JSE- and NYSE-listed Sibanye-Stillwater on Thursday said its South African platinum group metals (PGMs) operations continue to do well, with the miner expecting its platinum, palladium, gold and rhodium (4E) PGMs production for 2018 to be about 1.17-million ounces.
In a statement detailing updates since November 1, 2018, Sibanye explained that robust palladium and rhodium prices, which increased by more than 40% in dollar terms in 2018, together with the weaker rand/dollar exchange rate boosted the rand 4E PGMs basket price by 19% during the course of the year to more than R15 700/oz.
This significantly enhanced revenue, the miner said.
About 74% of the miner’s adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) in the first six months of year were derived from PGMs operations. This increased to 85% in the third quarter of 2018.
The solid performance by the PGMs business has allowed Sibanye to offset operational disruptions in its gold division, where members of the Association of Mineworkers and Construction Union (AMCU) remain on strike over wage demands. The industrial action started in late November.
Due in part to the successful implementation of strike plans at Sibanye’s South African gold operations, gold production (excluding DRDGold) for 2018 is expected to be about 1.1-million ounces, which is marginally below previous guidance of between 1.13-million ounces and 1.16-million ounces for the year.
Meanwhile, AMCU in December filed an appeal against the Competition Tribunal’s approval of Sibanye’s proposed acquisition of platinum miner Lonmin. A hearing date has not been finalized.
Sibanye, led by CEO Neal Froneman, said it remains “fully committed to the transaction”, which the miner considers as “compelling from both a strategic and value creation perspective”.
Meanwhile, with regard to the miner’s US PGMs operations, Sibanye noted that the current platinum and palladium (2E) basket price of $1 190/oz is 19% higher than the average 2018 2E PGM basket price of $996/oz.
Higher basket prices, together with increased production as a result of the start of mining operations in a second stope block at Blitz in October 2018, are expected to positively impact on revenue at the US PGMs operations.
2E PGM mined production for 2018 is expected to be about 590 000 oz, in line with the miner’s guidance for the year.
Further, the miner’s liquidity remains sound with the 2018 stream financing allowing for a 28% reduction, from $1.5-billion to just over $1-billion, in bond obligations.
Major debt repayments from the miner are only due from mid-2022.
As at December 31, 2018, Sibanye had about $417-million in undrawn and available revolving credit facilities.
The miner’s operating and financial results for the six months and year ended December 31, 2018, are expected to be released on February 21.