SIBANYE Gold will report a more than tripling in interim headline share earnings following a 31% improvement in the average rand gold price, according to a trading statement published today.
However, the group warned shareholders it would have to absorb a R820m impairment on Cooke 4, the gold and uranium producing shaft west of Johannesburg.
Sibanye said on July 11 that it may have to close its Cooke 4 mine as well as the Ezulwini gold and uranium processing plant as it had been accumulating losses despite the record rand gold price.
A 60-day review of the asset, called a Section 189 process, has commenced. Cooke 4 and Ezulwini employs 1,700 full time workers and 800 contractors. Unions have been alerted.
Headline share earnings for the six months ended June 30 were expected to be between 92 and 116 cents, an improvement year-on-year of 484% and 611% over the 19c/share reported in the corresponding period of the previous financial year.
Including the impairment on Cooke 4, however, share earnings will be between 70% and 110% higher equal to 14c and 22c a share – higher than the 20 cents per share reported for the previous comparable period.
However, both headline and earnings per share were affected by the 120% improvement in Sibanye Gold’s share price during the six month period. The improvement has resulted in a R1.18bn re-evaluation of financial instruments mostly related to share-based payments.
Normalised earnings, which do not include the impact of financial instruments or impairments, would be up to 848% higher at some 229 cents per share in the six months compared to 27c/share previously.
Sibanye’s gold production in the period was 23,200kg (746,000 ounces), some 996kg (32,900 oz) more than in the six months to end-June last year. All-in sustaining costs (AISC) totalled 454,000/kg ($920/oz) compared with R434,769/kg ($1,137/oz) for the previous comparable period.
The gold production figures must come as a disappointment to Sibanye CEO, Neal Froneman, however. He said at the end of last year that the company would address gold output following a year affected by fires and industrial production.
Platinum group metal (PGM) production is forecast to be 178,000 oz compared to 168,000 oz previously. Kroondal and Mimosa, the platinum mines Sibanye bought in the R4bn takeover of Aquarius Platinum, were forecast to deliver all-time record PGM production, the company said.
“Both operations continue to deliver above nameplate capacity, a notable achievement given their respective challenging operating environments,” said Sibanye in the trading statement.
