Gold, PGM numbers suggest Sibanye-Stillwater can pay handsome final dividend

SIBANYE-Stillwater’s South African assets exceeded revised guidance in the second half of its 2020 financial year setting the company up for “significantly” better operating numbers.

Production from the South African platinum group metal (PGM) mines was 918,678 ounces (4E) in the second half – a 40% improvement on the first half in which Covid-19 lockdowns halted operations – taking the full year production to 1.58 million ounces (4E).

This was higher than the 1.45 million oz set out in the upper end of guidance for the 2020 financial year. Given that rhodium and palladium pricing remained at high levels, the outcome for shareholders is likely to be good, despite strength returning to the rand in the latter half of the year.

Covid-19 lockdown conditions hurt the firm’s US operations.

Mined PGM production was 603,066 oz (2E) for 2020 which was below revised guidance of 620,000 to 650,000 oz primarily due to the impact of a spike in Covid-19 infections at the operations in Montana where a resurgence of Covid-19 was prominent. Second half output was 3% higher than in the first half.

Gold production, excluding DRDGOLD, the gold retreatment company in which Sibanye-Stillwater has a 50.1% stake, totalled 406,321 oz in the second half of the year. This was 48% higher than in the first half, and took full year production to 809,941 oz, slightly over the high-end of revised guidance which was 788,000 oz.

“The manner in which the initial threat of Covid-19 was handled at our operations in H1 2020 and the subsequent, safe return to normalised production levels by year-end was extremely pleasing,” said Neal Froneman, CEO of Sibanye-Stillwater in an announcement.

“In the absence of unexpected disruptions, the group is well positioned to deliver a much more consistent and significantly improved operating result for 2021,” he said.

The company announced an interim dividend in August of R1.4bn, its first payout to shareholders in about three years after raising $2.2bn to buy Stillwater Mining in the US.

By the third quarter, Sibanye-Stillwater had largely completed its deleveraging program.

Despite the dividend payment, net debt to adjusted EBITDA as of end-September fell 40% to 0.33 times from 0.55x at June-end.

In addition, Sibanye-Stillwater issued about 248 million shares settling the balance of a $450m bond used to part-finance the $2.2bn acquisition of Stillwater Mining in 2016. As a result, net debt to adjusted EBITDA falls to 0.05x at 30 September 2020.

1 COMMENT

  1. Impressive to see Sibanye publishing its production figures so soon after quarter-end.
    Just wondering why DRD (50% subsidiary) is yet to report its production numbers.
    Surely DRD’s 2 dump operations should be much easier to report, than Sibanye’s myriad of underground shafts?

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