asx ann yesterday comments please, page-12

re: asx ann aim trading SYLVANIA RESOURCES
Platinum and chrome to come on stream in South Africa
Rhona O'Connell
Posted Tue, 25 Jul 2006

LONDON (Mineweb.com) -- Sylvania Resources, already listed on the Australian Stock Exchange (ticker symbol ASX:SLV) is aiming to widen its shareholder base by commencing trading on AIM (ticker symbol, SLV/L) on Thursday July 20 following a placing that raised £12 million (US$22 million), taking the market capitalisation of the company to £56 million or $103 million.

While the company is incorporated in and does not have a Johannesburg listing, its principal activities are exploration for platinum group metals (PGMs) in South Africa and extraction of PGMs from chromite tailings. To this latter end the company holds, through its South African subsidiary Sylvania SA, a 25% interest in the Chrome Tailings Re-Treatment (CTRP) project in the western Bushveld. Sylvania is investigating Aquarius’s Everest North PGM project on the eastern Bushveld and has an agreement with Samancor Chrome for the production of chrome to be re-sold to from Samancor’s tailings. Following the chrome recovery cycle, PGM recovery is reckoned at a monthly 1,450 ounces.

The CTRP joint venture is managed by Aquarius Platinum Limited (50%) and operates a purpose-built minerals processing plant at the Xstrata-owned Kroondal mine for the generation of a PGM-bearing concentrate. The concentrate is to be sold via offtake agreements with Rustenburg Platinum Mines and Impala Refining Services. The third joint venture partner in this operation is GB Mining & Exploration.

Production of PGMs started in January 2005 with planned annual full-production target of 28,000 PGM ounces of PGM per annum from the retreatment of approximately 20,000 tonnes per month of chromite tailings. Life of mine is expected to extend to 2016. The company believes that costs will be well contained through the use of existing infrastructure; only a flotation circuit is necessary for the extraction process and costs are estimated at $180/ounce PGM initially, dropping to $170/ounce when at full capacity.

It would seem that there have been some technological difficulties to be resolved, though they were played down by the company. At the end of December recoveries were running at “over 40%” and Aquarius commissioned test work by South African minerals lab Mintek to examine the metallurgical characteristics of the feed sources (which include current tailings from the Kroondal mine itself along with old tailings from Bayer and Xstrata operations). The technology has now been proven and Sylvania reports that preliminary results from Mintek are providing a strong basis for improved performance in the future.

Sylvania has an option to acquire Aquarius’s interest in Everest North and has initiated a detailed feasibility study on PGM recovery. Sylvania is prospecting at the area at its own cost and acting as contractor to Aquarius. Once the project’s viability is proven, Sylvania will assist Aquarius to obtain a mining right that will subsequently be transferred to Sylvania – at which point Sylvania will pay a further R6 million (US$856,000) to Aquarius over and above the R2 million paid already.

Previous work had outlined a resource of 4.2 million tonnes grading 5.87 grammes/tonne 4 PGE (platinum, palladium, rhodium and gold) giving an inferred resource of 796,000 ounces PGE. Mining is planned to commence in June 2008 although this is still subject to regulatory approvals including the grant of the mining lease. Management is flexible on the operating plans and is looking at the viability of a stand-alone mining and processing operation, while it will also consider the benefits of working in cooperation with Aquarius’s Everest South, which is already in production.

Sylvania’s chrome production interests revolve around an agreement concluded in October 2005 with Samancor under which Sylvania will wash approximately 30,000 tonnes per month of dormant Samancor tailings along with current arisings from Samancor’s Millsell and Waterkloof mines; the chrome will be sold back to Samancor on commercial terms. Sylvania also has the right to process the tailings from this operation with a view to PGM extraction for sale under offtake agreements. The company therefore intends to construct PGM recovery plants similar to that at the CTRP joint venture, which lies only 4.2 kilometres away; current plans expect recovery of approximately 1,450 ounces of PGM per month, 17,400 ounces a year. A chrome washing plant is accordingly under construction. The company’s equity participation in the chrome retreatment will be 74% with 6% held by a self-funded BEE, while Sylvania’s interest in the PGM extraction consortium will be 100% initially, reducing to 50% once negotiations with Aquarius have been completed.

These operations are all early stage and clearly demonstrate the scope for low cost good margin production. Management would appear to have the appropriate track records to bring this about. The company’s Chairman is Ed Nealon, who has more than 30 years’ experience in the mining industry including with Anglo American and Rio Tinto. More recently he conceived of and built the Kroondal Mine for Aquarius. CEO, Terence McConnachie, has 25 years’ experience in mining and beneficiation and was the founder of South African Chrome & Alloys which has been built from scratch to an asset base of over $350 million.


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