SIBANYE Gold reduced estimated mineral reserves at its newly acquired platinum (4E) operations by some 12.5 million ounces of which about half were at Rustenburg Platinum Mines (RPM).
The reduction in reserves – those ounces that can be profitably mined at assumed price – represented a significant reduction on estimates of the previous owners of the mines – Anglo American Platinum (Amplats) and Aquarius Platinum.
Sibanye bought RPM from Amplats last year for about R4.5bn and spent another R4bn buying Aquarius Platinum which owned the Kroondal Platinum Mines and Mimosa Platinum assets.
Total platinum reserves were estimated to be 23.2 million oz of which about 1.7 million oz was down to depletion from mining activities. A further 1.1 million oz reduction in the reserves calculation was from the sale of Everest mine by Aquarius to Northam Platinum, a transaction conducted in April 2015.
Then Sibanye took out reserves from a pre-existing pool and share (PSA) agreement between Aquarius Platinum and Amplats. The two had both accounted for the reserves in the PSA so there was a double-count effect.
Finally, Sibanye shifted 6.2 million oz from reserves to resources at RPM because it couldn’t mine them profitably at the three-year trailing price average of $1,209/oz for platinum.
Excluding reserves that were depleted from mining and other accounting oddities, the reduction in reserves owing to the stricter price applied by Sibanye is roughly 30%.
James Wellsted, head of corporate affairs for Sibanye, said the company uses a more conservative price assumption than both Amplats and Aquarius owing to the US Securities and Regulation Panel standards to which it must comply.
“But we’ve also said that a 5% shift upwards in the basket price of platinum 4E will result in the metal moved to resources being shifted back into the reserves category. And we are obviously bullish on the metal price going forward,” he said.
In respect of its gold assets, reserves were lowered 2.3 million oz to 28.7 million oz – a 2% decline year-on-year – of which 1.3 million oz was down to depletion.
Of the other 700,000 oz, roughly 500,000 oz was metal contained in Cooke 4, the west Rand operation where Sibanye has ceased underground mining.
The company has used a three-year trailing average gold price of $1,229 per ounce.
On a rand basis, the assumption is R490,000/kg for its gold reserves against a spot price currently of R515,903/kg whilst for platinum, it has used a rand price of R499,000/kg against spot of R411,444/kg.
