Sylvania Platinum Regulatory News (SLP)

SYLVANIA PLATINUM LIMITED

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

(ASX: SLP, AIM: SLP)

Final Results

Audited Final Results for the year ended 30 June 2011

Sylvania Platinum, the low cost Platinum Group Metal ("PGM") processor and developer, today announces its audited final results for the year ended 30 June 2011. The annual report and accounts for the year ended 30 June 2011 are available at the Company's website at www.sylvaniaplatinum.com and will be posted to shareholders shortly. Unless otherwise stated, the financial information is presented in US Dollars.

Financial Highlights

·; Revenue increased by 79% to $46,872,232 ($26,115,145 FY10),

·; $7,708,176 Net operating cash inflow (Outflow $2,660,627 FY10) a 390% turnaround,

·; Net profit after tax of $1,608,126 (Loss after tax of $7,781,911 in FY10),

·; $12,340,998 Group EBITDA, 547% turnaround ($2,759,039 loss FY10),

·; $15,419,750 Sylvania dump operations ("SDO") EBITDA, 253% increase ($4,370,742 FY10),

·; PGM ounces sold increased by 61% to 42,232 oz (from 26,205 oz in FY10),

·; The average cost at operating level decreased by 2.3% to $601/oz ($615/oz FY10),

·; Average basket price increased by 15% to $1,166/oz ($1,015 in FY10),

·; PGE plant grade decreased by 9% to 4.55g/t (5.02g/t FY10),

·; Group cash balance $23,497,092 at 30 June 2011 ($20,107,830 FY10),

·; Group earnings per share increased to 0.39 cents (loss per share 3.11 cents FY10) a 113% turnaround.

Operational Highlights

·; Appointment of deputy CEO Nigel Trevarthen to directly oversee all production operations,

·; PGM production from five Sylvania Dump Operations ("SDO") tailings plants increased 67% to 41,013oz (24,605oz in FY'10)

o Plant feed production increased by 56% to 1,410,883 tonnes (907,032 tonnes in FY10),

o PGM Plant feed tonnes increased by 62% to 652,597 tonnes (403,825 tonnes in FY10),

o PGM recoveries increased by 8% to 43% (40% in FY10),

o Volspruit (Southern section of Northern Limb) Measured, Indicated and Inferred resource of 5 million ounces and Cu/Ni credits,

o Mining license application on Volspruit section submitted to the Department of Mineral Resources ("DMR"),

·; PGM production from SDO and Chrome tailings retreatment plant ("CTRP") for FY12 forecast to reach 60,000 ounces,

·; Additional target areas identified for further exploration on the Northern Limb (Northern part) Platreef Project

o Developing near surface mining and processing operations to exploit PGM's,

o First PGM alloy successfully produced during testing process.

Corporate Highlights

·; Re-domicile of Sylvania from Australia to Bermuda completed,

·; Commencement of on market share buy-back.

Post-Period Highlights

The Board has resolved to pursue the disposal of the magnetite iron ore project located in the Bushveld region of South Africa. Proceeds from the sale are anticipated to be in the form of equity in a listed entity which Sylvania intends to distribute to Sylvania Platinum shareholders.

Commenting, Sylvania Platinum CEO Terry McConnachie said; "The year saw real tangible benefits of an on-going restructuring programme that Sylvania has undertaken over the previous 24 months. Every period during the year saw the Company exceed operational performance targets in total output, efficiency and enhanced margins. Under the guidance of our new Deputy CEO, Nigel Trevarthen, we look forward to building on that success and continue to deliver on production targets for next year. Despite the challenging economic situation globally Sylvania has demonstrated its robust economic model.

Despite the Company's robust performance, Sylvania's share price and the performance of the PGM sector in general has been disappointing. A range of factors including rising industry costs, a strong Rand, safety stoppages, the well-publicised nationalisation debate in South Africa, and on-going weakness in the global economy have continued to weigh heavily on the sector. We believe that investment interest in the PGM sector will recover in line with the global economy and forecast an improvement in PGM prices.

Our challenge is to take Sylvania to the next level of expansion through low cost PGM production and progress our near surface mining development programme within the Northern Limb of the Bushveld complex. The directors have decided to spin out the iron ore assets to Sylvania shareholders as a dividend (in specie). This is aligned with our vision of achieving consistent growth, being profitable and returning as much of the profits as we can to shareholders."

CHAIRMAN AND CHIEF EXECUTIVE OFFICER's REVIEW

Group Overview and Strategy

The period covered within these results saw the first real benefits from a series of operational and strategic rationales that have been implemented over the last three years. The Board has committed to grow Sylvania to the next level by enhancing the Company's low cost platinum group metal production portfolio and deriving value from new surface or near surface resources.

Following a long term restructure of our tailings operations by Nigel Trevarthen who was appointed as deputy CEO following a career managing major precious metals mining and processing operations in Africa, Sylvania saw record production growth during this period with PGM ounces sold increasing by 61% to 42,232 (vs 26,205 in FY10). The record production results were as a result of the excellent foundation created by the original implementation team and a combination of optimised operational structures implemented by management at the plants and the commissioning of new plants. With improved elements within the production circuits at the Mooinooi and Lannex plants Sylvania has also been able to increase cost effective PGM recovery and lower operating costs to $601/oz (vs $615/oz in FY10) despite a negative Rand/Dollar exchange impact of $54/oz. Further circuits and new plants are expected to be commissioned in the next twelve months that will allow Sylvania to significantly build PGM production.

The strong operating performance was reflected in the significantly improved financial results with revenue increasing by 79% to $46,872,232 vs $26,115,145 in FY10. This was in part bolstered by the average basket price received which increased by 15% to $1,166/oz, compared to $1,015/oz in FY10. EBITDA from the dump operations improved 253% to $15,419,750 (vs $4,370,742 in FY10) resulting in an overall turnaround of 547% in Group EBITDA to $12,340,998 (vs negative $2,759,039 in FY10). The Company remains debt free with the cash balance increasing marginally to $23,497,092 (vs $20,107,830 in FY10). Towards the end of the financial year, Sylvania announced that it would implement an on-market share buy-back of up to 10% of the issued share capital of the Company.

Sylvania has also used the preceding 12 months to make significant steps forward in developing its near surface mining operations in the Northern Limb area. Sylvania Platinum is compiling feasibility studies aimed at developing new, low cost PGM production mines in the Northern Limb of the Bushveld Igneous Complex ("BIC"). These deposits are "massive" type ore bodies and are ideal for open pit mining operations. Traditionally near surface PGM material located in the Northern Limb has not been treated by the Bushveld smelters due to low PGM grades and the presence of other difficulties to extract base metals. Ongoing studies conducted by Sylvania have identified an extraction process route utilising proven technologies to recover base metals, such as Nickel and Iron and a PGM product of sufficient grade and purity fit for sale. Other South African platinum producers traditionally mine the high grade PGM deposits located within reefs at depth and accessed through significant underground mining operations. Since these surface deposits were typically much lower grade, this has allowed Sylvania Platinum to secure prospecting rights over a 25 km strike length in the Northern Limb and thus far over 8 million JORC compliant resource ounces (inferred) has been defined (at Volspruit as published in September 2010 and at the Northern Limb projects as published in March 2011). The Sylvania team is building a simple operational concept referred to as the "Ore to Metal" strategy for the recovery of low grade PGM ore. Following standard processing techniques such as crushing, milling and floatation the concentrate will be smelted through a standard DC Arc furnace to produce a metal alloy. Sylvania Platinum is working with alloy specialists and other specialist parties to upgrade the alloy using base metal refining techniques such that the remaining metals in the alloy will be acceptable to a standard PGM refinery. Sylvania Platinum is currently on schedule to begin production in FY14 from the first of their new mines in the Northern Limb at Volspruit. The study work concluded to date has produced physical alloy from the ore at Volspruit using a DC Arc furnace and this alloy was sent during February of this year for the final base metal extraction tests, which are extremely encouraging.

In the interim, the Company remains committed to growing shareholder value by optimising and expanding the PGM recovery operations from waste tailings and developing low cost near surface mining operations in the Bushveld Complex of South Africa.  

PGM Markets

The slow recovery in the global economy and demand for auto catalysts saw the average price of platinum increase by 17% to $1,708/oz in FY11 (vs $1,456/oz in FY10). Rand strength offset the gains for South African producers with the platinum price increasing marginally by 8% to R11,985/oz vs R11,072/oz in FY10. These gains were largely offset by increasing industry cost pressures resulting from rising power, water and labour costs as well as safety related stoppages.

Towards the end of the reporting period PGM prices weakened due to the deteriorating global economic outlook and the earthquake and tsunami in Japan which further delayed a demand driven recovery. Jewellery demand remains steady with China continuing to dominate. Investment demand for physically backed platinum and palladium exchange traded funds ("ETFs") continued to grow with many investors preferring to invest in ETFs rather than the underlying companies.

The constant talk of Nationalisation in South Africa has also negatively affected investors' appetite for South African mining operations.

Corporate

The Company made significant progress consolidating and streamlining its business activities during the year:

·; The Company raising its ownership in SDO to 100% (from 74%) via a transaction that saw Africa Asia Capital Limited become a 19.5% shareholder in Sylvania.

·; Sylvania also has under Licence a large iron ore target in the Northern Limb which it plans to develop separately from the Company's core PGM business. Proceeds from any disposal will be passed to Sylvania shareholders.

·; Shortly after the period end, on 4 July 2011 Sylvania appointed Royal Bank of Canada as joint broker to the company.

Outlook

The Board and executive management remain focused on delivering value from low cost PGM operations. Five PGM tailings recovery plants are now commissioned and work continuously to ensure they deliver maximum value and margin. The Company is also on course to develop a new set of low cost PGM production operations by unlocking the significant potential of near surface, low grade PGM deposits that Sylvania has already secured. Sylvania is focussing on establishing an integrated processing, smelting and refining capability for low grade ores.

The production achievements this year have been excellent and we are excited about the prospects that lie ahead for Sylvania as the Company looks to the next phase of growth and development. Our production target for the next 12 months is to produce 60,000 PGM ounces.

Sylvania continues to consider logical value enhancing acquisitions, restructuring and industry consolidation opportunities aimed at transforming the company into a significant PGM producer in the future.

Acknowledgements

On behalf of the Sylvania Board we want to express our gratitude to our fellow Board members, Dr Alistair Ruiters who retired as non-executive Director, and pay tribute to the Sylvania executive management team and all employees for their contributions to the strong performance of our Company in what has been an eventful year. We would also like to thank our shareholders for their continuing support as we develop the potential this Company has for significant, low cost, PGM recovery operations.

DEPUTY CEO'S REVIEW

Operating performance

A number of key initiatives intended to optimise performance at the plants were implemented during the 2011 financial year. Collectively, Sylvania's five operating plants have shown consistent improvements in production, outperforming targeted volumes and generating positive cash flow. The positive cash inflow from operating activities for the FY11 was $7,708,176 (versus a cash outflow in FY10 of $2,660,627) thanks to an increase in revenue and an unwavering focus on cost management which has made our 2011 financial period a record year in terms of tons processed, ounces sold increased by 61% and record Sylvania Dump Operations ("SDO") profits after tax of $5,659,814, a turnaround of $5,939,044.

Specifically the commissioning of the Doornbosch plant early in the year, the commissioning of the new tailings facility at Lannex and the heavy media separation ("HMS") plant at Mooinooi later in the year collectively contributed to the increased volumes and improved recoveries. Overall, PGM plant recoveries strengthened from 40% in FY10 to 43% in FY11 whilst PGM production for the year showed a marked increase from 24,605 oz in FY10 to 41,013 oz this year. The volumes of primary feed material and PGM feed were also pleasing with a 56% and 62% increase respectively for the year.

These pleasing results are a function of the first five plants approaching optimal operating performances. The plants are now performing at expected levels and unit costs will improve as various optimisation strategies come into play ensuring that we maintain our position as one of the lowest cost PGM producers.

Sylvania Dump Operations

The SDO are operated by Sylvania Metals Proprietary Limited ("Sylvania Metals"), a wholly owned entity of Sylvania Platinum Limited.

During the year the Company restructured its BEE arrangement. As part of the restructure, Sylvania Platinum amended its service and supply agreement with Samancor Chrome Limited ("Samancor"). As a result of this contract amendment Africa Asia Capital Limited has taken a significant equity position in Sylvania Platinum and Samancor continues to receive all processed chrome extracted from the SDO on an exclusive basis.

The recently negotiated and amended contract will provide significant benefits for Sylvania and aligns the operational interests of both companies. The on-going relationship has also provided a platform to explore other opportunities with Samancor.

Health, Safety and Environment

The first of Sylvania's values is that "We value the safety and Health of all" and believe that "Employees are at the heart of the Company, we place their safety and health above all else in all that we do." This has allowed the Company to work without a Lost Time Injury from October 2009 until April 2011 when an employee suffered an injury to one of his fingers. Safety is never compromised in the achievement of the record production achievements and the Company remains committed to maintaining a zero lost time injury rate and strives to achieve this through on-going and relevant education and improvements to safety procedures as guided by global best practice.

As a company that re-treats mine tailings, sound management of the natural environment is important to Sylvania. We measure our environmental performance against the highest international standards while ensuring that we are compliant with the host mine's environmental programmes and the National Environmental Management Act. During the year, the company only recorded two minor incidents.

Millsell

The Millsell plant has had a good year with consistent performance. A series of production initiatives were successfully implemented to maintain plant feed grade. Management have known for some time that the dump immediately associated with the plant will complete its first pass treatment during 2011 and instituted a programme of identifying additional feed sources for the plant. Whilst it has always been SDO strategy to treat the dump material a second time, all be it at lower recoveries, new feed sources have been successfully identified. This action, combined with the current arisings fed from the Millsell mine will allow the plant to operate profitably for many years to come.

Further work is being done to evaluate the economics of feeding material from the Mooinooi float plant tailings to the Millsell operation. Should this strategy prove successful it will dramatically improve the future production profile for the Millsell plant, both in terms of ounce production and operational life. Initial results are extremely encouraging.

Steelpoort

The Steelpoort plant has also had another good year with above expectation performances being recorded. The Steelpoort plant is approaching the end of the first pass treatment of its primary feed dump which is due to be completed towards the end of the 2012 financial year. Current arisings and second pass treatment of the new tailings dump will continue as planned. Potential feed of

float plant tailings from the Lannex plant may further improve profitability and life of the plant. This action, will improve the latest life of plant position which sees the re-treatment of the Steelpoort dump and allows the plant to operate profitably for many years to come.

Mooinooi

Sylvania entered into a joint investment project at the Mooinooi mine to expand the MG2 run of mine ("ROM") capability through the construction of an HMS plant at the Mooinooi complex, the first part of a three stage optimisation programme.

The plant was commissioned in May 2011, on time and in budget, and as expected, production slowed in the final quarter while resolving anticipated commissioning issues.

The ROM throughput increases from 15,000tpm to 40,000tpm as a result of the expansion with the ability to treat lumpy chrome ore directly from underground and effective waste separation. The life of the Mooinooi complex is thus extended from a 10 year dump retreatment project to a +15 year dump and ROM operation due to the displacement of the dump feed. While total plant feed remains at 40,000tpm, the increased ROM feed allows better recoveries and is expected to increase ounces produced by 220 oz per month.

Importantly, this project allows a second phase expansion at the Mooinooi floatation plant which involves the construction of additional chrome spiral capacity and a second PGM floatation plant. These improvements will see an increase in:

·; the ROM feed by 50% to 60,000tpm

·; the tailings retreatment, and thus the total plant feed to 75,000tpm

·; PGM production to +1,600oz per month.

The second expansion phase was approved by the Board in FY11 and will be completed in the second quarter of the FY12 with capital expenditure budgeted at R54 million. This symbiotic relationship between chrome and PGM extraction we believe has huge merit, and as can be seen by recent results on this Mooinooi plant, the concept of chrome subsidising platinum and platinum subsidising chrome is an area Sylvania will be researching aggressively.

Lannex

The water licence required for the construction of the new tailings dam was granted by the Department of Water Affairs in July 2010 and the facility was successfully completed in April 2011.

The tailings disposal facility is now fully operational and Lannex is ramping up production as it can now handle the deposition of the increased tonnes and is currently the largest PGM ounce producer amongst the five plants. This position should remain until the Mooinooi plant expansion is commissioned in Q2 of the FY12.

Various optimisation projects are underway to both improve plant and company performance. The backfilling of the underground workings below the plant to ensure safety has also been completed at a once off, cost of R8m.

Doornbosch

The Doornbosch PGM and chrome recovery plant was commissioned in July 2010 and the first saleable concentrate was produced during that month.

Designed to process 20,000tpm, the current feed consists of ore from dumps as well as tonnage from the underground operation which is still in development and below our production capacity. The feed and head grade is expected to improve as the underground mine builds up to full production.

To ensure that the Doornbosch plant is fully utilised, the float plant has introduced a system of recirculation which has seen an improved recovery thus allowing the plant to achieve better than expected performances.

Tweefontein

The final project study for the sixth SDO chrome and PGM plant at Tweefontein mine was completed during FY11 and the project received Board approval. The project has a total capital expenditure budget of R94 million including an estimated, but still to be ratified, R10 million set aside for the power reticulation from national power utility, Eskom. Plant construction is to start imminently and be completed by June 2012.

Tweefontein also has the possibility of a second phase of MG2 ore processing, similar to that at Mooinooi, where feed could be treated directly from underground. This symbiotic arrangement is currently being discussed with the host mine.

Chrome Tailings Retreatment Project (CTRP)

The CTRP joint venture, in which Sylvania has a 25% interest and which is managed and operated by Aquarius Platinum, saw a year-on-year decrease in production. Total output dropped by 24% from 1,599 oz in FY10 to 1,219 oz in FY11. The low ounce production was largely as a result of low feed density and numerous line chokes in the course of the year. This project and investment is being reassessed and shareholders will be advised shortly of the outcome of this review.

Northern Limb Operations

Since acquiring the important near-surface exploration assets in the Northern Limb of the Bushveld complex in 2010, we have been able to further evaluate the resources. An independent review provided a JORC compliant Inferred Resource on four geological targets identified for further exploration.

A four-phase drill programme was started in September 2011 aimed at upgrading components of the current declared Inferred Resource to Indicated category. Further drilling will be undertaken on two of the four areas which show an elevated PGM grade, with the intention of applying for a mining right in 2013.

Volspruit Mine and Smelter/Refinery Project

The Volspruit Project has two distinct sections; the development of a mine and concentrator which will be run by Sylvania and the development of a smelter and refinery complex which is planned to be run in a joint venture in which Sylvania will have an equal share.

The Volspruit Mine has a "massive" (ore evenly distributed over a large volume) ore body located at the southern end of the Northern Limb of the Bushveld Igneous Complex ("BIC"), containing both PGMs and base metals accessible by open pit.

The smelter/refinery project will be built at the mine site and will allow the whole project to complete an "ore to metal" production line.

The project will comprise two open pit mines with combined production of 300,000 tonnes of ore per month, feeding into three modular floatation plants, each with a 100,000tpm ROM capacity. The first of these three plants will be built with the mine and the remaining two will be constructed to coincide with production ramp-up.

The smelter/refinery project will comprise a smelter complex with a 10MW DC arc furnace and base metal refining complex using a carbonyl vapour metal refining process.

The "ore to metal" process uses known technology constructed in a unique configuration pioneered by this project team. The concept trials conducted during the year have properly defined the process and have delivered pleasing results.

The major focus for the feasibility team for 2012 will be the completion of an Environmental Impact Assessment ("EIA"). The EIA process is well underway and this is expected to allow for submission of the Environmental Scoping Report in Q1 FY12.

Everest North

Sylvania and Aquarius Platinum (South Africa) Proprietary Limited (AQPSA - a wholly-owned subsidiary of Aquarius Platinum Limited) entered into an agreement in June 2011 to investigate the viability of extracting and processing ore from the Everest North deposit (formerly the Vygenhoek prospecting area). A Feasibility Committee, assisted by DRA Mining, is in the process of updating the existing feasibility study, planned for completion by November 2011. The study is focusing on mining for PGMs at Everest North and then processing the ore at AQPSA's Everest South Metallurgical Plant to produce saleable PGM concentrate.

This Committee is determining the viability of mining for PGMs at Everest North, and it will also be responsible for preparing a Mining Right application, planned to be submitted in January 2012. Sylvania and AQPSA have agreed to form a joint venture company after the successful conclusion of the feasibility. Each party will hold an equal share and each party will appoint their own BEE partners to comply with legislation.

Whilst effectively reducing our exposure to the resource, the long-term benefits to Sylvania can be significant. Notwithstanding the partnership with the world's fourth largest platinum producer and an opportunity to reassess the PGM resource potential, by utilising existing plant capacity at Everest South, Sylvania has the advantage of a vastly reduced capex bill which will increase the IRR and NPV of the project significantly.

Human Resources

In line with restructuring and growth in the organisation, the Company appointed three new executives to the Sylvania management team in January 2011. We welcome Michiel van der Merwe, Executive Officer Operations; Albert Jordaan, Executive Officer New Business; and Lewanne Carminati, Executive Officer Finance. We are confident that their combined experience and expertise will bring immense value to the company.

The Company sees it as an imperative that we continue to promote a workplace that is representative of the country's demographics and, at the same time, attracts and retains high calibre, high performing employees who subscribe to the vision and values of the company.

During the year, a recognition agreement was put in place with the National Union of Mineworkers ("NUM") which now enjoys majority recognition at the operations. We successfully concluded a wage agreement with the NUM in May 2011 for the 2012 financial year.

Outlook

Sylvania is fully underway with the capital expansion projects at Mooinooi and Tweefontein that will allow the Sylvania Dump Operations and the CTRP to increase the total annual PGM production from 40,000oz to 60,000oz in the 2012 financial year and this level of production is planned to be maintained for at least 10 years.

Additional low cost PGM production should come from our Volspruit mine, the joint venture with Aquarius Platinum at Everest North and the development of our Northern Limb projects.

At the recent board meeting it was decided to sell off the Sylvania Iron ore assets. Any advantage derived from this asset sale will be distributed to shareholders.

Sylvania remains debt free with an increasing production portfolio from existing operations and a significant new route to increase growth.

Nigel Trevarthen

Deputy Chief Executive Officer

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 30 June 2011

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 June 2011

CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 30 June 2011