[miningmx.com] – BUFFETED by a power outage that downed its Carletonville mines, and a fire at Beatrix mine in the Free State province, Sibanye Gold still managed to generate enough cash in the first quarter of its 2013 financial year to lop R570m off its debt pile.
“Sibanye Gold is pleased to report that it has redeemed R570m of its bridge loan facilities, from cash generated during the first three months of F2013,” the company said in an announcement to the JSE today.
As a result, gross debt fell to R4bn and net debt to R3.6bn. In terms of its bridging loan agreement, it was obliged to pay down R500m during the financial year.
Apart from putting itself in a position to renegotiate the more onerous terms of its debt, incurred partly from the six week strike at its Carletonville and Free State mines last year, Sibanye Gold is also likely to make good on its listing promise that it would be a high yield (high dividend-paying) investment option.
It was calculated that at a listing price of anywhere between R10 to R15/share, Sibanye Gold could pay a dividend yield of up to 10%. The share opened on the JSE at R13.05/share on February 11.
“We didn’t have the best quarter so imagine what we can do if we can get through the year without a major strike or some other mishap,” said James Wellstead, head of investor relations at Sibanye Gold.
“We would like to start restructuring our debt. We don’t want to be in a position where the banks dictate what we do with the cash we generate,” he said.
The market seems generally appreciative of Sibanye Gold, at least on a relative basis; certainly there hasn’t been the enormous slump in its share price that some anticipated and based on the view that foreign investors would rapidly exit the stock.
The shares has traded heavily, however. Some 50% of its market capitalisation – about R4.5bn – has traded since it listed. This means that while the company’s share register is changing at a rate of knots, it is finding willing buyers.
The stock has outperformed AngloGold Ashanti (-12%) and Gold Fields (-21%) and level-pegged with Harmony Gold the shares of which are down 6.30% since the beginning of February. Shares in Sibanye Gold are 7.6% weaker since the beginning of February.
The weakness in the shares of Gold Fields is an interesting development as it was hoped that free from its troubled South African assets – now contained in Sibanye Gold following their unbundling – the share would re-rate.
Broad economic conditions have been against Gold Fields. The liquidation of gold-backed exchange traded funds in January and February, following an uptick in general equities based on expectations of higher global growth, have worked against gold stocks globally.
The outperformance of Harmony and Sibanye may also be closely tied to the weakness of the rand against the dollar which has taken the price received for all of Sibanye’s and most of Harmony’s gold to R475,729/kg.
