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 and a fire at Driefontein 5 in July as well as seismiticity at Driefontein.

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 while technical issues continued. The asset, which saw 50 days in lost production, posted a slight deepening in adjusted ebitda loss to $35m for the six month period. Sibanye-Stillwater recently installed new management which aimed to “radically” improve performance.

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.

Despite the payout, Froneman said Sibanye-Stillwater would revisit the firm’s dividend policy at year end. “We realise that we have a low dividend yield. We will look to re-establish dividend yield. That will be a board discussion with the final dividend,” he said.

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 for the first time since the second half of its 2020 financial year.