DURBAN - Sibanye-Stillwater’s share price rose more than 5percent on the JSE yesterday after the global precious metals mining group reported record earnings for the third quarter to end September.
The group reported a 182percent surge in adjusted earnings before interest, tax, depreciation and amortisation (Ebitda) for the quarter to R15.59billion compared to last year, boosted by consistent operational performance and high commodity prices.
Chief executive Neal Froneman said this represented another record quarterly financial result, surpassing the full-year group adjusted Ebitda of R14.96bn for 2019.
“This outstanding result reflects the significant value accretive platinum group metals (PGM) acquisition strategy embarked on from 2016,” Froneman said.
Sibanye, the world's largest supplier of PGMs, acquired the US mining company Stillwater for $2.2bn (about R36bn) in 2017.
In the US, the group said the 2E PGM basket price for the quarter was 37percent higher than the third quarter of last year and the adjusted Ebitda for the US PGM operations increased by 55percent year-on-year to $191 million.
But the production at its SA PGM operations declined by 18percent to 427715 ounces in the quarter, impacted by the Covid-19 disruptions.
However, Sibanye said despite the ongoing Covid-19 related constraints at the SA PGM operations during the quarter, the ongoing production build-up was well managed, with costs kept under control.
The average gold price for the third quarter of $1845 an ounce was 27percent higher compared to the same quarter last year.
By the end of the third quarter, its South African gold operations had recalled 92percent of the workforce and achieved a production run rate of approximately 99percent of planned levels, with the SA PGM operation having recalled approximately 88percent of the workforce with a production run rate of 93percent of planned levels achieved.
“By mid-October 2020, both the SA gold and PGM operations were operating at close to planned production rates with the employee complement close to pre-Covid-19 levels,” the group said.
The group’s net debt to adjusted Ebitda fell by 40percent to 0.33times at the end of the quarter compared to 0.55times at the end of June despite a dividend payment of R1.4bn at the interim period.
Sibanye reduced its debt by R11.16bn during the quarter after exercising a call option on the convertible bond, which was fully redeemed in October, and if considered against the balance sheet by the end of September, this would bring the net debt to adjusted Ebitda ratio down to 0.05 times.
The group said the strategic deleveraging which has been a primary focus since 2017 is now complete.
“At current commodity prices and the prevailing exchange rate, and with the South African operations having attained normalised production run rates, the group is likely to continue generating significant cash flow,” the group said.
BUSINESS REPORT