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Profiting from rhodium's price surge

The low-cost South African producer and developer of platinum group metals has just raised output for the fifth consecutive year, and is benefiting from a doubling of the rhodium price
August 13, 2018

The fourth quarter trading report from Aim-traded Sylvania Platinum (SLP:17.25p), a fast-growing and low-cost South African producer and developer of platinum group metals (PGMs) platinum, palladium and rhodium, made for an interesting read ahead of full-year results on Tuesday, 28 August. I included the shares at 14.5p in this year’s Bargain Shares Portfolio, and reiterated that advice at 17.75p (‘Bargain Shares: another chance to bag some bargains’14 May 2018).

The company has two lines of business: the re-treatment of PGM-rich chrome tailings material from mines in the North West Province; and the development of shallow mining operations and processing methods for low-cost PGM extraction. Its dump operations comprise seven active recovery plants that treat chrome tailings from mines across the western and eastern limbs of the Bushveld Igneous Complex.

The key point to note in the fourth-quarter update is that production hit a record level of 20,278 ounces (oz) of PGM, up 20 per cent on the third quarter, taking the 12-month total to 71,026 oz, the fifth consecutive year of record output. The positive trend is set to continue as management guidance points towards output of 71,000 to 75,000 oz for the financial year to end June 2019.

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