Johannesburg - Sibanye Gold, the South African miner spun off from Gold Fields last year, rose to a record in Johannesburg trading after announcing a 46 percent gain in economically viable reserves.
Cost cutting and a higher expected gold price has boosted the amount of bullion that Sibanye can mine profitably to 19.73 million ounces, the Westonaria-based company said today in a statement.
It climbed 3.7 percent to 20.50 rand by 2:44 p.m., the highest since Sibanye began trading in February last year.
“This increase in mineral reserves will significantly enhance and extend Sibanye Gold’s life-of-mine production profile,” the company said in the statement.
Sibanye, which has three operations in South Africa, cut its total costs by 15 percent in the six months ended December, making gold found in secondary reefs, unmined areas, waste dumps and mine-support pillars economically viable.
By contrast, producers including Gold Fields have been writing down assets after bullion prices dropped 28 percent last year.
The new reserve figure is based on capital spending being maintained at 3 billion rand ($280 million) to 3.5 billion rand a year and an increase in the assumed gold price of 8 percent to 410,000 rand a kilogram (2.2 pounds), Sibanye said.
Gold currently trades at the equivalent of about 463,000 rand a kilogram. - Bloomberg News