Johannesburg - Sibanye Gold said yesterday that an R817 million impairment at its loss-making Cooke 4 asset, coupled with R1.2 billion in share-based payments, had a dramatic effect on net earnings in the half year to June.
Sibanye, which has a R54bn market value dropped 9.9 percent to R58.50 a share at 1.41pm yesterday in tandem with its peers as the gold price fell.
The metal yesterday edged off Wednesday’s four-week low as the dollar retreated, but prices were range-bound ahead of a speech by Federal Reserve chairwoman Janet Yellen.
The company, which is based south-west of Johannesburg, said the strong gold price and the weakening of the rand against the dollar boosted group revenue by 44 percent in the half year to June.
Revenue rose to R14.7bn, driven by the higher rand gold price, which rose by 31 percent to R603 427 per kilogram, from R461 426 per kilogram in the previous reporting last year.
The rand was 29 percent weaker at R15.38 per dollar compared with R11.89 per dollar in the six months ended June last year.
Improved margins
Group operating profit was 128 percent higher to R5.3bn compared with R2.36bn at the end of June last year.
The robust performance in the half year to June was in line with improved margins across the sector, which had seen a windfall for competitors including AngloGold Ashanti, and Gold Fields. Sibanye declared an interim dividend of 85c a share or R750m in the period under review as compared with 10c a share or R91m in June last year.
“Sibanye delivered a strong financial result driven largely by a higher prevailing rand gold price, but underpinned by solid operational delivery from both the gold and platinum divisions, despite both being impacted by numerous unanticipated operational disruptions,” said the chief executive, Neal Froneman.
Sibanye also diversified into the platinum industry after acquiring Anglo American Platinum’s Rustenburg operation.
Froneman said while operational performance was solid, it was nowhere near its potential, referring to disruptions resulting from illegal industrial action and numerous section 54 safety stoppages.
Disruptions
“If everything had gone right - we know that’s highly unlikely - there’s 1.4 tons of additional gold that we could have produced had we not had the disruptions. That would have resulted in much better revenue and costs,” he said.
Froneman said Sibanye’s fatalities had doubled to eight in the half year to June compared with four in the same period last year.
He said the company had taken urgent steps to address fatalities including the appointment of Peter Turner.
“Immediate safety challenges will be addressed through stringent enforcement of standards and compliance in the short term, while a parallel drive to align Sibanye’s safety management with the changing life attitudes of the workforce will result in a more sustainable behavioural and cultural shift,” Froneman said.
Sibanye shares dropped 3.2 percent on the JSE yesterday to close at R62.91.
BUSINESS REPORT