Sibanye to reinstate its cash dividends
JOHANNESBURG - Sibanye-Stillwater yesterday committed to resuming cash dividends in 2020 after the metal prices helped it swing to a R432 million profit for the year to end December from a R2.5billion loss in 2018.
Sibanye-Stillwater chief executive Neal Froneman said that the group prioritised the reinstatement of the cash dividends when it reports its interim results later this year.
“Sibanye-Stillwater expects to resume dividend payments in the first half of 2020, based on the current deleveraging trajectory and subject to current commodity prices," Froneman said as the company released its solid annual financial results at the JSE.
“Our priority remains to deleverage the balance sheet. We want to get our net debt down.”
Froneman also hinted at the possibility of a special dividend saying it was subject of discussion at board level.
He said that once the company reduced debt, the group would consider acquisitions at the right prices.
“We are not deal junkies. We are looking for value-accretive opportunities after addressing our priority of paying debt,” said Froneman.
Sibanye-Stillwater which has been on an expansion drive paid R1.4billion for a 50.1percent stake in DRDGold, a gold tailings company which is currently worth approximately R4.1bn.
Froneman said the transaction would help DRDGold pursue new opportunities internationally as it looked to venture to tailings opportunities in the PGM sector.
“We have the ability to help them go international. This is a company that cleans up the environment, that deals with legacy issues. We will work together with DRDGold on those aspects,” said Froneman.
Sibanye-Stillwater financial highlights included the 44percent year-on-year increase in revenue to R75.57 million, driven by the windfall from rising precious metals prices and an improving or steady operating performance across the group in 2019.
The inclusion of Marikana as from June also helped group adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) jump by 79percent year-on-year to R15.43bn ($1.034bn). The group flagged that it was ahead of its net debt reduction target.
It said net debt before Ebitda reduced from 2.5 times at the end of June 2019 to 1.25 times during the current reporting period.
The group said this was well below its existing debt covenants and 1.8 times target for the 2019 year-end.
In terms of production, Sibanye-Stillwater produced 932659 ounces after being rocked by a 5-month long strike at its gold mines.
Froneman said the group also benefited from the firm stance it took to the Association of Mineworkers and Construction Union-led strike at its gold mines ahead of the platinum wage talks.
“You cannot negotiate when you are in a weak position,” Froneman said, adding that the strike had cost the group a lot of money. I can assure you it was a smart business decision. We have a credible and respectful relationship from both sides.”
Seleho Tsatsi, an investment Anchor Capital said the results were impressive, citing the robust share price and the solid numbers.
“Sibanye-Stillwater is enjoying the best of both world regarding precious metals prices. Sibanye-Stillwater is uniquely positioned to enjoy the current strength in gold and platinum group metal prices.
"These currently strong prices allow the company to generate meaningful free cash flow, which it can use to pay a portion of its debt,” said Seleho.
Sibanye shares closed 0.56percent lower at R44.33 on the JSE yesterday.