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Sylvania Platinum - Forecasts unchanged and outlook improved

Sylvania’s end March 2022 cash balance improved by 25.5% to US$138m and Q322 revenue increased by 17% as a result of higher platinum group metal (PGM) prices. Production improvement was slower than expected, which put pressure on unit costs over the quarter. Most of the operational issues of Q322 have now been or are almost resolved, with the company expecting a ‘significant increase’ in production in the fourth quarter. The Lesedi plant is back in full production and the Mooinooi plant’s run-of-mine (ROM) grades have improved post Q3. In light of the lower Q322 production versus Q222, we have nudged down our FY22 production estimate to 66,182oz, at the lower end of management’s unchanged guidance of 66,000–68,000oz. We expect unit costs to be flat in Q422 as ounce production is forecast to increase versus Q322. Overall, our modestly lower FY22 revenue forecast, combined with unchanged total cost forecasts, results in a 7.5% reduction in our EPS forecast to 22.6c. Our FY23 forecasts remain unchanged, with upside risk to PGM prices from supply constraints.