Johannesburg - The strengthening gold price was expected to more than double Sibanye Gold’s earnings for the half year to June, it said yesterday as it reported a twofold increase in operating profit to R2.5 billion in the March quarter.
Sibanye’s strong numbers are a reflection of the good fortunes that can be expected in the domestic gold industry this year due to the bullish bullion price. Investors view gold as a haven and the price has been rising this year helped by the weakening US dollar.
Read: Gold price lifts Sibanye earnings
Yesterday by 3pm in London, gold was fixed at $1 238.90 (R17 808.2) an ounce, $4.35 weaker than on Friday.
Production for the quarter to March was 14 percent higher helped by the 30 percent stronger average rand/gold price, which resulted in R2.5bn operating profit, a 240 percent increase compared with R744 million for the March quarter last year. However, analysts believed production could have been better.
Revenue rose by 50 percent on the higher gold price, while gold production guidance for the year remained unchanged at 1.61 million ounces or 50 000kg, with the all-in sustaining cost at $880 an ounce or R425 000 a kilogram.
Sibanye, which has been snapping up assets, including Anglo American Platinum’s Rustenburg assets and Aquarius Platinum, said yesterday that the Aquarius transaction had been successfully concluded this month.
Chief executive Neal Froneman said: “I am pleased with our start to the year with the March 2016 quarter generally positive – not only as a result of the much improved operational performance from our gold division, but also due to the steady progress with our platinum acquisitions.”
Sibanye has been one of the best performing stocks on the JSE after rising by 125.86 percent in the year to date. It also averted a wage strike after making a R50 monthly ‘stability premium’ in a desperate move.
“We have averted a potentially destructive strike at a fragile point… and managed to secure stability for our company and all its stakeholders,” Froneman added.
Sibanye indicated that it expected a 150 percent boost in earnings per share (EPS), or 30c a share, for the six months to June compared with 20c a share in the first six months of last year. Headline earnings per share (HEPS) for the six months to June were expected to be at least 158 percent, or 30c per share, higher than the 19c per share reported for the previous corresponding period last year, the company said.
The increase in EPS and HEPS is primarily due to the increase in the average rand/gold price, which was 301 percent higher for the March 2016 quarter than for the comparable quarter last year.
Sibanye said normalised EPS was expected to increase at least 500 percent from the 27c per share normalised earnings reported for the first six months of last year.
Sibonginkosi Nyanga, an analyst at Momentum SP Reid Securities, said yesterday that Sibanye’s share price had declined yesterday as production targets had been missed.
“The market was expecting more production in the March quarter this year because there were more once-off items last March quarter compared to this quarter. The market was also expecting better all in sustaining costs,” Nyanga added.
Rene Hochreiter, a mining analyst at NOAH Capital Markets, said Sibanye had posted “amazing results”.
“It is a very good set of results. This is all because the rand/gold price has increased to R600 000 a kilogram compared to the platinum price of R383 000 a kilogram,” he said.
Sibanye shares fell 4.23 percent yesterday to R51.66.
BUSINESS REPORT