Sylvania Platinum Limited (SAPLF) Q2 2023 Earnings Call Transcript

Sylvania Platinum Limited (OTCPK:SAPLF) Q2 2023 Results Conference Call February 22, 2023 7:00 AM ET

Company Participants

Jaco Prinsloo - CEO

Lewanne Carminati - CFO

Operator

Good afternoon and welcome to the Sylvania Platinum Limited Investor Presentation. Throughout this recorded presentation, investors will be in listen-only mode. [Operator Instructions] The Company may not be in a position to answer every question received during the meeting itself. However, the Company will review all questions submitted today and publish responses where it's appropriate to do so.

Before we begin, I'd like to submit the following part and I'd now like to hand you over to Jaco Prinsloo, CEO. Good afternoon, sir.

Jaco Prinsloo

Good afternoon. And thank you for the introduction. And welcome everybody to our half year results presentation for the year ended 31 December, 2022, myself and Lewanne Carminati, our CFO will take you through the presentation. I'll add some of the key results and highlight for the year. And then at the end, hopefully, we have enough time to answer some questions.

So maybe just to start off and for those of you who might not be familiar with the Company, let's just highlight what Sylvania is about? Sylvania has produced these parts to its business. Firstly, there is our attractive low cost gas generating Sylvania Dump Operations that consists of 6 Chrome and PGM beneficiation plants located in the Eastern and Western Limb of Bushveld Complex respectively. And these are the current PGM producing units of our business as responsible for our current cash flow and profits. And we will deal with the financials throughout the session and it is simulating from these operations.

And secondly, the Company also owns a number of liquid exploration assets. On the Northern limb of the Bushveld Complex that we can offer that network that you see, which offers significant growth potential for the Company, and I will touch a bit more in the presentation as we go along. I think just briefly looking at some of the key highlights for the year, we are very proud of half year performance of 38,471 ounces produced. This is the second highest half year performance in history of the Company and the highest since COVID. So certainly, we are very excited about it and it was enabled by a significantly improved PGM feed tons performance, as our historical water and buildings related issues at the Lesedi have been resolved and the operation is now very steady. And also our safe operation that we have been able to see the last time increased across our operations for the period.

This strong production performance combined with still a robust PGM basket price, although we declined 15% on the period compared to about 2,515 ounce. We have managed to deliver strong financial performance as well. We ended the year the check pull it on $134 million in cash, which enabled us and the more to take it as you get a clear interim dividend of 3 pence at this time with our results. Maybe while I mentioned the dividend is one of the other highlights for us during this period. I'm pleased to announce that we will have updated our dividend policy to provide some clearer highlights of what we expect to payout dividend basis. And this will bring dividends as a part of the -- first part of the annual dividend that Lewanne will cover in a bit more detail later in the presentation.

If we look at some of the more detailed parameters, as I mentioned, the higher PGM feed tons also enabling that's we have just a significant improvement of PGM recovery efficiency. And there -- we've seen a significant contribution from our Lannex operation. We have reagent optimization work. We've had a step change in recovery efficiency, especially on some of the oxidized sources that they do treat as well as at Mooinooi with the wrong quality and grade have improved. We have seen recovery improvements and also at our equipment and operation for optimization of the flotation plants and plants ability.

On the finance side and then you can see that we have had very attractive and significant growth in our net revenue as well as net profit figures. Net revenue up about 16% on the comparative period, the net profit approximately 34%, and besides the fact that it was driven by the higher ounces, I mentioned earlier that we had a slight reduction in the basket price, but then also the sales adjustment we received was a slight positive adjustment in this period compared to a negative adjustment in the previous period. And that's why these increases in revenue and profit are proportionally higher than just the production increase.

Touching on the ESG, which is covered in quite a bit more detail later in the presentation, I think it's just worth saying that we are very proud of progress we've made on our ESG during the last say two years and especially this past half-year. Our ESG strategy has always been aligned with our values that have been deeply entrenched in our operations and in the country for all the years we've been operating. And we've been able to publish our first standalone ESG report with our full year financials last year.

So, our ESG principles certainly well aligned with the sustainable development goals of the United Nations as well as the ICMM and we will touch a more detail later on. So, if I -- first look a bit more detail on the operations and as I mentioned focusing on the Dump Operations of ours mentioned strong performance, you can see it here in the bars for 2023, and you would've also noticed that the release of our second quarter results, we've increased the annual guidance for the year. We believe that we should be able to achieve 70,000 to 72,000 ounces at least and that's it. Despite the current, Eskom merchant constraints, which we don't believe we have addressing back on this guidance at the moment.

And then also take into account the recovery improvements we expect from the optimization of the MF2 circuit equipment plant was just commissioned during December and then looking forward towards '24, '25 financial years, you'll see contributions from the Lannex MF2 that's currently under construction then coming into play as well. I think, also encouraging and worth noting is that we have seen a very good performance in terms of the ROM feed graded quality at Mooinooi operation that you would remember historically have been a challenge for us after COVID and the initial slowdown at the host mines.

We are collaborative efforts with the host mines. We've managed to have a significant improvement in our own branch, which we believe it's now at a sustainable level going forward. Just on a bit more detail on the individual operations for -- and probably more for background and reference somebody want to look at it. I've actually mentioned quite a few of these points already. Just maybe focus on one or two of the points that was not mentioned yet and the one being the Lesedi. We are exposed currently to some downtime from the government commercial situation. And maybe we're just briefly expanding on that.

Our operations in general, so five of our six plants have not had impact from the legislature and that's because of the power utility load containment plans Africa that on integrated suppliers mean that they instead of cutting certain hours in a day, they ask the bigger industrial users to cut a certain percentage of supply. And your industrial integrated produces like as a man co-similar to Anglo Platinum Impala who have smelters and refineries as well as mines. They typically choose to do that load containment at the smelter facilities. Therefore the mines where most of our plants are situated are not impacted at this stage but our Lesedi operation is situated at the smelter site and therefore have been affected and there we are busy as a mitigating measure to with a project to install a backup power generation unit that can enable us to run, while they are no curtailment at our project.

The other point probably not mentioned earlier, it's just again highlighting that we are busy with the execution of two tailings dam facilities, one our Mooinooi operation, which will be the first to be constructed and the second at our Doornbosch operation that is in the design and authorization phase. While these are important with we've been building telling them throughout the history of the organization on a continuous basis as we’re remind certain tailings resources, we built new facilities, but just do have a bearing on the capital we guide on. And Lewanne will touch on a bit more detail on that later in the presentation.

So, just again reminding you in terms of the prill split and looking at how that basket price then has an influence, firstly just highlighting on that top graph illustrating our rhodium exposure in our pro is about 11.4% for this past half year. That's quite consistent throughout the periods. Palladium about 23% of platinum 65, and you can see at the bottom graph where the historical metal prices and especially rhodium overshadowing that bottom graph where the rhodium price significant increase, how that had an impact on our full year basket price.

And quite interesting on the top the rand, South African Rand basket price, you can see it stayed fairly flat while you saw a decline in the last six months of rhodium and palladium. And one of the reasons there is that these metal prices have declined in dollar terms to a large extent because of the strengthened of the dollar and not necessarily cause the strength of the metal. I think in terms of euro, rand and some other currencies, the metal price actually stayed quite consistent, so just worth noting.

So when we look forward, which is probably more important is the conflict with between Russia and Ukraine is still something that herein the industry. Certainly, we know historically the COVID-19 restrictions and lockdowns in China have had impact on that now being eased. We have a more positive outlook, and if we look at the some of our key institutions, just to give you some illustrative idea of what the price is more cost to do, we've included Nedbank CIB that covers most of the PGM producers in South Africa, Standard Bank Securities which is our standard bank as being our Corporate Bank in South Africa as well as Liberum Wealth in the UK that is our nomad and broker.

And it gives you an indication maybe the one worth pointing out and a lot of people ask why is platinum from Standard Bank increasing significantly? And that is largely due to the view on the supply and demand side. I take on the demand side have quite aggressive outlook on the road. Platinum will play in the hydrogen economy, hydrogen fuel cells, and going forward, and at the rate the uptake will happen. And on the supply side, they are more concerned than other institutions changes in terms of the impact that power in South Africa might have on supply. South Africa being the largest producer of platinum and palladium in the world, you can see that the platinum and palladium are higher than the other institutions in that regard.

If we turn our eye now slightly to the exploration opportunities and looking at how long history at track record and dump operations, a lot of people ask and say, okay, so why are you focusing on exploration projects? I think, firstly, I've mentioned before, we do own the Mooinooi rights of proof and rights on a number of these projects. And while the Company continues to focus on the delivery value from our existing operations and focusing and continuing on cash generation, it is important to optimize the value from these exploration assets that remain one of the important pillars of Sylvania's growth strategy and is a key value driver for shareholders.

So with us in mind during 2021 financial year, we initiated some targeted studies that specifically falls right in our formal number of projects with the two regions of these projects to determine how best to optimize these projects. So that we can, we create the optimum value for our shareholders. So let me first focus on what we have been doing on full spread and you might have noticed, we have published these initial optimization study results during October last year, on force breaking particular. We published a mineral resource estimate that focused first on the north body. And then also continue to do a scoping study to give us some idea of the possibility of economic extraction on the probability they are often.

And the reason we focus in the north body is, at that time, the south body that drilling density in geological data was not at ensure compliance status to include in the mineral resource estimate although it represents about 40% of the estimated resource on the area. And also another important thing, the initial study excluded the rhodium contribution. We couldn't include rhodium and again because historically when these projects were done rhodium was at a much lower price, rhodium was excluded from the SA. And we had to include a significant SA to look for work to get rhodium at the joint compliant level. So both of those, the south body and the rhodium is being addressed at the moment, and we are hoping that by the end of this financial year, when we report our results in August, September that we can include updated scoping study for full spread that would include those to the upside, best to use upside potential.

On our Aurora Project, which is a bit more to the north, but Aurora is typically, while Aurora project is located, about 30 kilometers north of Anglo Platinum Mogalakwena Operation and in just south of platinum group with metals which are the PGM project. So what we have on Aurora is a 16 kilometer strike length of near surface material and its material that sub crops at 5 to 10 meters below the surface. It's certainly very attractive from an open cost mine ability point of view. And I think probably more significantly is the discovery of the T-Zone mineralization of T-reef that we have discovered on this property.

So historically, we always interpreted this area from the historic protocols as SA plat reef deposit. And it wasn't until 2017 that some academics pointed out following the discovery of the T-reef at Waterberg Project. I think between 2012 and '14 that this could potentially also T-reef. Why is that significant whereas your T-reef is probably wider at a lower grade? This T-reef is anywhere between say, 2 and 11 meters thick at a significantly higher grade. And you can see from the portion at La Pucella where we already confirmed, the mineral resource estimate that we could get to about 2.6 per ton. And this is significant, because concrete to the initial strategy we had of having our own downstream refinery and smelting facilities, which will be highly capital intensive, we can now most probably produce a saleable concentrator.

What are we focused on this next year is to increase the confidence in the rest of the spike length, so that we can grow the mineral resource estimate for this project, and therefore, then we can make decision on what and how to proceed with this project going forward. The last one is maybe just Hacra on the far north and very similar to the Aurora project. We need to just confirm the mineral resource estimate. It is slightly different because it contains also a deep level, although deeper underground resource to the north that borders our neighbor, that left group metals, you can see in the yellow block. But again, we, we have to accrue to work, say in the next two to six months in terms of clearing a maiden resource estimate on that area and then we can decide our best in the rest of it.

So, having discussed all that, I think, this is just a summary of the results that I just discussed, and including the JORC compliant resource for full spread north and La Pucella only. And summarizing the actions, but I'll leave you for reference later, and then I'm going to hand over to Lewanne to have a look at the financial results and take us through the highlights of that.

Lewanne Carminati

Thanks, Jaco. Turning back to our historical information, we're quite pleased with our results to 31 December, and I'd just like to highlight a couple of points on the income statement. Our net revenue for the period is up 16% on the corresponding court year. Mineral royalty tax increase by $750,000 as a result of higher ounces, and a higher percentage of loyalty attracting ounces that were produced, as well as the higher revenues, finance income comprises of interest received on circle funds that we invest in South Africa, as well as interest charged on the two loans that we have outstanding with the La Taso JV and the loan to for African mining.

Income tax line includes income tax on taxable profits of the South African operations as well as free tax movements, dividends withholding tax on dividends located from the South African operations up to the current entity as well as the small amount of GTT on the sale of the Grass Valley assets. As I mentioned on the previous slide, the group proven net revenue increased 16% on the corresponding period. The main contributor to the increase in the revenue is the increase in ounces delivered with a small negative effect of the drop in the metal prices. As you can see from the pie charts at the bottom of the slide rhodium store remains a significant contributor to our total revenue reported for the period at 52% of our 6 million,

The SDO for e-cash cost for the half year was $602 per ounce and for the group has $742 per ounce although, this is a decrease of 18% and 16% on the corresponding period due to the higher production. The total direct cost increased 12% over for the reporting period. This is mainly due to the increase in the agent costs that we saw in the latter part of the last financial year, and we pulled through into the new financial year. The increase in number of employees as we commissioned the Lesedi and Tweefontein, we had some higher mining costs at the Western operations as they moved more times to the plants and the increase in electricity costs.

For the full year, we forecasting approximately $654 per ounce 4E and that's at an exchange rate of $17.63 annualized based on the revised ounce target of 70,000 to 72,000 ounces. In industry terms of any install operates in the lowest -- of the cost curve with the all end cost including our exploration capital of just over a $1,000 per ounce. The group reported $45 million EBITDA for that period ended 31 December. The full year forecast is currently forecast at between $76 million and $80 million, and again based on the February 2023 metal prices and exchange rate as well as the revised production.

Our cash flow for the period, we ended the reporting period at with a cash balance of $123 million. This is after paying $7.7 million in taxes as well as the $25 million we paid out in dividends in December '22. The group spent $6.2 million on capital for the six months, which is split between the SDO operations or the SDO at $5.3 million and $900,000 on the exploration projects. And then, the Board has declared as you mentioned the 3 pence dividend on ordinary shares in terms of the dividend policy, which are expand on the level in the next couple of months.

Our capital, as I just mentioned, the $6.2 million that was spent for the reporting period, the forecast for the full financial year has been revised down from $22 million to $18 million. This is as a result of the delay in the implementation of our backup power due to availability of equipment. It's not significantly delayed, but it'll be some of the capital will be pushed into the next financial year as well as rescheduling of some of the tailings dams due to delays in permitting of the host runs.

So for the full year, we are looking at spending about $5 million on exploration, $8.5 million on capital expansion and optimization projects. And these include the Lennox MF2 the 210 MF2 optimization and the backup power, and then about $4 million on SIB, including our status. You'll see the forecast of 2025 onwards, only SIB and a small amount for exploration, and that's pure because we haven't committed to large capital spend for those years.

And looking at how the Company returns value to shareholders, we are very pleased with the Board is revised for the dividend policy and that the Company now has a more clearer model friendly policy. The new policy states that the Board will distribute a minimum of 40% of the Company's adjusted free cash flow for a financial year. We will split this into an interim dividend at full year of about one-third of the forecast adjusted cash growth and then a final dividend and a continued increase.

Adjusted cash flow is calculated as the cash inflow from operations, as capital for that period and then adjusted for EBIT commitments and covenants and commenced future growth expansion capital. In addition to the annual dividends, the Company has bought back 56 million shares since 2015 and canceled 18 million shares. Buybacks will still be done on an ad-hoc basis or as opportunity arise.

Moving on to our ESG. This slide just gives a snapshot of some of the ESG progress for the reporting period and we will be sending you sustainable development goals that we require to our ESG strategy. On the environmental side, we received our province footprint for report following half year and we also developed water balances for each plant. We are in the process of implementing additional water flow, new tools to improve accuracy of water flow monitoring in each of the plants.

We've concluded assessments at four of our six operations to assist and confirm compliance with the global industry standard on tailings management, and most notably under the environmental section four to six months. And we are quite excited about the results of our first phase of the new legislation trials. And we took a ratio of six indigenous grass seeds and planted them on different control areas, and it was found that the seed traits treated with North Shore was successful.

We also implemented an increasing biodiversity in these areas to the increase of insects and other large species. And now we started Phase 2 where we will be introducing further insects and earthworms as well as other indigenous plant species, and it's been being processed with them to lower soil opportunity. Ultimately, this process will expect us -- that this method of rehabilitation will significantly reduce the rehabilitation costs. And reduce the number of years of Arctic layer as the areas will become self sustainable in approximately three years.

Under the social banner, we are particularly part of both our percentage female complement and our safety report. A female representation increased to 22% from 20% up in June, against an industry average of 14% that was published by the Women's Council in 2022. On the safety side, as if you mentioned in the snapshot, the group recorded not LTIs for the six months. As of 31 December with Doornbosch remains over 10 years of LTI-free and then it's also not really that the Company expects it to prove since inception.

Under governance, we have had -- we haven't updated legal compliance order underway. And the Company has also contributed approximately 1 billion rand to the South African economy over the six months. And details of this can be found in the results on our announcement.

Jaco, back to you.

Jaco Prinsloo

Thank you very much, Lewanne, for taking us through performance and outlook. We've looked at the past financial performance. Maybe let us just focus briefly on what you can expect from us in the next period and going forward. So, I think, first of all, it's important and I think you really agree that in recognizing the cash generation efficiency of our current businesses, that we should continue to focus on the profitability and safe performance of our operations so that we can continue to generate cash, both in order to generate stable returns to our shareholders, but also to enable us to fund our growth projects and aspirations.

So, we certainly continue to do that. We further in terms of our license to operate, the ESG has become a lot more significant in recent periods for especially our investors and the institutions we are dealing with. But also, in terms of our license in the communities we operate with our employees and also our stakeholders. It is important that we maintain those principles and also, more practically focusing on items like the permitting and authorizations rather telling them serving that timely in place.

And so looking forward them in terms of growth and increasing our PGM ounce profile, they are the two areas of was looking to at that. The one is looking internally. First of all at the current dump operations, regressing R&D initiatives and some to what we've done in the past to grow the ounce profile from the existing operations and existing resources, improving recovery efficiencies, reducing current in the feed to our PGM feed. Those items will continue with we then also in terms of the owned mineral resources.

As I explained earlier, by looking at our best to optimize value, and then external, external to what we already own, external to the host mines, where we already operate is to look at similar host mines or third-party producers that have and telling resources or run of mine material where we can replicate our current business model from current solid dump operations to add more value. And we have some projects, that's quite far advanced in the negotiations on the eastern and western limb respectively of the Bushveld Complex that we hope, we can make good progress in the coming period.

To give you some idea of timeframes and then scope, I'm just updating what I have shared and before is from the existing SDO, we mentioned prefer time that has just been commissioned and being in the optimization phase now, Lannex, that we are looking at commissioning early in the new financial year towards the end of this financial year. And then we continue to pursue higher-grade, third party material that we told to now our current operations as the wind opportunity rise.

Forward looking on that, I mentioned on the R&D focus and then longer term is steady focused to see how can we unlock further potential on dumps we may view as sterilized or redundant at the moment that could well still yield production in future. And the new opportunities, we've quite far advanced, as I mentioned with technical commercial due diligences and even some form process design on certain projects. And on the western limb, on the 100% cubic above basis, you look at about 10,000 to 50,000 ounces, should be able to add that the Western opportunity could come as soon as 18 to say 24 months.

Inter production where Eastern slightly more owners in the sense of authorizations, environmental authorizations and stuff that we have still needing to explore. So that might take a little bit longer. And then longer term, we continue to explore and investigate, opportunities for both very old historical dump sources, but also consulting with current producers. I always say to people, when Sylvania stole it initially, about 15 years ago, the estimated production life was about five years.

And now 15 years later, we say that from what we already know and have, we believe we can be beyond 10 years profitable life. And we therefore believe that we'll be able to continue and add on top of that profile. And then finally, in terms of the expiration assets, I mentioned in quite a bit of detail what we are busy with there and I think what we can look forward to it's just a key basis course update, the scoping study by the end of this financial year, then only probably the next year, the update of resource estimate on Aurora, and then also the Hacra probably closer this year.

But I think important to note there and some people ask us what is a capital requirement or need for this. And at this stage, we have not applied or forecasting to apply any capital for the development of this project. Our aim currently is to unlock the value by upgrading the resource estimates. And that would enable us and say about 18 months period to make a decision to say how best to unlock value yet is at the disposal, is at a partnership with somebody is at development in-house. Those decisions will only make once we have adequate data available. So that's where we are progressing to.

I have, as an indication only indicated that the size of operation, you can expect the typical ounce production while full plate. I say, yes, that was based on the north border only about selling 200,000 ounces a year just comparative to what we already produced. It gives you an idea what could can produce in the Northern, we also said about 80,000 to 120,000 ounces, that was when we initially just looked at -- which only about 12% of the overall resource. So obviously significant upside potential there, but we will update the market as we progress in terms of these exploration opportunities.

So finally, just final outlook and my closing slide then is to say, sure investors, we have a proven track record on delivering to shareholder returns, and we will continue to do so. We'll continue to focus on our cash generation projects. We will -- we have disciplined capital allocation policies in place and also have proven over the last few years, and mentioned five consecutive years of dividend payment that we are committed to return value to shareholders. And also our new dividend policy is testamentary our commitment. I've mentioned just in the previous slide, various opportunities for growth and we believe that we'll be able to continue doing that.

The PGM market, although, there are many external factors that impact and continuously play a role. We do believe that the market is robust. We are cautiously optimistic about pricing. We know I mentioned some of the global sociopolitical factors that play a role. But in general, our outlooks, we confident and remain, as I said, cautious, optimistic. And then just finally, the production and ounce guidance, we've stated what our estimate for this year is if there's no address or worse impact from Eskom for instance and our grades hold through, they might well be more upside to this guidance. And then longer term, you can see the '24 '25 onwards increasing production profile.

So, that I think conclude just the presentation from our side. So Alessandro, I will end a few if we can look at some of the questions.

Question-and-Answer Session

Operator

[Operator Instructions] As you can see, we received a number of questions throughout today's presentation, but I'd just start with the first pre-submitted question here, which reads as follows.

Why does Sylvania only report results against the previous period? Wouldn't like-for-like analysis with the same period last year also be helpful?

Jaco Prinsloo

Thank you. And so, I think that one and then maybe there is a slight bit of confusion. So in terms of the Sylvania performance, we have reported half year one of 2022 to the corresponding half year '21. So that is like-for-like periods. The quarterly results we do report on consecutive periods. So they are slightly different I mean, because it's a quarterly period. The guys don't want for periods back for the results and we do that. So we do -- the quarterly results that we produce is back to back that these half year results are, in fact, comparing with a comparative period. So it is a like-for-like comparison.

Unidentified Company Representative

Perfect. Thanks very much. So turning to the next question. How do you see the supply-demand balance for platinum evolving over the next seven years? And what's your full plan in relation to this background?

Jaco Prinsloo

Look, that's something slightly on environment and market outlook. I mean, I think there is two things when you look at the -- and platinum supply and demand, I'll keep -- about the question. I'll ask so platinum is so recent years it declined as automotive manufacturers move from diesel predominantly. The number of diesel manufacturing used with equipments used with auto catalyst to more petrol vehicles with palladium certainly at a higher market share. So from supply demand fundamentals, I think short-term wise, there is always the element of when do people manufacturers start to substitute as first between platinum and palladium.

And I think there is not a significant portion that focus at the moment, but what probably is more driving at moment is the supply risk to platinum and palladium. I think most of the primary and significant producers in the recent results announcement since December to somehow this past week have indicated that, there was a significant impact by the load shedding on production. So certainly, the supply pressures of ore and I mentioned earlier that Standard Bank view that is one of the key risks and the factors in adding their higher platinum price outlook.

So, I think in the short to mid-term supply fears for South Africa is a major platinum producer in the world is driving the price. And then longer-term, platinum will play a more significant role in the hydrogen economy, hydrogen fuel cells going forward, whereas, when you look at that substitution of internal combustion engines going forward with either battery vehicles or platinum fuel cells. Platinum is forecast a bit of a more important problem and that's why you see typically platinum's medium to longer-term price is increasing.

What can we do about it? What's our plan? We unfortunately with the broad split we have in our baskets, from our Dump Operations, we are very fortunate that platinum is actually the biggest of production about 65% platinum now. So, the platinum price increase here, the Dump Operations would benefit significantly. On the exploration assets, the platinum pro is actually slightly lower. There is more palladium rich but also what the exploration projects offer in future is that, they are significantly higher in nickel and copper and metals.

So, those two again in the battery and green economy playing a major role for balance as well, so, I mean, we can't change the content of our minerals, but I think we have a quite well diversified basket within the PGMs, that if one of the PGMs have a higher price outlook we should benefit from this to store goes well for a profitable, sustainable business going forward.

Unidentified Company Representative

Perfect. Thank you. A question here on dividend, which asks, if you can confirm whether you'll be paying two dividends, one in April, one in December '23 as per 2022?

Jaco Prinsloo

Yes, and I think to end, actually, not to answer that another thing, but maybe just to clarify again, and I think, there was a question as well about windfall dividend. And we have a new policy now says that we are looking at to pay 2 dividends or dividend in two tranches for the year, so roughly about one thirds of our estimated dividend for the year during the half year and then final payment equivalent about two thirds at the end of the financial year.

So that is how the current policy is written by taking this policy on board. And as we mentioned, it's a minimum of 40%, and it could well be more -- we are looking to move away from a special or a windfall dividend like we have declared in the past two years where there was a windfall dividend. I think, during our extensive engagement with institutions, analysts and shareholders given the past year or two about our dividend policy.

There's certainly a lot of people indicated that, it's very difficult to forecast a windfall dividend, for instance in their modeling, because or once off dividend, and they would prefer us having a more stable, consistent and annual dividend policy. And that is what we've tried to set out too, and as I said, it will be two payments as the question has been asked, roughly one third of the perceived dividend for the quarter estimated in -- at the healthcare results, and then a two third final dividend at the end of the year.

Unidentified Company Representative

Perfect. Jaco, thank you very much. Given the possible decline in the use of platinum in the motor industry, is the Board planning for such eventuality further, what future vision has the Board for the Company?

Jaco Prinsloo

Look, I think it ties somewhat in with the previous question-and-answers. I said we have different components in our basket. I think they are two years and asking my personal view on it as well, the big factor with our current PGM basket in the market is how forced the uptake of electric or fuel cell vehicles would be compared to the combustion vehicles. And also, once you say, so you have, first of all, it's moving away from combustion, and then it's the ratio of fuel cell which will still boost -- will still be very good for the platinum market because of all assume platinum, but versus battery elements that useless medium. So, it depends on what your view is about how fast that would be able to roll out.

Certainly, from a mining perspective and most of the mining conferences and some presentation I've attended this. There's certainly a big risk that mines globally will not be able to meet the demand for the battery metals and the green energy metals going forward. And therefore, that rollout could well be slower than currently anticipated. I'm not unfortunately also not in position to tell you exactly when it'll happen and at what rate.

I do personally think that it's going to be slower than most people anticipate at the moment. I certainly think outside the first world countries, the more developed world certainly there's a lot of infrastructure and that they have to be in place to convert and move away from internal combustion engines. But I mean that view certainly plays a massive role on how you view the market going forward.

Unidentified Company Representative

A lot of investors seem to be calling for another special dividend. Would it be better to hold cash for further projects efficiencies or expansion? Personally, I think the current dividend strikes the right balance.

Jaco Prinsloo

Yes. Thank you. And I think, I've mentioned just in one of the previous answers that, we would try to move away now from special or windfall dividends. So, yes, we would try to maintain our dividend policy, and as I said, the current dividend policy allows us to distribute more. If we have periods of higher metal prices, higher production and then we are able to distribute more than the minimum 40%, but at least investors know that we get the minimum of 40% available.

Looking at future projects, the short to medium term projects, the items we at the moment say is in the pipeline that we know about. We sure that the cash holding cash reserves we currently have are able to prepare for those. And then, going forward into the future, we certainly will evaluate the needs for the cash and that decision will impact on us to say, is it a 40% or 50% or a 60% cash flow -- free cash flow distribution is will be determined on what we need to provide for going forward. And I think that's why the -- mentioned very importantly, the adjusted free cash flow.

She said if net of debt governance producer, we don't have any debt at the moment, so that's not the issue. And the projects that we would then, if we have to provide for them would be projects that we would announce and shareholders that we are aware would be aware of and what the benefit would be. So yes, we will continuously see that we select the right balance of providing for growth and providing consistent return to our shareholders.

Operator

That concludes the pre-submitted questions, but as you can see, we received a number of questions throughout today's presentation. And if I could just ask you to read out the questions and give response to it's appropriate to do so, I'll pick up from you at the end.

Jaco Prinsloo

Okay. Yes, so I see we have about within 10, 15 minutes. I think one of the first questions I see on the side here is, for example, saying regarding the share buyback program, why the Company does not buy more shares in the market, is that not at an attractive price?

I think we tried to balance share buybacks of dividend and we historically tried to do that to Anna have mentioned to you that, I think over 56 million shares bought back over the last number of years, it's been a significant thing. I think, also free our engagement with our shareholders. There's always the view for that more stable return. And in terms of evidence I've seen some shareholders mentioned, said rather return the dividend and we decide in which company to buy the share speed in Sylvania or somebody else.

So that's always the one argument. There's some of our shareholders say they prefer the dividend and you can have a clear policy. We do have ever from time to time, the Board will assess if we believe there's potential weakness in the market, or if we do require shares for management or employee share buyback programs are in share programs, then we might buy back in the market when the price allow. But we currently don't have any formal share buyback programs in house. And as I said, we will the Board continue to view that opportunistically going forward.

So if that answers that question, I'm looking at another question that says, are you holding very large amount of cash? Why and what are your plans to use it? So we do take several factors into account when we look at our cash holding. We look at providing certainly for our -- typically about four month working capital provision that in the maturity like we have seen just in recent years during the COVID period, we are able to cover our commitments and salaries for the business.

We keep working capital. We make provision for our taxes and capital allocations, and also for potential opportunities. So that's how we consider in our cash holding and we will consistently review our cash holding together with the free cash flow generation going forward from this side that is specific dividend payment going forward. I would say, if we have guided the minimum amount. And this overall requirement for cash will play around in preparing higher than the dividend going forward.

Another question says or I'll just ask, are there any Chrome -- is there any Chrome associated with the northern limb projects? So the northern limb project does not contain any current at all. So it's below the detectable, and then on almost of those projects. So it's pure PGM projects to well one benefit from it. So probably on the downside is there is no Chrome revenue from any companies.

But on the positive side, one of the key impacts with your smelters being able to treat your concentrate from this project is what the current content is and our current operations is currently viewed very negative in that new concentrate for smelters. Whereas in these projects, they are in our perm, so that should help us in terms of the commercial marketing of concentrates.

Talking about Chrome, however, on the further Dump Operations we are looking at, third party opportunities, as I've mentioned. They are obviously growing billings and run of mine material. And very increasingly finding that, the partners or third-parties we are engaging with want more exposure to PGMs following the success we have had at the end of a number of years or some of our peers in the market.

And in those instances, we might take up slightly more exposure to the Chrome market, which actually at the moment is on year record high price or very attractive pricing at the moment in the Chrome market. So, there will be a combination of balancing the PGM versus Chrome exposures on new products, not o the Dump side, but on the exploration side, the northern one.

There was another question that also asked about the cash flow. I think I have answered that one. Then another question about share buybacks, I think I'll answer that one. Then there is a question that says that the Company produces 72,000 ounces for the year. Currently spot PGM, the net profit for the year is likely to be around $50 million versus market consensus of $60 million, should the Company update the market on this?

Now, as I mentioned and the slide in the presentation and also I think we mentioned in our status, we always, for these kind of presentations use a spot price after. So, what is the current spot price we are seeing and it is at the time when particularly say, the last two weeks average before we do the presentation. And then, we do indicate consensus and the institution sensitivities to see how it would be. So that is indicative outcome and we always warn the site that is an indicative view only.

We obviously, as we get more accurate information, so twice a year when we do the updates to these investor presentations, we update those the markets based on the spot price and give the sensitivities in terms of the market consensus and the outlook. But on guidance certainly on a quarterly basis, we assess where we are going with our ounce production, and as I said, we after our second quarter increase the guidance.

We will assess at the end of our third quarter again, where our production guidance is going. And then, we'll certainly update the market on a quarterly basis on our PGM forecast for the year. So, yes, we do update the market as I said, quarterly on the answers, and then twice a year based on the market outlook on the pricing. There is a question says, are there any dated suggested what the demand for PGMs may be required from power cells that you are aware of.

Now, certainly there are different types of cells. So when you look at the fuel cells, yes, what I -- you can -- most of the analysts will say to you can be up to double the loading for fuel cell compared to internal combustion catalysts. I'm not qualified to tell you exactly the numbers. There are some research of analysts and suppliers that do calculate some of it. But it is quite variable between the different technologies used, the different suppliers forecast that. I think, the general view is from a platinum point of view, certainly equally significantly more platinum in a fuel cell than in auto catalyst, but I unfortunately can't quantify the number for you.

Then there's a question relating to power. It says, when do you expect the current power outages to stop and the power need to be returned to normal operation? So, again, we can follow on what are being communicated to us by the Eskom utility by government in South Africa. I've -- I certainly at the current forecast, the estimate use and the guidance from utility government and also some analyst are that the current situation would most probably continue until about June, July this year.

And there are three things that at the moment is impacting significantly on the current ground supply. The one is the most recently commissioned and both power stations with Lesedi and Mooinooi is not running at the design capacity. So there's a lot of work to try and improve that and a lot of work going in to get the power output those two up.

Then secondly, because of the aging infrastructure at our existing power stations, there's a lot of downtime and unplanned maintenance. So they're doing a lot of work to try and resolve that. And then thirdly, and that I think would be the big swing for the industry at the moment is that. One of the modules or big part of the nuclear power plant in South Africa in Koeberg is down for a planned upgrade, and they just necessary in order to extend the life of that power station by a number of years.

So that is forecast that will come back online later in the year. That's why the guidance we currently get on the power station is that it would be going into about the middle of this year. Saying that, I think, I've mentioned earlier that barring further significant deterioration in the situation, we don't anticipate any major or more significant down times where we do experience down times at the moment to we are progressing with backup power solutions so that we can mitigate that. And that, so I hope that answer that question.

There was another question just on the basket price where this heading. I think, the previous answers maybe addressed that. And there's another question. How can, please comment on the continuum underperformance of the share price with an extremely low PE ratio? And could you comment on your performance on the future performance of the rhodium? Can you comment on your performance on the future performance of the rhodium price?

I'll get last part of the question, but maybe let's best focus on the first part of it, but people often look at the fundamentals. We mentioned it's a low cost, low risk business, cash generative, five consecutive annual dividends, growing dividend for the Company. Growth cost base. Why massive cash balance almost third of the market cap? In cash reserves, certainly everybody expect the share price to trade higher. We expect the share price to trade iron would hope for it to trade higher.

So, unfortunately, we are not in control of it and the markets will do what the markets will do. I sometimes look at things, we think historically certainly if you look a few years back, I believe that shareholders might have thought and myself think, there's not enough clarity in the growth potential for the Company and in the future, production is one thing, I think. What I think probably is also playing quite a big role is the sentiment around South Africa and the power. You've just asked us about the power at the moment that I think plays a role and we see some of our peers also trading below what we think they should be trading.

And then probably one other important point is that us being at the host lines. That's a private company are not posting formal resource statements or estimates for that to illustrate the life of the project. People probably feel uncomfortable to predict the life without it being published. However, and I mentioned before that we -- our host mine relationship at [indiscernible] about [indiscernible] the biggest producer of Africa, so Africa, the biggest resources in the world for cream. So certainly we have a very positive outlook.

So yes, I can't explain it for you. I hope it improved and certainly, we have. So I think conscious of the time, I am unfortunately don't have time for further questions a summer, so yes.

Operator

Yes, Jaco no problem at all. Thank you very much for that. I think you've addressed all those questions you can from investors, and of course, the Company will review all questions submitted today and we'll publish those responses on the Invest Meet company platform. But just before redirecting investors provide you with their feedback, which know particularly important to yourself and the Company.

Jaco, could I just ask you for a few closing comments?

Jaco Prinsloo

Thank you, Alessandro. Yes. I think as we've pointed out and I think we illustrate for this financials, that Sylvania is a very attractive business [indiscernible] and we have a strong record of both in terms of performance as well as shareholder returns. So certainly, through a combination of dividends and buybacks, we would focus on building on that going forward.

I also believe that by leveraging on our experience and expertise over the years and by continuing to do what we do and have been doing, we'll continue to be able to add value to our employees, our communities and stakeholders of Africa as well as our shareholders in terms of not only continuing to make dividends, but also to ensure that we maintain and grow the current business so that we have a sustainable business for many years to come, we will be able to continue [indiscernible].

So thank you very much for the opportunity. Thanks for the all the support and we appreciate it. Thank you.

Operator

Yes. Thanks Jaco and Lewanne, thanks once again for updating Investor Day. Can I please ask investors not to close the session as you now be automatically redirected to your feedback in order that the management team can better understand your views and expectations. This will only take a few moments to complete, but I'm sure we'll be greatly valued by the Company.

On behalf of management team of Sylvania Platinum Limited, we'd like to thank you for attending today's presentation and good afternoon to you all.

Jaco Prinsloo

Thank you.