The first quarter of 2019 marked an important period for JSE- and NYSE-listed Sibanye-Stillwater, with the group having successfully navigated operational and financial challenges, including a five-month strike at its South African gold operations.
The impact of the Association of Mineworkers and Construction Union- (AMCU-) led gold strike, which ended on April 17, was mitigated by a solid operational performance from the South African platinum group metals (PGMs) operations, Sibanye stated in its March quarter operational update on Thursday.
Significantly higher palladium and rhodium prices, combined with a 17% depreciation in the rand/dollar exchange rate, boosted the miner’s earnings and cash flow from the South African and US PGMs operations.
Adjusted earnings before interest, taxation, depreciation and amortisation (Ebitda) from its South African PGMs operations increased to R353-million ($25.2-million), from R258.3-million in the same quarter last year.
The US PGMs operations reported adjusted Ebitda of $104.6-million, a 33% increase on the $78.8-million a year earlier. In rand terms, this amounted to just over R1.4-billion, a 56% increase year-on-year.
The combined adjusted Ebitda from the PGMs operations of R1.8-billion for the first quarter, more than offset the more than R1.6-billion adjusted Ebitda loss from the South African gold operations, resulting in group adjusted Ebitda of R176-million for the period.
The South African PGMs operations produced 263 508 oz of platinum, palladium, rhodium and gold (4E) and achieved an average basket price of $1 221/oz of 4E, while the US PGMs operations delivered 130 899 oz of platinum and palladium (2E) a an average price of $1 305/oz of 2E.
The South African PGM all-in sustaining cost (AISC) in rand terms jumped to R12 741/oz of 4E and is in line with the yearly guidance, while the US PGM AISC increased to $833/oz.
Gold production, including that of DRDGold, amounted to 143 278 oz. Like-for-like, production from the South African gold operations, excluding DRDGold, declined 63% to 106 948 oz for the first quarter.
The implementation of a "no work no pay principle" during the gold strike, resulted in a significant reduction in operating costs in absolute terms, but unit costs were hit by the lower production volumes, resulting in AISC of R1 002 350/kg ($2 225/oz), significantly higher than expected ASIC of about R550 000/kg, at more normalised production levels.
While the strike action and the gradual build-up post the strike would continue to negatively impact on the South African gold operations during the second quarter, Sibanye said that unit revenues for the gold and PGMs operations were expected to exceed those in the comparative period in 2018, and further deleveraging was anticipated during the course of the year.
The company said it would only provide a 2019 guidance for its South African gold operations once it had “sufficient clarity” on the production build-up.
Sibanye maintained its PGMs guidance at between 645 000 oz and 675 000 oz for the US operations and between one-million ounces and 1.1-million ounces for the South African operations.