“With a feasibility study due to be completed within three months, Everest North provides both a significant additional share price driver and a significant future potential source of platinum group metal production,” Richard Chase from Ambrian Partners said in a note dated 17 May 2007.
Ambrian has a 12-month price target of 130 pence a share on Sylvania.
On Wednesday, Sylvania’s AIM-traded shares were two percent higher at 84.5 pence, well off the 30 pence low in mid-January this year.
Click Here to subscribe to our daily newsletterEastern Platinum owns two thirds of the deposit and Sylvania the other third. The deposit outcrops on Sylvania’s portion of the bowl-shaped orebody, giving the AIM-traded company leverage when it comes to negotiating terms with Eastern Platinum on a venture to exploit the deposit.
Sylvania’s drilling, which will be completed in June, has shown an in situ deposit of 833,000 oz of platinum group metals in the UG2 reef. Platinum makes up 54%, palladium 34% and rhodium 11% of the metals.
If a decision is taken to mine the deposit, developments will be funded from cash flows from existing operations. Plans show mining will start in October 2008.
A letter of intent has been signed with Eastern Platinum.
Sylvania predicts it will have attractive cash flows by extracting platinum group metals from a number of chrome tailings, most of which are owned by Samancor. It foresees an operating margin above 70%. The tailings dumps containing about 500,000 oz of platinum group metals in eight million tonnes of material.
Platinum production starts in June from its 74% owned projects, with just 690 ounces a month. It will build up to almost 6,700 ounces/month some 18 months later when all four planned platinum recovery plants are in operation. Cash costs are predicted to be roughly half those of the platinum miners.
Sylvania has a 25% stake in the Chrome Tailings Retreatment Project, in which Aquarius Platinum has a 50% holding.
SLV Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
