Sharp increase for Sibanye Gold shares after 240% rise in earnings
CAPE TOWN – Sibanye Gold’s share price increased sharply by 3.93 percent to R29.10 yesterday after it reported a 240 percent rise in earnings before interest tax, depreciation and amortisation (Ebitda) to R5.5 billion in the quarter to end-September 30.
The group's South Africa-based platinum group metal (PGM) operations had contributed R2.9bn to Ebitda, the US PGM operations R1.8bn and the South African gold operations R843m, a trading statement said.
The outlook for precious metals remained constructive and prices continued to strengthen into the fourth quarter, to date, chief executive Neal Froneman said.
There had been a record safety performance at the gold operations, but there were two fatal accidents at the South African PGM operations.
Froneman said the operating performance for the quarter “signals a pleasing recovery of the group, after a difficult 18-month period”.
Most pleasing was the way the gold operation improved on what was already an industry-leading safety record, he said.
The strong performance of the South African PGM operations had been sustained, while there was continued progress on the integration of Marikana.
Recovery plans at the gold and US PGM operations had advanced.
There was a possibility that dividend payments would resume in the latter half of 2020, should the current momentum continue, he added.
Net debt adjusted Ebitda of 1.7 times at September 30 significantly improved from 2.5 times at June 30. The level was well within the 2019 covenant ceiling of 3.5 times.
The rand revolving credit facility (RCF), due to mature in November 2019, had been refinanced on similar terms, resolving any near-term financing risk.
The RCF due in 2022 had an initial facility of R5.5bn, but included a R2bn option to upsize to R7.5bn and to extend through two further one-year extensions.
Mined 2E PGM production from the US PGM operations increased 6 percent to 139 178 2E ounces in the third quarter.
Adjusted Ebitda increased to $123 million (R1.85bn) from $49m in the quarter.
The Columbus metallurgical complex processed 20 percent more mined materials.
Capital expenditure amounted to $60m, including expansion capital at Blitz and FTM. An amount of $24m was incurred on sustaining capital and ore reserve development.
The SA PGM operations increased production by 70 percent to 518 234 ounces, primarily reflecting the consolidation of the Marikana operation for the full quarter and a 3 percent production increase from Kroondal, partly offset by lower production from the Rustenburg, Mimosa and Platinum Mile operations.
Chrome production (excluding Marikana) increased 19 percent to 243 000 tons.
At the SA PGM operations, wage negotiations for Rustenburg and Marikana were continuing.
The build-up to full production following the conclusion of the five-month Amcu strike in April 2019 had proceeded at a measured pace. Production had largely normalised.
The Beatrix operation had recovered well, with production only 8 percent below the third quarter of 2018.
Quarter on quarter, gold production (excluding DRDGold) increased by 1 408kg to 7 444kg.
Sibanye Gold shares closed 4.11 percent higher at R29.15 on the JSE yesterday.