Sylvania Platinum Regulatory News (SLP)

Sylvania Platinum Limited

("Sylvania Platinum", "Sylvania" or the "Company")

(ASX: SLP, AIM: SLP)

Sylvania Platinum Ltd Quarterly Report to 31 March 2012

Sylvania Platinum Ltd, the low cost Platinum Group Metal ("PGM") processor and developer today announces its results for the third quarter ended 31 March 2012 from its PGM production and development operations in the Bushveld region of South Africa.

SUMMARY

·; EBITDA at Sylvania Dump Operations ("SDO") remains positive R5.7 million (US$0.7 million) despite production shortfall;

·; A four week strike action at host mines, unusual tropical storm activity and safety stoppages slowed production to 7,506 PGM ounces;

·; Production ramp up of the new expansion plant at Mooinooi commenced;

·; Construction of the Tweefontein plant progressing well;

·; Conditional agreement to dispose Bushveld magnetite iron ore assets for £13.7m;

·; Cash on hand of R175 million (US$22.8 million) at period end;

Commenting on the quarterly results Terry McConnachie, Sylvania CEO, said "All in all a very disappointing quarter due to industrial action at the host mines where striking staff prevented our crews, who were not on strike, from entering the mine premises. This quarter has shown the importance of operating a business with healthy margins as the SDO still managed to report an EBITDA profit of R5.7 million (US$0.7 million) despite losing more than four weeks of production. During the quarter the company has made good progress with the Volspruit mining operation and the exploration of the Northern limb portion is progressing according to plan. Good progress has been seen at the expanded Mooinooi operation with the major impact expected in the final quarter of this financial year. The new Tweefontein plant construction is progressing according to plan and this will secure the company's anticipated ramp up to full steady state production. Finally, I am really pleased to see good progress on the corporate projects, with the completion of the Iron Ore spin out and the delisting from the ASX expected to be concluded shortly."

OVERVIEW

As reported in the operation and production updates released on 19 and 27 March 2012, Sylvania Dump Operations ("SDO") have been adversely affected during the reported quarter by a four week strike action at the host mines in the Bushveld complex, unusually severe weather conditions and safety related stoppages. Sylvania was able to operate the plants in the eastern limb during the strike and was able to process dump material only. However the western operations of Mooinooi and Millsell were unable to work at all during this four week period. An increase in the well documented safety related stoppages also impacted the operations of the SDO during the quarter as well as at the host mines. The reduction in processing days has resulted in the SDO production for the quarter ended 31 March 2012 totalling 7,506 ounces. Despite these setbacks, SDO have still achieved a positive EBITDA of R5.7 million (US$0.7 million) and have invested R23 million (US$3 million) in capital projects. As a result of the low ounce production revenue decreased from US$10.4 million to US$7.8 million for the quarter, costs per ounce rose 58% from US$499/oz to US$787/oz. The construction of the Tweefontein plant is progressing well and the engineering designs for phase 2 are underway, which will see Tweefontein also expand into the MG2 processing arena.

Strike action has now ceased at the host mines allowing the immediate production ramp up of the new Mooinooi expansion plant to commence. Sylvania remains confident that the Mooinooi plant's expanded production capability will allow SDO to produce approximately 5,000 PGM ounces per month.

The Tweefontein project is well underway with all earth works and civil construction for the thickener and floatation plant bases nearing completion. The strike action has caused the scheduled completion date to move from end August to September 2012 with all efforts being made to minimise the delay.

The Chrome Tailings Re-treatment Plant ("CTRP"), a joint venture company in which Sylvania has a 25% interest, produced 352 ounces for the quarter ending 31 March 2012.

On 30 December 2011, Sylvania announced that it had applied to the Australian Securities Exchange ("ASX") and been given conditional approval under Listing Rule 17.11 to be removed from the official list of the ASX. To date, the conditions of the delisting have been met and Sylvania is expected to be removed from the ASX on 27 April 2012 with a three month trading platform in place until 27 July 2012.

On 27 February 2012, Sylvania announced an update on the progress of its intention to dispose of the magnetite iron ore assets owned by Sylvania group companies and located on the Northern Limb of the Igneous Bushveld Complex.

On 7 March 2012 a further announcement was made detailing the legally binding conditional agreement entered into with Mercury Recycling Group Plc ("Mercury") whereby Mercury will acquire the iron ore assets for approximately £13.7 million by issuing 203,022,285 fully paid ordinary shares in Mercury ("Consideration Shares") to Sylvania (the Sale and Purchase Agreement "the SPA"). The SPA is conditional, inter alia, on the approval of shareholders of Mercury and re-admission to trading on AIM of the enlarged Mercury Group.

The Company had R175 million (US$22.8 million) cash available at 31 March 2012.

Aquarius Platinum SA (Pty) Ltd ("AQPSA") submitted the Mining Right Application ("MRA") for the Joint Venture ("JV") Everest North project to the Department of Mineral Resources ("DMR") in April 2012.

Summary Sylvania Platinum Performance

A. SYLVANIA DUMP OPERATIONS

Health, safety and environment

Sylvania had no lost time injuries during the quarter ended 31 March 2012.

Increased focus on health and safety compliance at all Sylvania operations by Sylvania management, management of our host mines and legislative bodies has been evident during the past quarter. As a result of this, production at some operations was interrupted in order to rectify identified safety deviations and to improve the overall condition of all operations.

The Company remains committed to maintaining the lost time injury frequency rate at zero through continued education, improving safety procedures and working to the highest possible standards.

Operational and Financial Summary

The impact of the loss in production days during the quarter is evident in the summary below when compared to previous quarters.

Millsell

The Millsell operation produced 998 ounces for the quarter ended 31 March 2012, against 2,052 ounces in the previous quarter. Millsell's production during the past quarter was significantly impacted by the lack of current arisings from the host mine during the whole of January 2012 due to the Christmas break. As mentioned earlier this is in addition to a safety stoppage imposed on the host mine as well as the total loss of production during the four week labour strike. During the current quarter, material from the old Mooinooi dump continued to be transported to Millsell for retreatment in addition to the material from the Waterkloof dump, in order to optimise feed grade to the PGM plant and reduce the chrome content in the final concentrate. Test work on the material from the old Elandsdrift dump, located close to Mooinooi, has also been assessed and will be used to supplement feed to the Millsell plant in the following quarter. Current arisings from the Millsell mine were treated at the Millsell plant during the current quarter, when available, and these arisings remain an important feed source for the plant in the future. Based on current resource planning, the second pass treatment of the over one million tonne primary dump is scheduled to commence towards the end of 2013. Cost per ounce was at R7,552/oz ($987/oz) for the quarter, which is significantly higher than the R3,983/oz ($485/oz) during the previous quarter. The primary reason for the high costs is due to lower PGM ounce production.

Steelpoort

The Steelpoort operation continued to perform well during the past quarter and produced 2,697 ounces for the quarter to 31 March 2012 being lower than the previous quarter's 3,365 ounces. Production was negatively impacted by unusually heavy rains on the Eastern Limb during January and February 2012, and by the four week host mine labour strike from 27 February 2012. In an effort to lift the production ounces, the plant was able to process its high grade dump feed and treated a combination of first pass Steelpoort Dam 3 dump material, and dump feed from the Montrose dump which has now been depleted. The second pass on the Steelpoort Dam 1 will commence during the next quarter, with supplement feed from the Doornbosch LG6 dump, and current arisings from the Steelpoort mine. The cost per ounce was R2,665/oz (US$348/oz), compared to R2,478/oz (US$302/oz) in the previous quarter.

Lannex

Operations at Lannex produced 1,547 ounces for the quarter to 31 March 2012; 24% down on the previous quarter's 2,030 ounces. In addition to the negative impact of the unusually heavy rainfall and strike at the host mine, production was hampered by breakdowns of key process equipment. A new mechanical mining feed installation was completed during the quarter which will improve throughput and ounce production during the next quarter. The cost per ounce was R5,582/oz (US$730/oz) for the quarter, compared to R4,382/oz (US$534/oz) in the previous quarter, primarily due to low ounce production.

Mooinooi

The Mooinooi operation produced 555 ounces for the quarter ended 31 March 2012, compared to 1,354 ounces in the previous quarter. Mooinooi's production during the past quarter was significantly impacted by the lack of current arisings from the host mine, by the total loss of production during the four week strike at the host mine and safety stoppages imposed during the quarter. Significant focus is being placed on this plant by both the SDO and host mine management teams to ensure the planned production levels are achieved and positive results are emerging.

Doornbosch

The Doornbosch plant produced 1,709 ounces for the quarter to 31 March 2012, significantly lower than the 3,288 ounces of the previous quarter. The Doornbosch plant was also impacted by both the lack of current arisings, the four week host mine strike and was also hit hard by the unusually heavy rainfall in January and February 2012. This impacted the mechanical mining of dump material which lead to the plant standing idle without feed from either the host mine or the dumps during this period. Cost per ounce for the current quarter was R3,999/oz (US$523/oz), significantly higher than the R2,135/oz (US$260/oz) in the previous quarter due to the low ounce production.

Tweefontein

Construction on the Tweefontein plant commenced in December 2011 and although the construction has been delayed by the strike, the contractors on site are making every effort to make up the lost time.

The existing Chrome plant, previously operated by the host mine, has been taken over by Sylvania and will form part of the new Sylvania Tweefontein plant.

A power supply agreement for the project has been secured. The power supply to the host mine will be increased by 2MVA for the interim while the new sub-station is being built. The new sub-station will supply power to the Tweefontein plant and will incorporate upgraded infrastructure for the Tweefontein mine.

The engineering stage for phase 2 of the Tweefontein project has been awarded to an external contractor and final designs are expected in August 2012. The phase 2 work will allow run of mine ("ROM") ore from a new adit at the host mine to be processed by Sylvania, thus increasing production capacity as well as creating a new tailings dam. Phase 1 of the Tweefontein Plant caters for the treatment of the increased ROM fines contemplated in phase 2 of the project.

B. SYLVANIA PLATINUM

Chrome Tailings Retreatment Plant ("CTRP") (25% Sylvania) Managed by AQPSA (50%)

CTRP production has improved consistently over the quarter from 263 ounces to 352 ounces attributable to Sylvania. Although production was still below target for the quarter ended 31 March 2012, CTRP management are confident that ounce production will continue to improve and targets will be achieved during Q4 of FY2012.

Total PGM Production for Sylvania Platinum

For a graph showing the Sylvania Platinum Quarterly production please click on the following web link (Graph 1):

http://www.rns-pdf.londonstockexchange.com/rns/2126C_-2012-4-27.pdf 

C. NORTHERN LIMB OPERATIONS

Volspruit Project

The Volspruit Project is located at the Southern end of the Northern Limb of the Bushveld Igneous Complex in South Africa. This project has two main areas of focus, namely the development by Sylvania of the open-cast mine and the concentrator and the Sylvania Joint Venture development of a smelter and refinery complex.

The Mining Right Application ("MRA") and a request to transfer the prospecting rights from Pan Palladium SA (Pty) Ltd to the newly formed Volspruit Mining Company (Pty) Ltd, both Sylvania Group companies was submitted to the Department of Mineral Resources ("DMR") in October 2011. The Limpopo Department of Economic Development, Environment and Tourism ("LDEDET") have officially accepted the Environmental Scoping report.

The surface layout for the mine has been completed and together with the concentrator and plant infrastructure reports will be included in the Environmental Impact Assessment ("EIA") and the Environmental Management Plan report as required by the Minerals & Petroleum Resources Development Act ("MPRDA").

The pre-feasibility study for the smelter and refinery commenced in January 2012, and is expected to be completed during Q4 FY2012.

A 39 hole drill programme (5,035m, excluding re-drills) was executed between September 2011 and March 2012. The purpose of the drill programme was to investigate:

·; the faulted boundaries of the northern ore body through inclined NQ cored boreholes;

·; faulting in the southern ore body through inclined cored boreholes;

·; areas outside the known ore bodies; and

·; in-fill drill the southern ore body to upgrade its resource classification from Inferred to higher categories.

All drill sites have been fully re-habilitated.

The Resource Statement for the Volspruit ore bodies is currently being updated with the new drill hole information and will be available during May 2012.

Northern Platreef Project

Nonnenwerth

Assay results from the six closely spaced cored boreholes reported on previously have been received and processed. The close spaced drilling allowed reasonable robust semi-variograms to be created. The variograms give ranges of 44m for 3E PGM, 50m for Copper and 42m for Nickel. The variograms support the geological observations that the mineralisation has limited continuity. This is critical to allow for the further planned exploration work required to allow the Mining Right Application to be submitted at the end of 2013.

Harriets Wish

Drilling commenced on 23 March 2012 with three diamond drill rigs exploring the new PGM reef horizon reported by Platinum Group Metals Ltd on the adjacent farm, Ketting. On 31 March 2012 a total of 838.23m were drilled reaching depths between 380.20m, 334.5m and 123.5m respectively, all still in the anticipated Waterberg cover. Mineralisation has been intersected and the results of the assays will be released in due course.

D. SYLVANIA GROUP

Vygenhoek project (Everest North)

Sylvania and AQPSA announced on 3 June 2011 that they had entered into a Heads of Agreement ("HOA") whereby Sylvania was tasked with the overseeing and the completion of a feasibility study to determine the economic viability of mining for PGMs on the Vygenhoek farm.

The Mining Works Programme and Social and Labour Plan for the Everest North project were completed during the quarter. These reports were submitted to AQPSA for inclusion in the MRA which was submitted to the DMR in April 2012.

The Environmental Scoping Report and the Public Participation Process report have been completed and were submitted to the Mpumalanga Department of Economic Development, Environment and Tourism ("MDEDET") in April 2012. The draft Environmental Scoping Report was also submitted to the DMR together with the MRA.

In terms of the HOA, upon approval of MRA by the DMR in favour of AQPSA and AQPSA contributing the right to the JV, Sylvania will pay R6 million to AQPSA. Sylvania and AQPSA will share equally in the profits and have equal representation in the management of the JV that will be formed to manage and oversee the project.

Minimum holding and selective buy-backs and removal from ASX official list

On 30 December 2011 Sylvania announced that it had applied to the Australian Securities Exchange ("ASX") for the Company to be removed from the official list of ASX. The application was approved with conditions under Listing Rule 17.11. Sylvania is currently listed on both ASX and the AIM Market of the London Stock Exchange ("AIM"). 

On 2 April 2012 Sylvania announced that it had completed simultaneous buy-back of (as required by ASX in terms of the aforementioned conditions):

·; common shares ("Shares") and depository interests ("DIs") from holders of parcels of Shares or DIs which are valued at less than $500 ("Unmarketable Parcel"), ("Minimum Holding Buy-Back"); and

·; Shares and DIs from holders of parcels of Shares or DIs valued at $500 or more but which comprise less than 5,000 Shares or DIs ("Selective Buy-Back"),

The buy-back closed at 5:00pm (WST) on 30 March 2012 and resulted in 486,909 shares being held by 761 shareholders being bought back and cancelled by the Company including:

·; 303,252 shares under the Minimum Holding Buy-Back; and

·; 183,657 shares under the Selective Buy-Back.

Notices to all shareholders who participated in the Buy-Back were sent out on 10 April 2012. A total of approximately A$148,507.25 will be paid based on the buy-back of 486,909 shares at A$0.305 per share.

To date Sylvania has complied with the conditions of the delisting as set by the ASX and disclosed in the quarterly announcement on 27 January 2012 and will be removed from the ASX official list on 27 April 2012 with a three month trading platform in place until 27 July 2012.

Iron ore assets update

On 27 February 2012 Sylvania announced an update on the progress of its intention to dispose of the magnetite iron ore assets owned by Sylvania group companies and located on the Northern Limb of the Igneous Bushveld Complex.

On 7 March 2012 a further announcement was made detailing the legally binding conditional agreement entered into with Mercury Recycling Group Plc ("Mercury") whereby Mercury will acquire the iron ore assets for approximately £13.7 million by issuing 203,022,285 fully paid ordinary shares in Mercury ("Consideration Shares") to Sylvania ("the SPA").

The Consideration Shares are to be issued at a deemed issue price of 6.75 pence, being the closing price of Mercury shares on AIM on 6 March 2012.

The Consideration Shares will be distributed to Sylvania shareholders as a dividend in specie, unless the distribution would result in a Sylvania shareholder holding a small number of Consideration Shares, in which case those Mercury shares will be sold for the benefit of the Sylvania shareholder. Upon such distribution, Sylvania shareholders will hold approximately 85% of the issued share capital of Mercury prior to the issue of any shares pursuant to a future placing of shares by Mercury to fund further development of the iron ore assets and general working capital requirements.

The acquisition of the Iron Ore Assets will constitute a reverse takeover for Mercury under Rule 14 of the AIM Rules for Companies and is therefore conditional upon the approval of Mercury's shareholders at a general meeting (the "General Meeting").

The SPA is conditional upon the fulfilment of certain conditions including, inter alia:

·; completion of certain outstanding due diligence by Mercury in relation to the Iron Ore Assets and no material adverse matters arising prior to the posting of the Admission Document;

·; completion of certain outstanding due diligence by Sylvania in relation to Mercury and no material adverse matters arising prior to the posting of the Admission Document;

·; the completion of the restructuring of the corporate group currently holding the Iron Ore Assets; and

·; approval by Mercury shareholders and re-admission of the enlarged Mercury Group to trading on AIM.

CORPORATE INFORMATION

Registered office: Sylvania Platinum Limited

Clarendon House

2 Church Street

Hamilton HM 11

Bermuda

Postal address: PO Box 524

Wembley WA 6913

Australia

CONTACT DETAILS

South Africa: Terry McConnachie Louis Carroll

(CEO) (Director/Assistant Company Secretary)

Sylvania Platinum Limited Sylvania Platinum Limited

+27 (11) 673 1171 +44 (0) 7969 170 622

Australia: Richard Rossiter Grant Button

(Chairman) (Director/Assistant Company Secretary)

Sylvania Platinum Limited Sylvania Platinum Limited

+61 (8) 9226 4777 +61 (8) 9226 4777

United Kingdom: Samantha Harrison Martin Eales/James Kelly

Ambrian Partners Limited RBC Capital Markets

Nominated Advisor Joint Broker

+44 (0) 20 7634 4700 +44 (0) 20 7653 4000

Graham Herring/Beth Harris

Newgate Threadneedle Communications

+44 (0) 20 7653 9855

Sylvania Website: www.sylvaniaplatinum.com

Rule 5.3

Appendix 5B

Mining exploration entity quarterly report

Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001, 01/06/10.

Consolidated statement of cash flows

Payments to directors of the entity and associates of the directors

Payments to related entities of the entity and associates of the related entities

Non-cash financing and investing activities

Financing facilities available

Estimated cash outflows for next quarter

Reconciliation of cash

Changes in interests in mining tenements

Issued and quoted securities at end of current quarter

Description includes rate of interest and any redemption or conversion rights together with prices and dates.

Compliance statement

1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 4).

2 This statement does give a true and fair view of the matters disclosed.

Sign here: Date: 27 April 2012

Louis Carroll

Director/Company Secretary

Notes

1 The quarterly report provides a basis for informing the market how the entity's activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.

2 The "Nature of interest" (items 6.1 and 6.2) includes options in respect of interests in mining tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2.

3 Issued and quoted securities The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities.

4 The definitions in, and provisions of, AASB 1022: Accounting for Extractive Industries and AASB 1026: Statement of Cash Flows apply to this report.

5 Accounting Standards ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.

== == == == ==