[miningmx.com] – SIBANYE Gold said it would stick to its full-year gold production target of between 1.61 million ounces and 1.67 million oz despite suffering a slide in output in the usually difficult March quarter.
Reporting operating figures today, the R25.5bn gold producer said it had mined 315,300 oz which was 5% lower than for the comparable period in 2014, but nearly 31% lower than in the December quarter. Sibanye Gold’s year-end is December 31.
In addition to disruptions related to year-end holidays, Sibanye blamed the March quarter decline on load-shedding by Eskom, an underground fire at Kloof 7 shaft, and inter-union conflict at Beatrix.
“The operational disruptions were primarily a factor during January and February, with the operational performance improving significantly during March,” the company said indicating that it was likely to produce within guidance for the June quarter.
Sibanye Gold’s all-in cost forecast for the year was kept at between $1,070/oz and $1,110/oz which compares to and all-in cost of $1,259/oz in the March quarter. The average gold price was $1,222/oz in the quarter.
The outcome was that Sibanye Gold’s operating margin fell to 17% in the March quarter which compares badly to the 36% margin in the corresponding quarter of the previous financial year, and the 37% margin achieved in the December quarter.
“Opportunities to enhance productivity and recover gold production lost during January and February have been identified and have been implemented at all of the operations,” it said. “As such, the annual production forecast for 2015 remains unchanged.”
Shares in Sibanye were 2.5% lower on the Johannesburg Stock Exchange taking its 12-month return to a positive 6%.
Neal Froneman, CEO of Sibanye Gold, warned in comments to the quarterly figures that job losses could result if “inflated” wage demands were tabled (and were met) when biennial wage talks kick off in the current (June) quarter.
“Many gold mines are marginal and inflated wage and benefits increases will significantly impact on the sustainability of the industry and, while delivering short term gains for employees and unions, it will inevitably result in the loss of jobs and destroy value for all stakeholders in the longer term,” he said.
The gold industry looks like it could be heading for difficult wage talks again this year owing to the increased membership the Association of Mineworkers & Construction Union (AMCU) was won in the sector.
The union’s president, Joseph Mathunjwa, has expressed unhappiness with the venue for upcoming wage talks which he said should be on neutral ground. He also asked for a neutral chairperson to run the meetings.
Data from the Chamber of Mines — dated the end of February — indicate that the National Union of Mineworkers has 54% representation in the gold sector against some 29% for AMCU. The United Association of SA has 2% membership while Solidarity – which has tabled a wage demand of 12% – has 7% membership. About 8% of the combined 94,000 employees in the sectors are not unionised.
The NUM and AMCU have yet to table their wage demands but according to a report by City Press, the NUM is preparing wage demand increases of up to 75% for certain employee levels.
