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Sibanye guides soaring earnings after quarterly operating profit rockets

Neal Froneman

Neal Froneman

Photo by Duane Daws

25th April 2016

By: Martin Creamer

Creamer Media Editor

  

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JOHANNESBURG (miningweekly.com) – ‘Proudly South African’ precious metals mining company Sibanye on Monday reported a 240% higher operating profit to R2.5-billion in the March quarter on a doubled-plus 38% margin.

The flourishing JSE- and NYSE-listed company, headed by CEO Neal Froneman, said earnings a share for the six months to June 30 would be at least 150% – or 30c a share – higher than the 20c a share reported for the corresponding period in 2015.

All-in sustaining costs (AISC) were 3% lower in rands at R454 282/kg and 28% lower in dollars at $895/oz, with the AISC margin increasing from a negative 2% to a positive 24% in the three months to March 31.

Pronounced March-quarter safety regression, however, reflected the deaths of Moreruoa Mahao, Tanki Sebolai, Elliot Kenosi and Luis Massango.

Net debt, excluding the Burnstone gold mining development on the South Rand, fell from R1 362-million to R591-million after a dividend payout of R916-million.

Headline earnings a share for the six months were expected to be at least 158% – or 30c a share – higher than the 19c previously.

Both increases were on rises in the 301%-higher March-quarter rand gold price, Sibanye said in a release to Creamer Media’s Mining Weekly Online.

It added that normalised earnings a share were expected to increase by at least 500% from the 27c a share normalised earnings reported for the prior six months.

March-quarter revenue increased by 50% to R6 736-million ($427-million) on higher gold output and a gold price that rose from R459 564/kg to R600 267/kg and from $1 182/oz to $1 222/oz.

The Kloof gold mine near Westonaria produced a 31%-higher 114 400 oz (3 557 kg) mostly on improved underground yields.

The Beatrix mine in the Free State produced a 26%-higher 73 000 oz (2 269 kg) and Cooke near Randfontein a 12%-higher 1 536 kg (49 300 oz), both on better underground yields and volumes.

Driefontein's production was similar year-on-year at 124 100 oz (3 859 kg), with improved underground mining values offsetting lower mining volumes caused by a seismic event at the Hlanganani Five shaft and issues at Masakhane One shaft.

Despite a March-quarter cost push, total cash cost remained similar to that of the March 2015 quarter at R385 117/kg and significantly lower at $759/oz owing to the weakening of the rand:dollar exchange rate.

March-quarter capital expenditure (capex) increased by 3% to R739-million, mainly on upped underground development at the Burnstone project.

The acquisition of Aquarius Platinum, which delisted, has been concluded while the acquisition of the Rustenburg platinum assets from Anglo American Platinum are still awaiting the Section 11 transfer of mineral rights by the Department of Mineral Resources, which has been with the department since February.

Aquarius’s attributable platinum group metals production increased to 90 800 oz, with the Kroondal, Mimosa and Platinum Mile operations delivering year-on-year growth of 7%, 6% and 26%.

Kroondal's unit on-mine cash cost fell 2% to R9 353/oz, Platinum Mile’s fell 6% to R8 810/oz and Mimosa’s cash costs fell 5% to $758/oz.

Kroondal had a March-quarter cash margin of 17%, Platinum Mile 12% and Mimosa a negative 5%.

Most of the capex of R174-million was incurred at Kroondal, leaving Aquarius with net cash of R530-million and no debt.

Sibanye’s strike-averting settlement premiums to Association of Mineworkers and Construction Union (AMCU) add from R25 a month to R75 a month to each AMCU employee’s wages from July last year to June 2017 while engagement with all other unions was continuing.

Sibanye gave notice in supporting the Chamber of Mines to vigorously oppose any elements in the proposed new Mining Charter that threatened the sustainability of the company.

The forecast gold production for the year to December 31 remained unchanged at 1.61-million ounces (50 000 kg) at an AISC of $915/oz (R440 000/kg). The dollar costs are based on an average exchange rate of R15/$1.

Detailed financial and operating results are provided on a six monthly basis at the end of June and December each year.

Edited by Creamer Media Reporter

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