AS incoming Sibanye-Stillwater CEO Richard Stewart steps into the massive mining boots of Neal Froneman, dividends are on his mind – and no doubt those of the company’s shareholders.
While Sibanye-Stillwater’s headline share earnings surged in its six months to the end of June to 190 South African cents, it hardly shot the lights out, and the board opted for prudence, citing “… the uncertain global economic and geo-political backdrop”.
“We do want to get back into a dividend paying position and we do expect a better second half operationally. If prices remain where they are I think we will be back in dividend paying territory by the end of the year,” Stewart said in an interview.
Sibanye-Stillwater’s origin story in 2013 as a spin-off from Gold Fields was tightly tied to its dividend flow. But that was because it pumping gold from legacy, conventional South African mines that did not require much in the way of capex as the future was not extending to the horizon.
“When we started the company as gold only the dividend story was incredibly important because there wasn’t much of a story to sell when there was only deep-level gold assets without any growth. So dividend was absolutely core to the story then,” Stewart said.
That narrative around dividends underwent a metamorphosis under Froneman’s deal-making and diversification drive into PGMs and battery metals.
“This has eased a little bit because we do have growth plans. The dividend policy shows good financial discipline. And I think our shareholders welcome it. If we had of declared a dividend now it would have been small,” Stewart said.
And while the dividend tap is expected to get turned on again soon, the market and geo-political currents are swirling in ways that are tough to forecast.
“We are cautious on PGM prices We have not seen the recent prices translated into fundamental industrial demand. If we see that happening it will give us more confidence. But markets could still be volatile for the next six months,” Stewart said.
Farewell to founder
This was a torch-passing set of results as Froneman officially steps down at the end of September. Stewart lead the presentation and pointedly was the voice and face for media interviews.
“I believe we have had a world-class transition and not just at CEO level. I know that Richard will take this company together with his world-class team to new heights. I will watch your progress as a shareholder,” Froneman said at the start of the presentation, his voice betraying a hint of emotion.
“Let me thank my team,” he said at the end of the presentation. “This is the best team in the mining industry and they will certainly demonstrate it.”
Mining companies are often linked to personalities, but few have been as intwined as Sibanye and Froneman.
Stewart has his hands full and while the gold price remains red hot and PGMs are rebounding, it is tough to take the mantle of any global company at the moment in the face of such uncertainty. The size and timing of the next dividend will be his first big test.
