Sibanye-Stillwater says SA ‘overhead’ cuts on radar

Neal Froneman, CEO, Sibanye-Stillwater

SIBANYE-Stillwater CEO Neal Froneman raised the prospect of further restructuring of the firm’s South African division which produces gold and platinum group metals (PGMs).

“At the operational shaft level our restructuring is done,” Froneman said when asked at the PGM Day conference in Johannesburg on Wednesday about possible further restructuring of the firm’s PGM output.

He added: “But we wiill always look at the overhead structure and potentially there is some restructuring at central (head office),” he said.

Froneman said in March that earnings remained “under pressure” despite having cut about R6.5bn in costs at its gold and PGM mines in South Africa as well as at the Stillwater palladium and platinum mine in the US.

However, he said the South African PGM mines were “cash flow positive”. Sibanye-Stillwater had “moved very early to take out lossmaking production”, he said. He added that Stillwater was making progress after cutting back production targets.

According to a report by RMB Morgan Stanley, published on March 13, mines owned by Sibanye-Stillwater, Impala Platinum (Implats) and Northam Platinum’s Eland mine could burn about $430m in cash, after stay-in-business expenses, by calendar year-end

“The good news is we are Ebitda positive at Stillwater. We are not cash flow positive, but we won’t close it. If you think taking out 400,000 ounces (in annual PGM production) out of the market … no, it’s not happening. It’s too strategic,” he said.

Of the R6.5bn in recent cost cutting, nearly half of the savings from restructuring (R3bn) was at Stillwater after the group called time on a proposed expansion to 700,000 oz a year of palladium and platinum. Production for 2024 is expected to be between 440,000 to 460,000 oz.

Froneman told Miningmx previously that it didn’t make sense to close Stillwater whilst the company hoped to build the Rhyolite Ridge lithium and boron project in Nevada in the US. The company is expected to plough $490m for a 50% stake in Rhyolite Ridge once permits are granted. Project founder, Ioneer will hold the balance of the project.

Concerns about how funding Rhyolite Ridge come as the spotlight falls on Sibanye-Stillwater’s balance sheet. The group ended the 2023 financial year with net debt of R11.9bn, equal to a net debt to adjusted Ebitda ratio of 0.58x.