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Sibanye-Stillwater’s US operations in the midst of major growth phase

2nd November 2018

By: Simone Liedtke

Creamer Media Social Media Editor & Senior Writer

     

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JOHANNESBURG (miningweekly.com) – Sibanye-Stillwater’s Blitz project development area, which is adjacent to its Stillwater mine, in Montana, in the US, is in the midst of a significant growth phase, says executive VP for the US region Chris Bateman.

He told the media in a conference call this week that the expanded Stillwater mine is expected to ramp-up to its targeted production rate of 850 000 oz in the fourth quarter of 2021.

The Stillwater mine currently produces 550 000 oz/y of gold.

Bateman reaffirmed the group’s belief that there is a good growth potential in the orebody below the current Blitz area – known as Lower Blitz – as well as further development opportunities at the East Boulder mine and further down on the right-hand side below the current Blitz mine.

The East Boulder, Bateman explained, was characterised by lower grades; however, in a much more consistent orebody, which leads to lower mining costs. While Stillwater has some high-grade stopes, both Stillwater and the Blitz project are running at more than 20 g a metric tonne.

At year-end, the miner expects Blitz to move up significantly on the y-access, especially considering that the miner has had some good results on the project in terms of drilling and developing stope blocks.

Sibanye this week reported that underground platinum-group metals (PGM) production at its US operation was 3% higher at 139 178 oz in the third quarter, with early production shortfalls at the Stillwater mine having been recovered at the end of the quarter.

Fourth-quarter production is expected to be higher owing to the implementation of a second stope block at the Blitz project.

Meanwhile, Sibanye, in late October, concluded a transaction with Regulus Resources and the newly-formed Argentinian subsidiary of Regulus, Aldebran Resources, which was established to unlock value at its Altar copper/gold project, in the San Juan province, Argentina.

According to Bateman, Regulus is looking to spend an additional $30-million to increase its share in Aldebran to 60%.

This transaction, he said, would provide Sibanye with greater exposure in the country.

COSTS

Bateman, meanwhile, enthused that the all-in sustaining costs (AISC) for Sibanye’s US operation had been on a pleasing downward trend during the third quarter.

Sibanye is, however, still expecting to finish the year within its guidance and is targeting an AISC of about $550/oz by the end of 2021 or beginning of 2022.

The average realised selling price dipped to $896/oz in the third quarter, but Bateman noted that a strong recovery was on the cards for this month.

The miner is trading at about $1 020 per 2E ounce, which comprises 78% palladium and about 22% platinum.

Meanwhile, one of the two furnaces at the miner’s PGM processing facilities, in Columbus, Ohio, is expected to come back online in early December, with operations expected to restart in mid-December.

Bateman explained that the ore fed from the mines increase the copper/nickel levels, which acts as a collector for the PGM ounces from the automotive catalysts.

“That gives us a cost advantage in the recycling business, as we’re not having to purchase additional materials to recycle to autocatalysts,” he said.

The processing facility currently has a high recovery rate of 99.8% for PGMs, and only runs for four days a week.

Bateman said electric furnace number two would soon be expanded when it is rebuilt.

He explained that this is required as a result of the Blitz growth and will increase the capacity to catch-up after a rebuild.

“We’ve got a good feeling about the quality of Stillwater . . .  and we think that the pain we are taking in terms of current leverage, and so on, was well worth [it] in acquiring this asset,” CEO Neal Froneman commented.

SOUTH AFRICA

Sibanye is also looking forward to closing the buyout of fellow South African platinum Lonmin transaction and integrating it successfully into its operations.

The Competition Tribunal’s hearing on Sibanye-Stillwater’s proposed acquisition of Lonmin has been rescheduled for the week of November 12, with a ruling anticipated before the end of November.

The company, meanwhile, remains focused on deleveraging, and getting its gold business performing again, while not letting its PGM assets underperform.

The significant operational challenges experienced at the South African gold operations during the first half of this year, and the additional safety improvement interventions that were undertaken, continued to affect productivity across the gold operations in the third quarter period.

Driefontein, in particular, delivered substantially reduced production rates.

As a result, adjusted earnings before interest, taxation, depreciation and amortisation (Ebitda) for the South African gold operations for the third quarter was substantially lower than for the comparable period in 2017, with an elevated AISC.

As a result of the reduced contribution from the South African gold operations during the period and the deferral of September sales into October at the US PGM operations, group adjusted Ebitda plummeted by 40% to R1.6-billion.

Contributions from group PGM operations to group adjusted Ebitda increased to 85% from 49% in the prior comparable period.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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