Sibanye-Stillwater will pay a R1.38 interim dividend per share despite a 51 percent plunge in earnings that topped a period chief executive Neal Froneman has described as “difficult” and worsened by a prolonged industrial action at its gold mines, flooding in the US and supply chain disruptions across its markets.
Shares in the company, however, firmed by as much as 2.7 percent on the JSE in yesterday’s session to R40.7 in intraday trade after the release of the miner’s financials for the half year period to end June.
Froneman said the latest payment to shareholders showed that the resource firm’s “commitment to dividends is unchanged” with the half year dividend – amounting to R3.9 billion – calculated at 35 percent of normalised earnings.
The company’s earnings for the period were, however, 51 percent lower at R12.3bn, a big dip from the record earnings recorded for the same period last year. The decline in earnings has been attributed to production declines at the South African platinum group metals (PGM) and gold operations as well as flooding in the US palladium operation.
Sibanye-Stillwater is investing heavily in green and electric vehicle battery metals such as lithium. The company has so far invested €176 million (R2.9bn) for its over 50 percent shareholding in Keliber, a Finland-based lithium producer.
The South African gold operations, which were impacted by a three-month labour dispute, had a 63 percent lower output for the period on a year on year basis. Gold mining production under DRD Gold, however, increased by 3 percent, with a 7 percent decline in milled tonnes offset by an 11 percent increase in yields.
Nonetheless, inflationary cost pressures resulted in operating cost per tonne milled increasing by 26 percent to R135 per tonne. This was mainly a result of above-inflation increases in the costs of key consumables such as diesel, steel and cyanide.
The SA PGM production was not equally upbeat for the same period, with 4E output narrowing by 8 percent. The focus for the SA PGM operations is now on cost containment through production ramp up.
Sibanye-Stillwater has also just begun wage negotiation engagements with labour unions for its Rustenburg and Marikana PGM operations.
It said its position on labour negotiations will be based on inflation-related increases “that accommodate the cost pressures facing our employees and ensure fair pay, while protecting the sustainability of the business” for a lower PGM pricing environment.
The US PGM operations also suffered a 23 percent decline in production “as a result of ongoing operational constraints and the temporary suspension of operations at the Stillwater mine” due to severe regional flooding.
“We have defined this period as a challenging period; supply chain disruptions continue to manifest in terms of energy shortages and other disturbances. The SA PGM, volume underperformance made achievement of good costs much more difficult but I have no doubt that with higher volumes that will come down” Froneman told investors during a conference call yesterday.
Given the operational disruptions under the period, Sibanye-Stillwater’s financial performance for the interim period “was notable,” with group adjusted Ebitda of R22.6bn lower by 19 percent compared to the previous contrasting period.
BUSINESS REPORT