JOHANNESBURG - Sibanye-Stillwater shares surged more than 5percent on the JSE yesterday after reporting record quarterly operating profitability during the March 2020 quarter as gold continued to glitter, brushing off the impact of weaker platinum group metal (PGM) prices.
The group said its balance sheet was in good shape after earnings before interest, taxes, depreciation and amortisation (Ebitda) rose to R11.13billion from R10.32bn a year earlier. Gearing was reduced, resulting in net debt to adjusted Ebitda falling to 0.75 times from 1.25 times in December.
The group, whose South African PGM and gold mine production has been reduced to 50percent capacity in response to the government’s Coronavirus lockdown regulations, slashed capital expenditure by R900million to R2.2bn.
Domestic gold operations capital expenditure for 2020 was revised downwards by R840m to R2.5bn.
Sibanye-Stillwater’s local gold mines recorded a R2.7bn turnaround during the period as production stabilised on the price rally.
It said the return to more normalised production levels after a five-month strike last year, coupled with a strong average rand gold price, resulted in a R2.7bn turnaround in adjusted Ebitda from a loss of R1.61bn.
Chief executive Neal Froneman said strong gold prices boded well for the South African mines, which include Kloof, Driefontein, Beatrix and Cooke.
“This has positive implications for earnings and cash flow from the South African gold operations, as production continues to ramp up in accordance with the amended Covid-19 regulations issued in terms of the Disaster Management Act,” Froneman said.
Sibanye-Stillwater said the average rand gold price received jumped 35percent to R795323 a kilogram during the quarter and averaged R1m for the first time in history, as gold appealed as a safe haven to investors during the Covid-19 crisis.
An analyst who spoke on condition of anonymity, said gold miners were basking in the sun. “Lower PGM prices may hurt a little in this quarter but could be offset by gold at $1700 (R31183),” said the analyst.
Palladium and rhodium prices reached record levels, before falling in late March, as rising concerns about the economic impact of the pandemic led to a general collapse in most global markets, including precious metals.
Gold production increased 66percent to 238076 ounces higher than for the comparative period in 2019.
South African PGM operations continued to perform strongly, with 4E PGM production up 59percent to 418072 4E ounces during the quarter.
The group said improved PGM production reflected the change to toll processing at Rustenburg, higher royalties, and the inclusion of production from the Marikana operation with a higher average all in sustaining cost, which was absent a year earlier.
Sibanye-Stillwater shares closed 6.90percent higher at R36.40 on the JSE yesterday.