Sibanye-Stillwater cuts gold, nickel and PGMs production for 2023

SIBANYE-Stillwater announced cuts to production guidance for gold, nickel and platinum group metals (PGMs) owing to operational mishaps, a strike, and lower metal prices.

Publishing his firm’s interim results for the six months ended June 30, Sibanye-Stillwater CEO Neal Froneman said steps had been taken to “minimise” the events. “The operating environment has been … demanding, with regional factors in our operating jurisdictions posing significant challenges,” he said.

New gold production guidance of 625,000 to 660,000 ounces was 16% to 17% lower than forecast at the beginning of the year following a shaft incident at Kloof 4 shaft earlier this month.

Guided nickel output was lowered a quarter to 7,000 and 7,500 tons while PGM output from the firm’s US recyling operations was reduced 100,000 oz to 350,000 to 400,000 oz for the year as a result of lower demand.

The group produces nickel from the Sandouville refinery in France where nationwide strikes affected output. The asset posted a slight deepening in adjusted ebitda loss to $35m for the six month period.

The group had earlier this year cut guidance for US PGM production by between 8% and 10% to 460,000 and 480,000 oz following a shaft incident at the Stillwater West section of Stillwater mine following a shaft incident. The event also delayed the repositioning of production as announced post flooding of the Stillwater mine in 2022.

These events aside, and a deterioration in global macro-economic conditions which depressed metal prices, did not affect shareholder returns for the six months. Sibanye-Stillwater announced a 53 South African cents per share interim dividend representing the upper end of its payout range.

The interim dividend is 35% of normalised earnings for the six months to June 30 which at R4.28bn were 62% lower year-on-year.

Normalised earnings excludes foreign exchange fluctuations, impairments, and other exceptional items. Basic interim share earnings and headline interim share earnings fell 38% and 51% to 262 and 208 South African cents respectively.

As flagged by Sibanye-Stillwater in a recent trading statement, weaker PGM pricing drove performance for the period. There was a 22% decline in the average rand 4E PGM basket and a 28% fall in dollar 2E PGM basket price, the latter affecting Sibanye-Stillwater’s US based Stillwater mine and its recycling operations.

Sibanye-Stillwater’s saving grace was its gold production. Lossmaking at the interim stage last year (-R440m) following a three month strike by union Amcu, normalised production this year saw it contribute R2.38bn in adjusted ebitda or 17% of total.

The group moved into a net debt situation of some R262m.

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