Sibanye Gold posted record output in the three months to September, following solid production operational performances in the quarter compared with the same quarter last year, it said yesterday. But costs had increased significantly.
Sibanye rose 1.4 percent on the JSE, after reporting that better output from the Kloof, Beatrix and Driefontein underground mines, coupled with the inclusion of a full quarter’s production from the Cooke operations for the first time, had boosted production. Sibanye acquired Cooke mines and the Ezulwini processing plant from Gold One last year.
South Africa’s largest individual producer of gold reported 424 700 ounces of gold production compared with the 387 800 ounces in the three quarters to September last year. However, costs rose following annual wage increases in July and the higher winter power tariff.
“These above-inflation increases, coupled with a significant increase in planned ore reserve development, resulted in all-in sustaining costs increasing by 15 percent to R384 777 a kilogram,” the company said.
Sibanye said it would address above-inflation cost increases over time.
It said the build-up to full production by June at the Cooke underground operations continued through the September quarter, with volumes and production from the Cooke 1, 2 and 3 operations consistent with the plan. It said talks with unions over the loss-making Cooke 4 operation had begun, heralding future job cuts.
Despite production build-up, output at Cooke 4 had fallen behind, necessitating a section 189 notice being sent to trade unions and employees last month, Sibanye said.
“The section 189 process involves a 60-day consultation period with trade unions and affected employees, during which the parties will attempt to co-operatively address the productivity and profitability shortfall issues at the operation,” the company said in its production update yesterday.
Gold traded at an average of $1 290 (R14 118) an ounce in the first half of this year, 15 percent lower than a year earlier, making operations less profitable for mining companies.
Gold production from the surface operations was 10 percent higher year on year at 33 300 ounces, but was significantly behind plan.
“Since commissioning, the Python plant at Kloof has struggled to meet the required levels of throughput and was stopped in July,” the gold company said.
Metallurgical recoveries of surface rock dump material at Driefontein was lower than anticipated during the quarter, and resulted in 2 990 ounces less output than planned from the Driefontein surface plants.
The shares lost 0.13 percent to close at R23.52 yesterday.