets
Deferred tax assets have not been recognised in respect of the following items:
Exploration and evaluation assets
Unrealised gains and losses on foreign exchange
Tax losses
Deductible temporary differences
2022
$
2021
$
159,842
411,043
2,593,371
2,774,860
1,514,499
1,646,908
340,285
56,263
4,607,997
4,889,074
The deductible temporary differences and tax losses do not expire under current tax legislation. Deferred tax assets have not been recognised in
respect of these items because of the uncertainty of the timing of probable future taxable profits which will be utilised.
61
FINANCIAL STATEMENTSSYLVANIA ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
11. INCOME TAX (continued)
Reconciliation of deferred tax assets/(liabilities)
2022
Other temporary differences
Rehabilitation provision
Unrealised gains and losses on foreign exchange
Property, plant and equipment
Exploration and evaluation assets
Change in rate
2021
Other temporary differences
Rehabilitation provision
Unrealised gains and losses on foreign exchange
Property, plant and equipment
Exploration and evaluation assets
12. EARNINGS PER SHARE
Basic earnings per share
Diluted earnings per share
Opening
balance
Charged
to profit
or loss
Exchange
differences
$
$
$
604,851
1,037,239
4,655,476
61,474
568,264
(29,837)
(167,922)
1,642,134
(1,039,070)
Closing
balance
$
636,488
1,437,581
5,258,540
(9,939,197)
(3,005,481)
1,387,798
(11,556,880)
(7,512,884)
–
(11,154,515)
433,471
825,616
4,497,671
(7,571,913)
(7,512,884)
(9,328,039)
–
122,390
(611,219)
152,467
45,069
–
–
–
(7,512,884)
122,390
150,969
(11,614,765)
18,913
166,554
157,806
604,851
1,037,239
4,655,477
(884,933)
(1,482,352)
(9,939,198)
–
–
(7,512,884)
(687,397)
(1,139,079)
(11,154,515)
2022
2021
Cents per
share
Cents per
share
20.62
20.40
36.65
35.92
$
$
Reconciliation of earnings used in calculating earnings per share
Earnings attributable to the ordinary equity holders of the company used in calculating basic earnings per share
56,150,844
99,806,051
Earnings attributable to the ordinary equity holders of the company used in calculating diluted earnings per share
56,150,844
99,806,051
Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share
272,353,604
272,310,455
Effect of dilution:
Share options and bonus shares
2,874,461
5,513,932
Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share
275,228,065
277,824,387
2022
2021
Number of
shares
Number of
shares
62
SYLVANIA ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
13. EXPLORATION AND EVALUATION ASSETS
2022
Balance at beginning of financial year
Foreign currency movements
Direct expenditure for the year
Assets held for sale
Balance at end of financial year
2021
Balance at beginning of financial year
Foreign currency movements
Direct expenditure for the year
Assets held for sale
Balance at end of financial year
Deferred
exploration
expenditure
$
45,351,817
(1,609,585)
1,907,396
437,825
46,087,453
42,840,775
1,827,809
1,414,699
(731,466)
45,351,817
Ultimate recovery of exploration and evaluation expenditure carried forward is dependent upon the recoupment of costs through successful
development and commercial exploitation, or alternatively, by sale of the respective areas.
The projects comprise Hacra and Aurora, located within the northern portion of the Northern Limb in the Waterberg and Capricorn district, as
well as Volspruit, located at the southern end of the Northern Limb of the Bushveld Igneous Complex. The projects are PGM and Base Metal mining
projects for which Mining Rights for PGMs and Base Metals have been awarded.
Specialist consultants have been appointed to assist Sylvania in evaluating the respective resources and in exploring the economic potential. Extensive
work was conducted during the reporting period, with the view to possibly upgrade the mineral resource either for development or sale.
63
FINANCIAL STATEMENTSSYLVANIA ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
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64
SYLVANIA ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
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65
FINANCIAL STATEMENTSSYLVANIA ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
14. PROPERTY, PLANT AND EQUIPMENT (continued)
LEASED ASSETS – VEHICLES UNDER INSTALMENT SALE AGREEMENTS
Motor vehicles
Cost
Accumulated depreciation
Borrowing costs
2022
$
–
–
–
2021
$
405,949
(199,961)
205,988
No borrowing costs have been capitalised during the year. All instalment sale agreements were settled during the reporting period.
Non-current assets pledged as security
Leased assets are pledged as security for the related lease liability (refer to note 21). No other non-current assets are pledged as security for any
liabilities.
Impairment of property, plant and equipment
Given the constant pressure on the commodity price and the effects of the Russian invasion of Ukraine, the floods in Kwa-Zulu Natal and COVID-19
on the markets, the directors performed an impairment assessment of the Group’s property, plant and equipment at year end. No impairment was
considered necessary in the current year. Refer to note 4.
Commitments for plant construction
At 30 June 2022, commitments signed for continued improvements of the plants were $1,709,764 (2021: $7,794,976).
15. OTHER FINANCIAL ASSETS
Loans and receivables:
Loans receivable (a)
Rehabilitation debtor (b)
Balance at the end of the financial year
Non-current asset
Current asset
(a) Loans receivable consist of:
2022
$
2021
$
1,029,205
283,450
885,593
298,864
1,312,655
1,184,457
283,450
1,029,205
298,864
885,593
1,312,655
1,184,457
• A loan amounting to $348,420 (2021: $885,593) was granted to TS Consortium by Sylvania South Africa (Pty) Ltd. The loan is unsecured,
bears interest at 7% per annum and is repayable on demand. During the period $0,8 million of the loan was transferred to equity. The Group’s
interest in TS Consortium changed from 50% to 75%; and
• A loan amounting to $680,785 was granted to Forward Africa Mining (Pty) Ltd in September 2021. The loan is secured over the Grasvally
Plant, bears interest at the Johannesburg inter-Bank Offer Rate (JIBOR) + 3%, compounded monthly in arrears.
(b)
Contribution paid to the host mine for rehabilitation purposes. The debtor is ZAR denominated and was translated at a spot rate of
ZAR16.38:$1 (2021: ZAR14.36:$1).
Other financial assets measured at amortised cost were included in the ECL calculation, refer note 28.
66
SYLVANIA ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
16. CASH AND CASH EQUIVALENTS
Cash at bank and on hand
Short-term deposits
Short-term deposits – restricted cash
Assets held for sale
2022
$
2021
$
94,134,130
76,272,060
26,260,051
28,893,209
890,239
979,309
(1,995)
(9,143)
121,282,425
106,135,435
Cash at banks earn interest at floating rates on daily bank deposit rates. Short-term deposits are made for varying periods of between one day and
three months, depending on the immediate cash requirements of the Group, and earn interest at the respective short-term deposit rates. The fair
value of cash and short-term deposits is $121,282,425 (2021: $106,135,435).
At 30 June 2022, the Group had $1,709,764 (2021: $1,991,220) of undrawn borrowing facilities available. The Group only deposits cash surpluses with
major banks of high-quality credit standing.
The Group has pledged part of its short-term deposits, excluding interest earned, with a carrying value of $798,772 (2021: $917,857) in order to fulfil
collateral requirements for the guarantees held below.
The restricted cash balances relate to funds set aside to serve as collateral against guarantees made to the Department of Mineral Resources
and Energy (DMRE) in South Africa for environmental and rehabilitation obligations as well as deposits to Eskom and Growthpoint, refer to the
below table.
Bank guarantees are held as follows:
Eskom
The Department of Mineral Resources
Growthpoint
17. TRADE AND OTHER RECEIVABLES
Trade receivables (not subject to provisional pricing) - fair value
Trade receivables (subject to provisional pricing) - fair value
Trade receivables – amortised cost
Other receivables – amortised cost
Assets held for sale
2022
$
2021
$
730,350
832,769
45,614
22,808
59,082
26,006
2022
$
2021
$
13,638,124
20,595,041
37,837,471
47,334,506
138,668
1,386,097
(60,771)
158,114
578,277
(53,819)
52,939,589
68,612,119
Trade receivables are due from major minerals mining and processing companies.
Trade receivables (not subject to provisional pricing) are non-interest bearing and are generally on terms not exceeding 30 days.
Trade receivables (subject to provisional pricing) are non-interest bearing but are exposed to future commodity price and exchange rate fluctuations
over a period. It relates to revenue from contracts with customers and the Group has an unconditional right to the consideration due as the
performance conditions have been met.
Other receivables are non-interest bearing and are generally on 30 – 90-day terms. Included in other receivables are pre-paid expenditure, VAT
receivable, advances and other sundry debtors.
Trade receivables at amortised cost were considered in the ECL calculation, refer note 28.
67
FINANCIAL STATEMENTSSYLVANIA ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
18. INVENTORIES
Stores and consumables
2022
$
2021
$
4,258,960
3,838,147
Inventories of $8,355,238 (2021: $3,759,449) were recognised as an expense during the current year and included in cost of sales.
Stores and consumables
Included in stores and consumables are critical spares and consumables are held in stock for engineering breakdowns.
19. ISSUED CAPITAL
AUTHORISED CAPITAL
Ordinary shares with a par value of $0.01
1,000,000,000
10,000,000
10,000,000
2022
No of shares
2022
$
2021
$
ISSUED CAPITAL
Share capital
Ordinary shares
Ordinary shares fully paid
2022
2021
No of shares No of shares
2022
$
2021
$
280,155,657
286,155,657
2,801,557
2,861,557
Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at shareholders’
meetings. In the event of winding up of the holding company, ordinary shareholders rank after all creditors and are fully entitled to any proceeds
on liquidation.
Details
Number of shares
286,155,657
(6,000,000)
280,155,657
286,845,657
(690,000)
286,155,657
$
2,861,557
(60,000)
2,801,557
2,868,457
(6,900)
2,861,557
Date
1 July 2021
30 June 2022
1 July 2020
Opening balance
Cancellation of shares
Closing balance
Opening balance
Cancellation of shares
30 June 2021
Closing balance
68
SYLVANIA ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
19. ISSUED CAPITAL (continued)
On 9 May 2022, the Company announced the intention to conduct a Share Buyback (“Share Buyback”) on-market which had a closing date of
30 June 2022.
The table below shows the movement in the treasury share account for the year. The shares are being held to be issued as bonus shares to senior
management in recognition of the achievement of performance criteria. Refer to note 27 for further details.
Balance at beginning of financial year
Shares purchased
Shares purchased through Share Buyback
Shares cancelled
Share options exercised and shares issued to directors
Balance at end of financial year
2022
2021
No of shares
No of shares
13,681,792
14,993,315
8,728,077
1,582,825
–
375,652
(6,000,000)
(690,000)
(2,385,000)
(2,580,000)
14,024,869
13,681,792
Of the 14,024,869 shares held in the treasury share account 7,500,000 shares are ring-fenced for the Employee Dividend Entitlement Plan (“EDEP”).
20. RESERVES
NATURE AND PURPOSE OF RESERVES
• Reserve for own shares
The reserve comprises the cost of the Company’s shares held by the Group as treasury shares. Refer to notes 19 and 27 for further details.
• Foreign currency translation reserve
The foreign currency translation reserve comprises the exchange differences arising from the translation of the financial statements of foreign
controlled entities.
• Share-based payment reserve
This reserve comprises the value of equity benefits provided to employees, consultants and directors as part of their remuneration. Refer note 27.
• Non-controlling interests reserve
This reserve comprises the differences between the carrying value of non-controlling interests and the consideration paid/received, where there has
been a transaction involving non-controlling interests that does not result in a loss of control.
• Equity reserve
This reserve arises from the recyclable reserves in the former holding company (Sylvania Resources Proprietary Limited) as at the date that Sylvania
Platinum Limited was introduced as the ultimate holding company.
69
FINANCIAL STATEMENTSSYLVANIA ANNUAL REPORT 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
21. BORROWINGS
Balance at 30 June 2022
Due within one year
Due between one and five years
Balance as at 30 June 2021
Due within one year
Due between one and five years
Future
minimum lease
payments
$
68,411
50,915
119,326
224,276
76,766
301,042
Finance
charges
$
(19,454)
(15,884)
(35,338)
(11,625)
(5,810)
(17,435)
Present value of
minimum lease
payments due
$
48,957
35,031
83,988
212,651
70,956
283,607
Finance lease liabilities were secured over various motor vehicles and were settled during the reporting period. Prior to settlement, the finance lease
liabilities were repayable in monthly instalments of $10,458 (2021: $11,925) at rates varying between 7.25% and 7.5% (2021: 7.0% and 7.5%) p.a. Refer
to note 14 for further detail on non-current assets pledged as security.
22. PROVISIONS
Rehabilitation provision
Balance at the beginning of financial year
Foreign currency movements
Unwinding of discount factor
Change in estimate
Balance at end of financial year
2022
$
2021
$
4,539,937
3,646,044
(707,815)
365,523
732,932
289,985
1,739,159
(129,024)
5,936,804
4,539,937
A provision is made for the present value of closure, restoration and environmental rehabilitation costs (which include the dismantling and demolition
of infrastructure, removal of residual materials and remediation of disturbed areas) in the financial period when the related environmental disturbance
occurs. The provision is based on the estimated future costs using information available at the reporting date. These estimates are reviewed regularly
to take into account any material changes to the assumptions (refer note 4). However, actual costs will ultimately depend on future market prices for
the rehabilitation work required.
Rehabilitation is performed and paid for on an on-going basis as mining properties are depleted. The majority of the rehabilitation will be undertaken
progressively over the life of the mine during the depletion of each respective mining property. It is expected that the life of each mine could
vary therefore, the timing of rehabilitation work is inherently uncertain. Refer note 16 for detail of the guarantees in place with regards to the
rehabilitation provision.
70
SYLVANIA ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
23. TRADE AND OTHER PAYABLES
Trade payables
Accrued expenses
Other trade payables
Liabilities directly associated with assets held for sale
2022
$
2021
$
5,766,225
6,163,727
3,783,734
5,437,612
1,566,099
2,051,139
(5,862)
(461)
11,110,196
13,652,017
Other trade payables are made up mainly of VAT payable to the local authorities. Trade and other payables are non-interest bearing and are normally
settled on 30-day terms, predominately payable in ZAR and located in South Africa.
24. NET CASH INFLOW FROM OPERATING ACTIVITIES
(a) Reconciliation of profit before tax to net cash flow from operating activities
Profit before income tax expense
Adjusted for:
Proceeds on sale of property, plant and equipment
Interest and penalties
Forgiveness of debt
Foreign exchange (gain)/loss
Finance income
Finance cost
Depreciation
Rehabilitation provisions
Share-based payments
Net operating profit before working capital changes
Changes in working capital:
Decrease/(Increase) in trade and other receivables
Increase in inventories
(Decrease)/Increase in trade and other payables
Cash generated from operating activities
Finance income received
Finance cost paid
Taxation paid
Net cash inflow from operating activities
(b) Taxation paid
Balance (owing)/receivable at the beginning of the year
Income tax recognised in profit or loss
Interest received/(paid)
Dividend tax
Foreign currency movements
Balance payable/(receivable) at the end of the year
Taxation paid
2022
$
2021
$
80,928,688
143,212,573
(3,006)
7,850
2,306
982
–
(36,947)
–
(20,912)
(1,711,371)
(1,705,366)
457,363
373,236
3,092,481
1,526,312
2,979,793
(7,526)
901,269
854,540
85,202,874
145,649,391
9,514,549
(33,972,688)
(961,106)
(1,159,702)
(1,825,529)
3,256,324
91,930,788
113,773,325
1,604,100
1,607,930
(91,841)
(34,574)
(23,831,718)
(47,111,379)
69,611,329
68,235,302
4,329,860
(1,198,277)
(22,850,836)
(40,085,224)
–
(83)
(1,315,789)
(1,628,697)
(508,727)
130,762
(3,486,226)
(4,329,860)
(23,831,718)
(47,111,379)
71
FINANCIAL STATEMENTSSYLVANIA ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
25. NET CASH OUTFLOW FROM FINANCING ACTIVITIES
(a) Borrowings and leases
Balance owing at the beginning of the year
Cash flow items
Repayment of borrowings (instalment sale agreement)
Lease payments during the year
Non-cashflow
Foreign currency movements
Closing balance
(b) Treasury shares
Treasury shares opening balance
Cash flow items
Purchase of treasury shares
Non-cash flow items
Share options & bonus shares exercised
Shares issued
Shares cancelled
Closing balance
(c) Bonus shares
Share Based payments opening balance
Non-cash flow items
Share options & bonus shares exercised
Bonus shares expensed
Closing balance
26. ASSETS HELD FOR SALE
2022
$
2021
$
(283,606)
(451,494)
117,635
160,577
59,697
80,288
22,285
(72,977)
(83,989)
(283,606)
(8,840,725)
(7,616,128)
(9,865,070)
(1,602,765)
650,871
308,561
–
60,000
62,707
6,900
(17,994,924)
(8,840,725)
(4,420,761)
(3,937,489)
650,871
308,561
(901,269)
(791,833)
(4,671,159)
(4,420,761)
In 2019 the Board committed to a plan to sell 100% of the shares in, and shareholder claims against Grasvally Chrome Mine (Pty) Ltd (Grasvally), an
insignificant part of the Exploration segment of the Group to Forward Africa Mining (Pty) Ltd (“FAM”). Post period end all of the conditions precedent
for the sale of 100% of the shares in, and claims against Grasvally to FAM were fulfilled and the sale was completed on 8 July 2022.
The following table summarises the carrying value of the assets held for sale and the liabilities directly associated with the assets held for sale:
Exploration and evaluation assets
Property, plant and equipment
Cash and cash equivalents
Trade and other receivables
Other financial assets
Assets held for sale
Trade and other payables
Liabilities directly associated with assets held for sale
72
2022
$
2021
$
3,662,478
4,100,303
15,885
1,995
60,771
30,532
18,113
9,143
53,818
34,813
3,771,661
4,216,190
(5,862)
(5,862)
(461)
(461)
SYLVANIA ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
26. ASSETS HELD FOR SALE (continued)
No impairments have been recognised on the above-mentioned asset held for sale namely Grasvally. There are no cumulative income or expenses
included in the statement of profit or loss and other comprehensive income relating to the disposal group. The asset held for sale is included in the
exploration projects segment under the segment reporting, refer note 8. The carrying value of the asset held for sale at the reporting date was
$3.7 million and the sale proceeds of ZAR100 million (~$5,96 million as at 8 July 2022), will be paid in fifteen equal quarterly instalments.
27. SHARE-BASED PAYMENT PLAN
Expense arising from equity-settled share-based payment transactions
Total expense
2022
$
2021
$
(901,269)
(854,540)
(901,269)
(854,540)
SHARE BONUS AWARD
On 22 August 2019, 1,780,000 ordinary shares of $0.01 each in Sylvania Platinum Limited were allocated to certain employees and senior management
in recognition of the achievement of performance criteria. These shares have a vesting period of three years and will vest on 21 August 2022.
Employees are required to achieve a minimum of a three rating on their performance appraisals.
On 24 August 2020, 1,435,000 ordinary shares of $0.01 each in Sylvania Platinum Limited were allocated to certain employees and senior management
in recognition of the achievement of performance criteria. These shares have a vesting period of three years and will vest on 23 August 2023.
Employees are required to achieve a minimum of a three rating on their performance appraisals.
On 20 August 2021, 520,349 ordinary shares of $0.01 each in Sylvania Platinum Limited were allocated to certain employees and senior management
in recognition of the achievement of performance criteria. These shares have a vesting period of three years and will vest on 19 August 2024.
Employees are required to achieve a minimum of a three rating on their performance appraisals.
BONUS SHARES
Issue date
2022
22 August 2019
24 August 2020
20 August 2021
Total
2021
24 August 2018
22 August 2019
24 August 2020
Total
Nominal value
at issue date
Balance at the
start of the year
Issued during
the year
Balance at the
end of the year
$
Number
Number
Number
0.10
0.10
0.10
0.10
0.10
0.10
1,780,000
1,435,000
–
3,215,000
2,710,000
1,780,000
–
4,490,000
–
–
520,349
520,349
–
–
1,435,000
1,435,000
–
1,780,000
1,435,000
520,349
3,735,349
2,710,000
1,780,000
1,435,000
5,925,000
The fair values of the bonus shares granted take into account the terms and conditions upon which the bonus shares were granted (the exercise price,
the term of the bonus shares), and the share price at grant date.
Fair value at grant date (GBP)
Fair value at grant date (USD)
Share price at grant date (GBP)
Share price at grant date (USD)
Expected life (years)
2022
2021
1.20
1.65
1.20
1.65
3
0.60
0.83
0.60
0.83
3
73
FINANCIAL STATEMENTSSYLVANIA ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
28. FINANCIAL INSTRUMENTS
The impact of the Russian invasion of the Ukrainian, the floods in Kwa-Zulu Natal and COVID-19 is already priced into the inputs, which for the Group
mostly relates to commodity price risk used in the level 2 fair valuation techniques as determined by the market.
The following table summarises the Group’s classification of financial instruments:
Financial assets – carrying amount
Financial assets at amortised cost
Trade and other receivables 1
Cash and cash equivalents
Other financial assets
Financial asset at fair value through profit and loss (FVPL)
Trade and other receivables 2
Financial liabilities – carrying amount
Financial liabilities at amortised cost
Borrowings
Trade and other payables 3
2022
$
2021
$
550,822
247,188
121,282,425
106,135,435
1,312,655
1,184,457
123,145,902
107,567,080
51,475,595
67,929,547
(83,988)
(283,607)
(9,586,212)
(11,642,521)
(9,670,200)
(11,926,128)
1
Prepayments and Value Added Tax amounting to $973,943 (2021: $489,203) are excluded from the trade and other receivables balance as this analysis is required only for
financial instruments.
2 The fair value was determined using the commodity prices and foreign exchange rates.
3
Value Added Tax amounting to $1,523,984 are excluded from the trade and other payables balance as this analysis is required only for financial instruments. The prior year
disclosure was corrected to remove the Value Added Tax previously included, amounting to $2,009,496.
IFRS establishes a fair value hierarchy that categorises the inputs to valuation techniques used to measure fair value into three levels:
• Level 1 – Quoted prices in active markets for the same instrument
• Level 2 – Valuation techniques for which significant inputs are based on observable market data
• Level 3 – Valuation techniques for which any significant input is not based on observable market data
The following financial instruments are carried at fair value:
2022
$
2021
$
Fair value
hierarchy
Valuation technique & key inputs
Financial asset at fair value
through profit or loss (FVPL)
Trade and other receivables
51,475,595
67,929,547
Level 2
Quoted market metal price and exchange rate
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group’s principal financial liabilities comprise trade and other payables and borrowings. The main purpose of these financial instruments is to
manage short term cash flow and raise finance for the Group’s capital expenditure program. The Group has various financial assets such as trade and
other receivables and cash and short-term deposits, which arise directly from its operations.
74
SYLVANIA ANNUAL REPORT 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
28. FINANCIAL INSTRUMENTS (continued)
RISK EXPOSURES AND RESPONSES
The Group manages its exposure to key financial risks in accordance with the Group’s financial risk management policy. The objective of the policy
is to support the delivery of the Group’s financial targets while protecting future financial security. The main risks that could adversely affect the Group’s
financial assets, liabilities or future cash flows are market risks (foreign currency risk, commodity price risk and interest rate risk), liquidity risk and credit risk.
The Group’s senior management oversees the management of financial risks. The Board ensures that the Group’s financial risk-taking activities are
governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with Group policies and
the Group’s risk appetite. It is the Group’s policy that no trading in derivatives for speculative purposes shall be undertaken. At this stage, the Group
does not currently apply any form of hedge accounting.
The sensitivity analyses have been prepared on the basis that the amount of net debt, the ratio of fixed-to-floating interest rates on the debt and the
proportion of financial instruments in foreign currencies are all constant.
The following assumptions have been made in calculating the sensitivity analysis:
• The impact on equity is the same as the impact on profit before tax, unless stated otherwise.
CAPITAL RISK MANAGEMENT
The Group manages its capital to ensure that all companies within the Group will be able to continue as a going concern while maximising the return
to stakeholders through the optimisation of the debt and equity balance. Due to the inherent risks involved in mining, the Board prefer not to utilise
funding from financing institutions.
The Group’s overall strategy remains unchanged during the years ended 30 June 2022 and 30 June 2021.
The capital structure of the Group consists of equity attributable to equity holders of the holding company comprising issued capital, reserves and
retained profits.
None of the Group’s companies are subject to externally imposed capital requirements.
Operating cash flows are used to maintain and expand operations, as well as to make routine expenditures such as tax, dividends and general
administrative outgoings.
MARKET RISK
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices
comprise three types of risk: interest rate risk, commodity price risk and currency risk (pages 93-96). Financial instruments affected by market risk
include receivables, loans, borrowings and deposits. Refer note 28 for more detail on the commodity price risk.
Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange
rates. The Group’s exposure to the risk of changes in foreign exchange rates relates primarily to the Group’s financing and operating activities (when
revenue or expense is denominated in a different currency from the Company’s functional currency). The Group manages foreign currency risk
through the strategic business model which has proved to be exceptionally successful.
The financial instruments exposed to foreign currency risk are as follows:
Financial assets
Trade and other receivables
Cash and cash equivalents
2022
$
2021
$
37,837,471
47,334,506
32,762,424
36,922,808
A reasonably possible strengthening/(weakening) of the Rand (ZAR) against the US dollar (USD) at 30 June 2022 would have affected the
measurement of financial instruments denominated in a foreign currency and affected equity and profit or loss by the amounts shown below.
The analysis assumes that all other variables remain constant and ignores any impact of forecast sales and purchases. 15% was applied due to the
movement in the spot exchange rate from 30 June 2021 ($/ZAR – 1:14.36) to 30 of June 2022 ($/ZAR – 1:16.38), reflecting a net movement in spot
rate of 14.02%.
75
FINANCIAL STATEMENTSSYLVANIA ANNUAL REPORT 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
28. FINANCIAL INSTRUMENTS (continued)
MARKET RISK (continued)
Foreign currency risk (continued)
15% (2021:20%) appreciation
15% (2021:20%) depreciation
2022
20211
Equity
increase/
(decrease)
Profit/(loss)
Equity
increase/
(decrease)
Profit/(loss)
$
$
$
$
10,592,609
(10,592,609)
16,823,669
(16,823,669)
(10,600,868)
10,600,868
(16,877,496)
16,877,496
1
The prior year disclosure was corrected to remove an amount of $20,595,041 relating to trade receivables already invoiced, and therefore no longer exposed to fluctuations
in foreign currency. To be more prudent, ZAR denominated Cash and cash equivalents were also included in the analysis. The resultant sensitivities were updated to reflect
these changes.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.
The Group’s exposure to interest rate risk arises from cash balances, loans receivable and borrowings.
Cash and cash equivalents are exposed to ZAR deposit rates.
The Group does not engage in any hedging transactions to manage interest rate risk. In conjunction with external advice, management consideration
is given on a regular basis to alternative financing structures with a view to optimising the Group’s funding structure. The Group manages the risk by
maintaining an appropriate mix between fixed and floating rate liquid funds.
The financial instruments exposed to movements in variable interest rates are as follows:
Financial assets
Cash and cash equivalents
Loans receivable
Financial liabilities
Borrowings
CREDIT RISK
2022
$
2021
$
121,282,425
106,135,435
680,785
–
121,963,210
106,135,435
(83,988)
(283,607)
Credit risk is the risk that a contracting entity will not meet its obligation under a financial instrument or customer contract that will result in a financial
loss to the Group. The Group is exposed to credit risk from its financing activities, including deposits with banks and financial institutions and its
operating activities, primarily for trade receivables. The carrying amount of these financial assets represents the maximum credit exposure.
Receivables balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant. The Group is
exposed to concentration risk due to the exposure to two major customers. It is not considered significant as the customer adheres to the stipulated
payment terms and has never defaulted on a payment since inception. The credit risk exposure is 100% in South-Africa and the Group only operates
in the mining industry.
Trade and other receivables
For trade receivables, the simplified approach permitted by IFRS 9 is applied, which requires lifetime ECLs to be recognised from initial recognition of
the trade receivables.
For other receivables ECLs are calculated based on the general model, which take into account the Probability of default (PD), the exposure at default
(EAD) and the loss given default (LGD). Rates are obtained from reputable ratings agencies.
Forward-looking macro-economic conditions and factors are considered when determining the ECLs for trade receivables, namely economic growth
and inflationary outlook in the short term.
76
SYLVANIA ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
28. FINANCIAL INSTRUMENTS (continued)
CREDIT RISK (continued)
Trade and other receivables (continued)
The following table provides information about the exposure to credit risk and ECLs for trade receivables and other financial assets as at 30 June 2022.
Trade receivables – Current (not past due)
Other financial assets
Weighted-
average
loss rate
%
0.1332289
0.1332289
Gross carrying
amount
$
Loss allowance
$
Credit
impaired
550,821
1,364,338
729
1,805
No
No
1 Prepayments and Value Added Tax amounting to $973,943 are excluded from the trade and other receivables balance as this analysis is required only for financial instruments.
2 The gross and net carrying values are the same amounts as the loss allowance and were not recognised. This is deemed immaterial for the Group.
The following table provides information about the exposure to credit risk and ECLs for trade receivables and other financial assets as at 30 June 2021.
Trade receivables – Current (not past due)
Other financial assets
Weighted-average
loss rate
Gross carrying
amount
Loss allowance
Credit impaired
%
0.1322890
0.1322890
$
247,188
1,184,457
$
327
1,567
No
No
1 Prepayments and Value Added Tax amounting to $489,203 are excluded from the trade and other receivables balance as this analysis is required only for financial instruments.
2 The gross and net carrying values are the same amounts as the loss allowance and was not recognised. This is deemed immaterial for the Group.
Cash and cash equivalents
The Group held cash and cash equivalents of $121,268,557 at 30 June 2022. The cash and cash equivalents are held with banks which are rated P-3 to
P-1 based on Moody’s Investment Services.
Impairment on cash and cash equivalents has been measured on a 12-month expected loss basis and reflects the short maturities of the exposures.
The Group considers that its cash and cash equivalents have low credit risk based on the external credit ratings of the banks. No impairment has been
recognised for the year.
LIQUIDITY RISK
Ultimate responsibility for liquidity risk management rests with the Board of directors, who have built an appropriate liquidity risk management
framework for the management of the Group’s short, medium- and long-term funding and liquidity management requirements.
The table below summarises the maturity profile of the Group’s financial liabilities based on contractual undiscounted payments based on the earliest
date on which the Group can be required to pay. The table includes both interest and principal cash flows.
2022
Trade and other payables
Borrowings
2021
Trade and other payables 1
Borrowings
Carrying
amount
$
Contractual
cash flows
$
Less than
1 year
$
1 - 5 years
$
Total
$
9,642,409
9,642,409
9,642,409
–
9,642,409
83,988
83,988
48,956
9,726,397
9,726,397
9,691,365
35,032
35,032
83,988
9,726,397
11,692,615
11,692,615
11,692,615
–
11,692,615
283,607
283,607
212,651
70,956
283,607
11,976,222
11,976,222
11,905,266
70,956
11,976,222
1
Value Added Tax amounting to $1,523,984 are excluded from the trade and other payables balance as this analysis is required only for financial instruments. The prior year
disclosure was corrected to remove the Value Added Tax previously included, amounting to $2,009,496.
77
FINANCIAL STATEMENTSSYLVANIA ANNUAL REPORT 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
28. FINANCIAL INSTRUMENTS (continued)
COMMODITY PRICE RISK
Commodity price risk refers to the risk of changes in fair value or cash flows of financial instruments as a result of changes in commodity prices. It
is applicable to the largest debtor of the Group. In terms of the agreement between the Group and the debtor, the commodity prices used in the
calculation of the payment are based on the prices over the period following delivery, leaving the Group exposed to the commodity price fluctuations
until the price is fixed. The subsequent remeasurement of the receivable every month following the month of delivery until the price is fixed, is
recognised in other sales, refer note 9.
Sensitivity analysis
Commodity price risk sensitivity analysis presents the effect of a 10% change in the year-end commodity price on financial instruments in the
statement of financial position, statement of comprehensive income and therefore equity.
Financial Assets:
Trade Receivables still subject to price fluctuation
Effect of 10% commodity price fluctuation
29. LEASES
A. THE GROUP AS A LESSEE
Statement of Financial Position
2022
$
2021
$
37,837,471
47,334,506
±3,783,747
±4,733,450
The Group has a commercial lease agreement whereby it leases its current office premises, in Johannesburg. This lease has an average life of five years
with no renewal option. Lease payments are escalated at 9% per annum.
The Group has settled all instalment sale agreements during the reporting period, refer to notes 14 and 21.
The Group leases various office equipment. Office equipment with a value of $5,000 or less are regarded low value. The Group has elected not to
recognise right-of-use assets and lease liabilities for low value assets. The cost relating to the leases are included in operating costs.
Containers are leased for office space on two of the operational plants. These leases are for a period of two to four years.
Information about leases where the Group is a lessee is presented below:
2022
$
2021
$
107,464
146,525
35,963
(62,166)
(11,356)
69,905
–
(63,729)
24,668
107,464
Right-of-use assets
Right-of-use assets related to leased properties that do not meet the definition of investment property are
presented as property, plant and equipment.
Office premises
Balance at 1 July
Additions
Depreciation charge for the year
Exchange rate difference
Balance at 30 June
78
SYLVANIA ANNUAL REPORT 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
29. LEASES (continued)
A. THE GROUP AS A LESSEE (continued)
Office Equipment
Balance at 1 July
Depreciation charge for the year
Exchange rate difference
Balance at 30 June
Plant
Balance at 1 July
Additions
Depreciation charge for the year
Exchange rate difference
Balance at 30 June
2022
$
16,621
(3,869)
(1,769)
10,983
18,339
11,908
(9,963)
(2,397)
17,887
2021
$
22,237
(9,380)
3,764
16,621
34,084
–
(21,050)
5,314
18,348
B. GROUP AS LESSOR
The Group leases out certain portions of the property owned by Zoetveld Properties (Pty) Ltd to a third party exclusively for the grazing of livestock.
This original lease expired on the 30th of April 2020 and is continuing for an indefinite period subject to termination by either party on a six months’
notice to the other party. Lease payments escalate at 9% per annum. The Group has classified this lease as an operating lease, because it does not
transfer substantially all of the risks and rewards incidental to the ownership of the asset.
Rental income recognised by the Group during 2022 was, $54,348 (2021: $48,325).
30. KEY MANAGEMENT DISCLOSURE
SHAREHOLDING OF KEY MANAGEMENT PERSONNEL
The number of shares in the Company held during the year by each director of the Group is set out below:
2022
SA Murray
JJ Prinsloo
L Carminati
E Carr
AJ Reynolds – appointed 1 August 2021
S Scott – appointed 1 January 2022
2021
SA Murray
JJ Prinsloo
L Carminati
RA Williams*
E Carr
*RA Williams resigned 31 December 2021.
Balance at
the start of
the year
Issued/
Purchased
during the
year
Balance at
the end of
the year
1,050,000
1,221,144
1,104,081
50,000
–
–
–
1,050,000
151,250
1,372,394
140,250
1,244,331
20,000
20,000
20,000
70,000
20,000
20,000
1,025,000
25,000
1,050,000
959,894
862,081
1,092,000
25,000
261,250
1,221,144
242,000
1,104,081
25,000
25,000
1,117,000
50,000
79
FINANCIAL STATEMENTSSYLVANIA ANNUAL REPORT 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
30. KEY MANAGEMENT DISCLOSURE (continued)
SHAREHOLDING OF KEY MANAGEMENT PERSONNEL (continued)
All equity transactions with key management personnel other than those arising under the bonus shares granted have been entered into under terms
and conditions no more favourable than those the group would have adopted if dealing at arm’s length.
Short Term Benefits
Cash salary/
Consulting
fees
Bonus1
Directors’
fees
$
–
318,999
289,886
–
26,500
–
–
635,385
1,734,634
2,370,019
–
270,310
247,826
–
39,000
557,136
883,414
$
–
61,253
56,193
–
–
–
–
117,446
232,863
350,309
125,000
75,000
75,000
42,500
80,000
71,250
37,500
506,250
–
506,250
–
125,000
37,263
34,044
–
–
71,307
94,916
75,000
75,000
85,000
75,000
–
Share-Based
payment
Equity
shares/
bonus
shares2
Total
$
$
79,725
69,810
–
–
–
–
149,535
266,723
416,258
19,938
73,504
67,721
19,938
19,938
125,000
534,977
490,889
42,500
106,500
71,250
37,500
1,408,616
2,234,220
3,642,836
144,938
456,077
424,591
104,938
133,938
1,440,550
166,223
435,000
435,000
201,039
1,264,482
123,277
324,316
1,101,607
2,366,089
Director
2022
SA Murray
JJ Prinsloo
L Carminati
RA Williams – resigned 31 December 2021
E Carr
AJ Reynolds – appointed 1 August 2021
S Scott – appointed 1 January 2022
Sub-total
Other key management
Total
2021
SA Murray
JJ Prinsloo
L Carminati
RA Williams
E Carr
Sub-total
Other key management
Total
1 Cash bonuses were awarded to directors and key personnel based on individual performance.
2 Share-based payments on bonus shares granted - refer to note 27.
80
SYLVANIA ANNUAL REPORT 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
31. RELATED PARTY TRANSACTIONS
The consolidated financial statements include the financial statements of Sylvania Platinum Limited, a Bermudan registered company and the controlled
entities listed in the following table:
Name of Entity
Country of incorporation
Class of shares
Aralon Holdings Limited
Sylvania (Mauritius) Limited
Sylvania South Africa (Pty) Ltd
Sylvania Metals (Pty) Ltd
Sylvania Properties (Pty) Ltd
Sylvania Mining (Pty) Ltd
Sylvania Northern Platinum (Pty) Ltd
Sylvania Northern Mining (Pty) Ltd
Sylvania Resources (Pty) Ltd
Sylvania Exploration (Pty) Ltd
Mauritius
Mauritius
South Africa
South Africa
South Africa
South Africa
South Africa
South Africa
South Africa
South Africa
Hacra Mining and Exploration Company (Pty) Ltd
South Africa
Pan Palladium South Africa (Pty) Ltd
Volspruit Mining Company (Pty) Ltd
Zoetveld Properties (Pty) Ltd
Grasvally Chrome Mine (Pty) Ltd
Grasvally Resources (Pty) Ltd
PT Sands (Pty) Ltd
South Africa
South Africa
South Africa
South Africa
South Africa
South Africa
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Equity Holding
2022
2021
%
100
100
100
100
100
100
74
74
100
100
67
100
74
100
74
100
100
%
100
100
100
100
100
100
74
0
100
100
67
100
74
100
74
100
100
Sylvania Platinum Limited is the ultimate holding company of the Group. Transactions between Sylvania Platinum Limited and its controlled entities
during the year consisted of loan advances between Group companies. All intergroup transactions and balances are eliminated on consolidation.
NON-CONTROLLING INTERESTS
The non-controlling interests are all held by BEE participants.
TERMS AND CONDITIONS WITH CONTROLLED ENTITIES
All loans are unsecured, bear no interest and have no fixed terms of repayment.
INVESTMENTS IN JOINT OPERATION
The Group’s interest in TS Consortium, which operates a pilot pelletiser plant in South Africa, increased from 50% in prior periods to 75% in the
current reporting period. Although the group’s interest has increased to 75%, both parties are still required to unanimously make decisions and
Sylvania has no power nor control over TS Consortium.
In relation to its interest in TS Consortium, the financial statements of the Group include:
• Assets, including its share of any assets held jointly;
• Liabilities, including its share of any liabilities incurred jointly;
• Revenue from the prospective sale of the output by the Joint Operation;
• Share of the prospective revenue from the sale of the output by the Joint Operation; and
• Expenses, including its share of any expenses incurred jointly.
81
FINANCIAL STATEMENTSSYLVANIA ANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(continued)
31. RELATED PARTY TRANSACTIONS (continued)
TERMS AND CONDITIONS WITH LOAN TO JOINT OPERATION
The loan to TS Consortium is unsecured, bears interest at 7% and is repayable on demand.
LOANS TO RELATED PARTIES
Balance outstanding at 30 June
Loan to joint operation (TS Consortium)
2022
$
2021
$
348,420
885,593
32. EVENTS AFTER THE REPORTING DATE
On 8 July 2022 the sale of Grasvally Chrome Mine (Pty) Ltd, as described in note 26 of the financial statements, became effective.
The directors are not aware of any further matters or circumstances arising since the end of the reporting period, not otherwise dealt with in the
financial statements, which significantly affects the financial position of the Group or the results of its operations.
33. GOING CONCERN
The Group’s financial risk management objectives and policies are detailed in note 28 and available borrowing facilities are set out in note 16.
The Group identified the principal risks and uncertainties related to the Russian invasion of Ukraine, the floods in Kwa-Zulu Natal and the
COVID-19 pandemic. Management has produced forecasts and budgets that have been sensitised to reflect plausible downside scenarios for the global
volatile economy.
The invasion of the Ukraine by Russia that commenced in February 2022 had a widespread economic impact worldwide. Although the invasion and
possible escalation thereof contributed to global uncertainty with resultant lower commodity prices and a weaker Rand, the Group operates in an
essential industry with a low risk business model which supports business continuity. The Group is in a fortunate position of being cash strong which
mitigates the impact and market risk, both short and long term.
The series of floods that occurred in South Africa during the second quarter of the reporting period, did not occur in the geographical areas where
the Group’s operations are located. The Group does not rely on importation and does not procure from affected areas, and hence was not impacted
by the negative knock-on effects of the floods.
The impact of the COVID-19 pandemic has stabilised since the last reporting period. The directors are monitoring the pandemic and will take the
necessary precautionary measures to ensure the safety of employees where a risk is identified.
The Group has sufficient cash reserves and resources to continue to meet its obligations even in the event if operations were to be placed under care
and maintenance for 12 months.
After considering the aforementioned, the financial position, operational performance, budgets and forecasts as well as the timing of cash flows and
sensitivity analyses, the directors are satisfied that the Company and the Group have adequate resources to continue in operational existence for at
least 12 months from date of signing the financial statements.
82
SYLVANIA ANNUAL REPORT 2022
ADDITIONAL INFORMATION FOR LISTED PUBLIC COMPANIES
SHAREHOLDERS’ PROFILE
AS AT 30 JUNE 2022
SHAREHOLDERS HOLDING 3% OR MORE FULLY PAID SHARES
Shareholder
Number of shares
% Shareholding 1
1
2
3
4
5
6
7
8
9
Hargreaves Lansdown, stockbrokers
Interactive Investor (EO)
Africa Asia Capital
Premier Miton Investors
AJ Bell, stockbrokers (EO)
Blackrock
Barclays Smart Investor
Acadian Asset Management
HSDL, stockbrokers
10
Banque Cantonale Vaudoise
41,480,726
36,921,914
27,250,000
23,262,810
15,701,420
11,530,000
10,796,239
9,713,373
9,531,882
8,304,194
194,492,558
1
The percentage shareholdings are calculated on the total number of ordinary shares with voting rights being 266,130,788 shares. The total issued number of shares is
280,155,657 including 14,024,869 shares held in treasury.
15.45
13.75
10.15
8.66
5.85
4.29
4.02
3.62
3.55
3.09
72.43
83
SYLVANIA ANNUAL REPORT 2022 LTIFR
MF2
MPRDA
MRA
NWA
PGM
PAR
PDMR
Lost-time injury frequency rate
Milling and flotation technology
Mineral and Petroleum Resources
Development Act
Mining Right Application
National Water Act 36 of 1998
Platinum group metals comprising mainly
platinum, palladium, rhodium and gold
Pan African Resources Plc
Person displaying management responsibility
Pipeline ounces
6E ounces delivered but not invoiced
Pipeline revenue
Pipeline sales
adjustment
Project Echo
Revenue recognised for ounces
delivered, but not yet invoiced based
on contractual timelines
Adjustments to pipeline revenues based on the
basket price for the period between delivery
and invoicing
Secondary PGM Milling and Flotation (MF2)
program announced in FY2017 to
design and install additional new fine
grinding mills and flotation circuits at
Millsell, Doornbosch, Tweefontein,
Mooinooi and Lesedi.
Revenue
(by products)
Revenue earned on Ruthenium, Iridium, Nickel
and Copper
ROM
SDO
SLP
Sylvania
tCO2e
TRIFR
TSF
UNSDGs
USD
WULA
UK
ZAR
Run of mine
Sylvania dump operations
Social and Labour Plan
Sylvania Platinum Limited, a company
incorporated in Bermuda
Tons of carbon dioxide equivalent
Total recordable injury frequency rate
Tailings storage facility
United Nations Sustainability
Development Goals
United States Dollar
Water Use Licence Application
United Kingdom of Great Britain and
Northern Ireland
South African Rand
GLOSSARY OF TERMS FY2022
The following definitions apply throughout the period:
4E PGMs
6E PGMs
AGM
AIM
All-in sustaining cost
All-in cost
4E PGM ounces include the precious
metal elements Platinum, Palladium,
Rhodium and Gold
6E ounces include the 4E elements plus
additional Iridium and Ruthenium
Annual General Meeting
Alternative Investment Market of the London
Stock Exchange
Production costs plus all costs relating to
sustaining current production and sustaining
capital expenditure.
All-in sustaining cost plus non-sustaining and
expansion capital expenditure
CLOs
Community Liaison Officers
Current risings
DMRE
EBITDA
Fresh chrome tails from current operating host
mines processing operations
Department of Mineral Resources and Energy
Earnings before interest, tax, depreciation and
amortisation
Environmental Authorisation
Employee Assistance Program
Employment Engagement Forums
Employee Dividend Entitlement Programme
Environment, social and governance
Environmental Impact Assessment
Effective interest rate
Environmental Management Programme Report
Environment, Social and Governance
Pounds Sterling
Greenhouse gases
International Accounting Standards Board
Internal combustion engine
International Financial Reporting Interpretation
Committee
International Financial Reporting Standards
Phoenix Platinum Mining Proprietary Limited,
renamed Sylvania Lesedi
London Stock Exchange
Lost-time injury
EA
EAP
EEFs
EDEP
ESG
EIA
EIR
EMPR
ESG
GBP
GHG
IASB
ICE
IFRIC
IFRS
Lesedi
LSE
LTI
84
SYLVANIA ANNUAL REPORT 2022 CORPORATE INFORMATION
Directors
SA Murray
RA Williams – resigned effective 31 December 2021
E Carr
AJ Reynolds – appointed effective 1 August 2021
S Scott – appointed effective 1 January 2022
JJ Prinsloo
L Carminati
Company secretary
Conyers Corporate Services (Bermuda) Limited
Principal registered office
Clarendon House
2 Church Street
Hamilton HM11
Bermuda
South African Operations
Constantia Office Park
Ground Floor, Cycad House
Cnr 14th Avenue & Hendrik Potgieter Road
Weltevredenpark
1709
South Africa
Telephone: +27 (0)11 673 1171
Facsimile: +27 (0) 11 673 0365
Share Registry
Computershare Services Plc
The Pavilions
Bridgewater Road
Bedminister Down
Bristol BS99 7NH
United Kingdom
Auditor
PricewaterhouseCoopers Inc
4 Lisbon Lane
Waterfall City
Jukskei View
Midrand
2090
South Africa
Solicitors
Conyers Dill & Pearman Limited
Clarendon House
2 Church Street
Hamilton HM11
Bermuda
Gowling WLB
4 More London Riverside
London SE1 2AU
United Kingdom
7452/22
85
FINANCIAL STATEMENTSSYLVANIA ANNUAL REPORT 2022 w w w . s y l v a n i a p l a t i n u m . c o m