JOHANNESBURG (miningweekly.com) – The operating performance of Johannesburg- and New York-listed Sibanye Gold continued on an upward trend well into the third quarter of the year, despite multiple challenges, leading the group to up its production guidance for 2013.

The group now expected to produce about 1.42-million ounces for 2013, at an all-in cost of R360 000/kg, compared with the previous guidance of 1.35-million ounces at an all-in cost of R375 000/kg.

Group gold production increased 9%, from 356 900 oz in the June quarter, to 387 800 oz in the September quarter – the highest collective production from these operations since the December 2010 quarter. All-in costs and total cash costs declined 4% each to R339 847/kg and R262 142/kg respectively.

The quarter to end December 31, was expected to deliver about 378 000 oz of gold at an all-in cost of R355 000/kg, with Sibanye confident of arresting negative trends at the operations over the last decade.

During the quarter to September, Sibanye had faced an 8% quarter-on-quarter decline in the average dollar gold price, above inflation wage and electricity cost increases and other seasonal cost pressures, as well as operational difficulties, disruptive wage negotiations and strike action at its Kloof and Beatrix operations.

But CEO Neal Froneman believed that the positive performance levels achieved despite the challenges during the year were sustainable, particularly as further productivity initiatives were implemented and continued operational improvements emerged from the new operating strategy and the initial cost benefits of the restructuring and reorganisation that had taken place this year.

“The positive production and cost trends that were evident during the quarter and six-months ended June 2013 have continued during the September 2013 quarter,” he said.

Gold production at Driefontein, the group’s “star performer” for the quarter, increased 18% to 170 300 oz, after increased focus on quality mining resulted in the underground yield increasing 21% to 7.4 g/t, compared with 6.1 g/t in the June 2013 quarter.

Sibanye noted that, with safety stoppages following the three fatal accidents during the September quarter, gold production at its Kloof operations fell 6% quarter-on-quarter to 130 000 oz.

The operational problems at Beatrix in the previous quarters were resolved and gold production increased 18% to 87 400 oz during the third quarter, despite the three days of wage-related strike action.

“It is our expectation that this performance from Beatrix is sustainable,” he said.

The higher production and lower production costs led to a 10% rise in operating profit to nearly R2-billion, up from R1.8-billion in the preceding quarter.

The operating margin increased from 37% in the June quarter, to 39% in the September quarter, with the all-in cost margin increasing from 19% to 20%.

Sibanye had also generated R811-million in cash during the quarter, bolstering its R2-billion balance at June 30, 2013.

The group’s share price on the JSE had increased almost 4% by 11:00 on Thursday.