Sibanye-Stillwater CEO Neal Froneman expects improvements to South Africa’s operation environment and further strengthening of the rand under the Government of National Unity (GNU) after the gold and platinum group metals (PGM) and lithium-focused miner sank to a basic loss of R7.5 billion for first half to June 2024.
With operations across South Africa’s gold and PGM industry, as well as developing the Keliber lithium project in Finland, Sibanye-Stillwater also has exposure to the US PGM sector.
However, it has had to impair the US PGM operations to an amount of R7.5bn during the period under review, with the company gearing to cut platinum and palladium production from the US by 200 000 ounces “in the face of low metal prices that pushed it to a half-year loss”, according to commodity analyst Giovanni Staunovo.
In South Africa, Sibanye-Stillwater has been restructuring the gold and PGM operations to save costs. It hopes the current GNU administration will help improve the operating environment.
Shares in Sibanye-Stillwater nonetheless surged 11.21% to R15.68 in afternoon trade on the JSE yesterday.
“Sibanye-Stillwater is up 10% today on H1 2024 results,” said equity analyst Alex Frey on X yesterday“
“Investors bid up the share as their concerns of a potential rights issue were allayed on news of balance sheet improvements and cost cutting efforts.”
During a briefing on the company’s half-year financials yesterday, Froneman said they were doing everything to protect their margins.
“We have a currency collar that we’ve implemented for our South African PGM operations to protect the margin in a strengthening environment that was done on the basis that we could see the potential of an improving climate,” Froneman said.
“I can say that the appointment of the Government of National Unity is the first very important step in that and we will continue to see the rand strengthening.”
He said the restructuring of the South African PGM operations was geared to “preserve our margins through the low commodity downturn”.
The South African PGM operations “delivered another solid performance, increasing production and generating positive free cash-flow” for the period under review, said Froneman.
Although there was lower production from the restructuring of loss-making shafts and due to industrial action at Kroondal, this had been offset by the consolidation of an additional 50% of Kroondal production after Sibanye-Stillwater acquired Anglo American Platinum’s remaining 50% shareholding in the operation in November last year.
Resultantly, overall PGM production for Sibanye-Stillwater in South Africa rebounded by 4% to 828 460 ounces while all in sustaining costs were 9% higher compared to the previous year at R21 533 per ounce.
However, a 28% decline in the average 4E PGM basket price resulted in adjusted earnings before interest, taxes, depreciation, and amortization (Ebitda) declining by 60% to R4.8bn.
The company’s South African gold production sagged by 17% to 344 109 ounces over the half year to June, against the backdrop of an 18% quickening in all in sustaining costs that climbed to $2 078 per ounce mainly as a result of cessation in production from Kloof 4 shaft.
Adjusted Ebitda from the South African gold operations of R2.2bn was 7% lower than for the previous comparative period but 92% higher compared to the half year to December 2023.
This had resulted in group adjusted Ebitda declining 53% to R6.6bn, tipping the company into a R7.1bn loss after tax compared to a profit of R7.8bn in the same period last year.
This was mainly accounted for by a heavy impairment of the US PGM operations made due to 5-8% lower palladium prices.
Headline earnings per share (Heps) for the interim period to June 2024 resultantly tanked at 5 cents compared to Heps of 208 cents recorded for the comparative period.
Although net debt increased by R6.8bn, cash and cash equivalents closed the period at R15.5bn.
BUSINESS REPORT