Quick Glance on Two Metals Mining Stocks - Sylvania Platinum & Cora Gold

Summary

• Sylvania Platinum reported revenue of USD 114.1 million in FY2020, which increased by 62 percent year on year.
• It produced 69,026 ounces of 4E PGM in FY2020 and sold it at an average basket price of USD 2,015 per ounces.
• Cora Gold received a positive result from the scoping study performed at the Sanankoro gold project.
• Sanankoro gold project is expected to have an IRR of 107 percent and NPV of USD 41.5 million at a gold price of USD 1,500 per ounces.

Sylvania Platinum Limited (LON:SLP) and Cora Gold Limited (LON:CORA) are two precious metals mining stocks. Shares of SLP and CORA were down by about 7.11 percent and 1.33 percent, respectively from the previous closing price (as on 8 September 2020, before the market close at 12:50 PM GMT+1). SLP and CORA had a market capitalization of around £175.43 million and £17.45 million, respectively.

Sylvania Platinum Limited (LON:SLP) - Balance sheet remains debt-free

Sylvania Platinum Limited is a Bermuda based precious metals mining company. The Company has mining rights for projects such as Volspruit, Northern Limb Exploration and Grasvallyon in South Africa. It has operating complexes in Millseell, Mooinooi, Lesedi, Doombosch, Lannex and Tweefontein.

FY2020 results (ended 30 June 2020) as released on 7 September 2020

In FY20, Sylvania Platinum reported revenue of USD 114.1 million, which increased by 62 percent year on year from USD 70.5 million in FY19. The revenue was underpinned by an increase in average basket price for platinum group metals. The cash cost increased by 14 percent year on year to USD 636 per ounces that was mainly due to the fixed costs. The adjusted EBITDA more than doubled to USD 69.6 million in FY20 from USD 30.2 million in FY19. The net profit was USD 41.0 million in FY20 that increased from USD 18.2 million in FY19. The earnings per share were 14.62. Sylvania Platinum announced a cash dividend of 1.6 pence per share. In FY20, the Company made a capital expenditure of USD 5.4 million. As on 30 June 2020, Sylvania had cash of USD 55.9 million, and the does not have any debt on the balance sheet.

Operational Highlights in FY2020

Sylvania dump operations (SDO) produced 69,026 ounces of 4E PGM (includes platinum, palladium, rhodium and gold), which declined by 4 percent year on year in FY20. The lower production was due to the covid-19 lockdown following which production of 10,000 ounces was lost. PGM (platinum group metals) feed declined by 11 percent year on year to 1.10 million tonnes in FY20 from 1.23 tonnes in FY19. 4E recovery improved by 15.0 percent to 56.9 percent in FY20 due to Mooinooi MF2 (milling and floatation technology). The PGM (platinum group metals) average basket price increased by 58 percent year on year to USD 2,015 per ounces in FY20 from USD 1,277 per ounces in FY19. The basket price was driven by an increase in palladium and rhodium prices. The Company halted production from 26 March 2020 as per the South African government's covid-19 guidelines, and it resumed operation at a reduced capacity in May 2020. The mines were fully operational from June 2020.

Share Price Performance Analysis

1-Year Chart as on September-8-2020, before the market close (Source: Refinitiv, Thomson Reuters)

Sylvania Platinum Limited's shares were trading at GBX 59.45 and were down by close to 7.11 percent against the previous closing price (as on 8 September 2020, before the market close at 12:50 PM GMT+1). SLP's 52-week High and Low were GBX 68.00 and GBX 24.00, respectively. Sylvania Platinum had a market capitalization of around £175.43 million.

Business Outlook

The Company acknowledges the challenges due to the pandemic and highlights that the second wave of coronavirus could hinder the operations at the facilities. It is focused to continue operations and targets PGM production of around 70,000 ounces for FY21. The processing modification at the Mooinooi project would is expected to complete in H1 FY21, and the secondary milling and floatation module at Lesedi is scheduled for H1 FY2022. Sylvania Platinum is reviewing the Volspruit and Northern Limb projects, and it would either develop the project or put it for sales in the future.

Cora Gold Limited (LON:CORA) - Secured USD 21 million for the development of the Sanankoro project

Cora Gold Limited is a British Virgin Islands-based company that is engaged in the development and exploration of mineral projects. The Company has an interest in gold projects in Senegal and Mali in Africa. The project areas of the Company are categorized under Sanankoro project area, Yanfolila project area and Diangounte project area.

H1 FY2020 results (ended 30 June 2020) as released on 7 September

In H1 FY20, Cora Gold completed the scoping study of Sanankoro gold project situated in Southern Mali. As per the study, the project has the potential to generate an internal rate of return (IRR) of 107 percent, which is calculated at the gold price of USD 1,500 per ounces. Sanankoro gold project is expected to generate NPV of USD 41.5 million at a discount rate of 8 percent. It has discovered two oxide gold zones of 1.5 kilometres each near the surface at the project. Along with Hummingbird Resources, Cora Gold performed a bulk sampling of ore in which gravity separation of ore was done to check the feasibility to transport ore to long distance of more than 100 kilometres to bring down the capital expenditure. The Company got a positive outcome from the sampling programme. Cora Gold identified sample assays of gold that depict 57.2 grammes of gold per tonne (gt), 11.8 gt, 5.99 gt and 3.97 gt at Medina Foulbe license in Senegal. At the Diangounte project in Western Mali, two targets were identified, and the sample showed 14.1 grammes of gold per tonne (gt) and 12.1 gt. As on 30 June 2020, Cora Gold had cash of USD 3.6 million. In June, the Company signed a termed sheet with Lionhead Capital Advisors to fund the Sanankoro gold project. The term sheet is for USD 21 million that includes USD 6 million from equity financing, USD 5 million from convertible loan note and USD 10 million from debt financing. In April 2020, the Company issued close to 61 million shares at 4.75 pence per share. Cora Gold raised approximately £2.88 million through the new share issue. In March 2020, Cora Gold entered into a deal with International Drilling Company Africa to drill 2,000 metres at Madina Foulbe Permit. The drilling of 642 metres was completed by April 2020 when the programme was halted due to the covid-19 restrictions. Cora Gold has incurred a capital expenditure of USD 37,360 related to the drilling programme.

Share Price Performance Analysis

1-Year Chart as on September-8-2020, before the market close (Source: Refinitiv, Thomson Reuters)

Cora Gold Limited's shares were trading at GBX 8.88 and were down by close to 1.33 percent against the previous closing price (as on 8 September 2020, before the market close at 12:50 PM GMT+1). CORA's 52-week High and Low were GBX 15.45 and GBX 4.00, respectively. Cora Gold had a market capitalization of around £17.45 million.

Business Outlook

The Company is planning to complete the definitive feasibility study (DFS) of the Sanankoro gold project by the end of 2021. Cora Gold has appointed Digby Wells Environmental to take care of the environmental assessment class at Sanankoro. The term sheet secured for the Sanankoro gold project would help to keep the development on track. The Company highlighted that 1 February 2020, its license for the Sanankoro project in Yanfolila gold belt of Southern Mali. The Company has applied an application for the new permit.