Johannesburg - Sibanye Gold’s interim headline earnings per share (HEPS) would fall at least 20 percent after it issued more shares, but gold output would climb after the acquisition of Gold One International’s Cooke operations, South Africa’s second-largest gold producer said yesterday.
Sibanye shares ended unchanged at R27.50 yesterday after earlier falling as much as 3.75 percent following the profit warning, which it attributed to the rise in the weighted average shares in issue from 556 412 788 in the first half of last year to 771 294 404 in the six months to June this year.
On May 16, Sibanye issued almost 157 million shares to Gold One to acquire Cooke.
In a strategic and operational update released yesterday, Sibanye gave no more details on the fall in HEPS, saying it would give a more detailed announcement later, but said it had boosted production forecasts and reserves while embarking on a uranium strategy.
Management was delivering on its promise to increase flexibility and volumes, Michael Schroder, a portfolio manager at Old Mutual Equities, said yesterday.
“We are seeing great results from these assets under the new management,” he said.
For the six months to June, Sibanye forecast gold production would be 690 000 ounces, including a one-month contribution of 21 000 ounces from Cooke. It said production guidance in April did not include Cooke’s contribution.
Output in the year to December would rise to 1.58 million ounces, including about 158 000 ounces from Cooke.
Production forecasts for operations have been revised to about 1.4 million ounces a year until 2018, with forecast output remaining above 1.2 million ounces until 2020.
Production was previously expected to fall below 1.2 million ounces in 2016. The forecast group life of mine was also extended by three years.
Following restructuring and cost-cutting, production grew 17 percent to 1.43 million ounces last year, and all-in costs fell 8 percent compared with 2012 to $1 148 an ounce. All-in costs, including Cooke, are forecast to increase to $1 080 an ounce this year from $1 070.
Operational improvements resulted in Sibanye reporting a 46 percent increase in its gold mineral reserves at the end of last year. increased by a further 66 percent from year-end to 32.7 million ounces after the Wits Gold and Cooke acquisitions, it said yesterday.
In addition, Sibanye plans to acquire assets in the platinum industry, provided all internal investment criteria are met.
Both the gold and platinum industries use deep-level mining methods in which Sibanye specialises. Acquisitions could include Anglo American Platinum’s non-core assets, such as the Union mine in Limpopo.
Sibanye was formed after Gold Fields unbundled its ageing Beatrix, Kloof and Driefontein assets. The plan was to create a group with mature assets that would set the benchmark for dividend payments. Last year, Sibanye declared a dividend of R1.12 a share.
The share price has more than doubled since Sibanye listed at R13.05 last February.