Sibanye-Stillwater bids to save 330,000 oz/y in lossmaking gold

SIBANYE-Stillwater is considering implementing central services for its South African mines that will help save half of approximately 330,000 ounces in gold production currently lossmaking, even at the current high metal price.

Neal Froneman, CEO of Sibanye-Stillwater said in an interview on August 29 that the company hoped to develop a model in the next six to nine months in which the firm’s gold and platinum group metal (PGM) mines would share infrastructure.

“We are looking at a number of scenarios with the lossmaking part of the gold business,” said Froneman. “These won’t be marginal changes but a complete change in how we run the business as we have to deal with the overheads,” he said.

Sibanye-Stillwater’s gold division reported R2.38bn in adjusted ebitda for the six months ended June, a vast improvement on the R3.11bn loss in the previous year in which a strike by union Amcu resulted in three months of lost production. Costs were also lower year-on-year owing to the higher production.

Despite this, up to 40% of its 416,738 oz in the first six months of this year was operating at or above a price of R1.15m, according to the firm’s interim results presentation. In addition, Sibanye-Stilwater’s gold business is facing operating headwinds in the second half of the year after lowering production guidance 16% to 625,000 to 660,000 ounces.

This was owing to a fire at Driefontein 5 shaft which impacted the mine’s No 1 shaft affecting roughly 29,000 oz in output so far this year. There was also a “shaft incident” at Kloof No 4 in July which has rendered it inaccessible below 39 level for the year. Sibanye-Stillwater said the impact of this was being assessed.

The firm’s gold business played an important role this year helping to offset a decline in the profitability of Sibanye-Stillwater’s platinum group metals production.

But its shafts are mature. Excluding the company’s undeveloped Burnstone project, gold reserves will be exhausted in a maximum of 10 years (and four years for Beatrix mine in the Free State) assuming a gold price of $1,650/oz (R850,000/kg).

In 2021, Froneman suggested a three-way tie-up with AngloGold Ashanti and Gold Fields – but approaches to both companies were rejected.

Speaking in July last year, Froneman said the company was not concerned about its gold assets. “We are not fazed about a decline in production profile because it’s not the only asset we have, and it’s one of the reasons we moved into PGMs,” he said.