Wrap Text
Updated trading statement and production report for the March 2013 quareter
Sibanye Gold Limited
(Reg. No. 2002/031431/06)
(Incorporated in the Republic of South Africa)
(Sibanye Gold or the Company)
Share code: SGL
ISIN ZAE000173951
Issuer code: SGL
Updated Trading Statement and Production Report for the quarter ended 30 March 2013
WESTONARIA 8 May 2013: Sibanye Gold Limited (JSE: SGL & NYSE: SBGL) is pleased to provide a trading statement and
operating update for the March 2013 quarter and a group strategic update. Full financial and operating results will
be provided on a 6 monthly basis.
Trading statement
Further to the trading statement released on Friday, 3 May 2013, shareholders are advised that a reasonable degree of
certainty exists, in the ordinary course of business, that earnings per share and headline earnings per share for the
six months ended 30 June 2013 will be at least 127 cents per share , based on 566.4 million ordinary shares, being the
weighted average number of ordinary shares in issue during the six months ended 30 June 2013. Based on the total number
of ordinary shares in issue at the date of this report of 732.8 million, the earnings per share and headline earnings
per share for the six months ended 30 June 2013 will be at least 98 cents per share. A further announcement will be
released once a more definitive range can be given. The trading statement is based on a gold price of R415,000 per
kilogram from 30 April 2013 until 30 June 2013.The financial information on which the trading statement has been based
has not been reviewed or reported on by the Companys auditors
March 2013 quarter salient features
A 121% quarter-on-quarter increase in operating profit to R1,518 million (US$171 million).
Free cash generation of R590 million (US$66 million) during the quarter.
A 36 per cent quarter-on-quarter gold production increase to 9,312 kilograms (299,400 ounces).
A 22 per cent quarter-on-quarter reduction in notional cash expenditure ("NCE") to R381,347 per kilogram
(US$1,334 per ounce).
Net debt of R2.8 billion (US$304 million) as at 30 April 2013.
A 327% increase in available cash from 31 December 2012 to R1.2 billion (US$130 million)on 30 April 2013.
Excellent safety performance with the group now in line with United States underground fatality rates.
Good progress made with implementation of the group business process re-engineering ("BPR") initiatives.
South African Rand Key statistics United States Dollars
Quarter Quarter
March December March March December March
2012 2012 2013 2013 2012 2012
10,227 6,831 9,312 kg Gold produced oz (000) 299 220 329
256,956 373,093 306,594 R/kg Total cash cost US$/oz 1,073 1,338 1,027
319,429 490,265 381,347 R/kg Notional cash expenditure US$/oz 1,334 1,759 1,277
3,503 2,349 3,006 000 tons Ore milled 000 tons 3,006 2,349 3,503
743 1,103 952 R/ton Operating costs US$/ton 107 127 96
1,680 686 1,518 Rm Operating profit US$m 171 72 189
39 21 35 % Operating margin % 35 21 39
24 (2) 19 % NCE margin % 19 (2) 24
Average received gold price: US$1,645/oz; Average exchange rate: R8.89/US$ for the quarter ended March 2013
Statement by Neal Froneman, Chief Executive Officer of Sibanye Gold:
I am pleased to present an operating update for Sibanye Gold for the Quarter ended 31 March 2013, the first
quarter these assets (Kloof, Driefontein and Beatrix) have operated independently as Sibanye Gold.
Even in a seasonally difficult quarter, which was impacted by significant, unanticipated operational disruptions,
Sibanye Gold was able to generate R1,518 million (US$171 million) in operating profit and free cashflow of R590
million (US$66 million). Kloof and Driefontein, which will in future be separately reported, continued to improve
through the quarter, with Driefontein in particular recovering strongly from the strikes and fire at its Ya Rona shaft in
2012. Between them, Kloof and Driefontein were responsible for 89 per cent of Group operating profit. During the
quarter under review, Beatrix has been negatively affected by the underground fire at the Beatrix West Section and
operational challenges at the Beatrix North Section.
The above results were achieved at an average received gold price during the quarter of R470,157 per kilogram
(US$1,645 per ounce at an exchange rate of R8.89 per US dollar). Despite limited implementation during this quarter
of the BPR initiatives described below, notional cash expenditure (NCE) of R381,347 per kilogram (US$1,334 per
ounce), was achieved. Through the BPR the group is targeting significant cost reductions over the next two years.
The BPR together with the high quality nature of the resource base should result in the group having improved
flexibility.
On 26 March 2013. the Company announced the early repayment of R570 million in debt, reducing its gross debt to
R4 billion and its net debt to R3.6 billion. By 30 April 2013, cash and equivalents had risen to R1.2 billion
(US$130 million) and net debt had reduced further to R2.8 billion (US$304 million).
As previously announced, the 2013 business plan assumed a gold price of R400,000 per kilogram and as is evident
from the March 2013 quarter, Sibanye Gold remains significantly cash flow positive even at current gold prices.
Safety a priority
The health and safety strategy is under pinned by the pillars of Culture (hearts and minds), Stakeholder alignment
and engagement, Wellbeing, Engineering out the Risk and Compliance. Sibanye Gold believes that all accidents
are preventable and aims to achieve continual safety improvement by aligning beliefs and behaviours with our
values, including the goal of zero harm. All stakeholders are in included in a structured safety programme and the DMR
and government are continually engaged to ensure they understand and support the safety strategy. Wellbeing is
achieved by ensuring workers are healthy, live decently in a safe environment and are nourished. Key risk areas are
identified and prioritised on a continuous basis and correct procedures and technical solutions are implemented.
Overall compliance to standards and procedures by employees are measured through workplace audits, which
form an integral part of bonus schemes for all production personnel.
The safety performance of the group has continued to improve and the fatal injury frequency rate for the Group
improved by 69 per cent from 0.16 the previous quarter to 0.05 during the March 2013 quarter. The March 2013
quarter fatal injury frequency rate is in line with the 2012 United States underground mining industry fatal injury frequency rate
average, which is particularly notable, considering that Sibanye Gold is a labour intensive business, operating at
depths of over 3,000 metres.
Driefontein and Kloof reported zero fatalities during the March quarter, and together, achieved an outstanding two
million fatality free shifts (FFS) on 2 April 2013. Kloof (previously KDC East) underground section set a new record by
achieving the milestones of 4 million underground FFS and 18 months without any underground fatalities. Sibanye
Gold as a group, had also achieved 1.5 million FFS before the regrettable fatal accident at Beatrix on 4 April.
The lost day injury frequency rate (LDIFR) also improved, declining from 6.90 in 2012 to 6.06 in the March quarter.
Sibanye Gold management will maintain its focus in this area in order to reduce the LDIFR further.
Sibanye Gold will continue to pursue its goal of zero harm at its operations. That said, we believe that the health and
safety gains achieved in recent years bode well for improved relationships with our regulators and significant
improvements in productivity.
Operating Performance
The quarter under review presented some significant operating challenges. The underground fire at Beatrix West
Section which began on 19 February 2013 resulted in the loss of approximately 100 kilograms (3,215 ounces) of production.
The area affected by the fire remains closed and as a result the production at this shaft is some 61 kilograms (1,961
ounces) of gold per month less than planned. The future viability of this shaft is in doubt and the Company has
initiated a formal section 189 process to review alternatives to closure with the regulators and organized labour.
At Driefontein the power outage due to a lightning strike and subsequent transformer fire at an ESKOM substation on
13 March 2013, resulted in some 295 kilograms (9,484 ounces) of production losses.
Despite these disruptions, and the slow start up in January post the Christmas break, total production increased by 36
per cent from 6,831 kilograms (220,000 ounces) in the December 2012 quarter to 9,312 kilograms (299,400 ounces) in
the March 2013 quarter. Production trends over the quarter are positive, with notable improvements at Kloof and
Driefontein. Beatrix remains a concern, with the operation as a whole being negatively impacted by high costs, low
flexibility and lower than planned underground grades. These issues are receiving appropriate attention and it is
estimated that it will take three quarters to rectify the current underperformance.
Development rates (and hence ore reserve development costs) have risen as the company is now preparing to
arrest the historical and inherited declining production profiles.
Business process re-engineering
Since the listing of Sibanye Gold, the company has made significant progress in reviewing every aspect of the
business. The initial focus has been on reducing costs. Lower costs will lower the paylimits (the grade at which the ore
body can be mined without profit or loss i.e. at break-even). Lower paylimits should enable the conversion of
measured resources, which are pre-developed in many cases, into reserves. This should enhance operational
flexibility and hence either extend the Life of Mine (LoM) or increase current production profiles. Lower paylimits
could also enable the economic extraction of secondary reef packages which were to a large extent ignored in the
past, when the focus was on higher grade opportunities. The potential of mining these reef packages is currently
being assessed.
Costs have been reduced and organizational effectiveness improved by merging regional and corporate office
structures and flattening operational management layers. Shared services divisions are now being rightsized and
streamlined and the Group is in the process of rolling out the new management operating model. We believe this is the
first step in reducing costs and improving the organizational effectiveness of the underground operations.
Operational focus has been improved with the appointment of senior managers for each of the operations of Kloof,
Driefontein and Beatrix. The operational benefits of these initiatives should flow through during the June quarter with
the cost benefits being visible from the September quarter onwards.
Sibanye Gold will communicate appropriately as the cost reductions and the productivity benefits have been fully quantified.
Wage negotiations
The upcoming wage negotiations with organised labour are set to begin at the end of May 2013. The increased profile of
the Association of Mineworkers and Construction Union (AMCU) in the last year adds a new dimension to the
negotiations and at this stage, it remains uncertain how the wage negotiation process will proceed. Management is
acutely aware of the heightened risks of strike activity and as such has developed comprehensive strike plans to minimise
the impact of any potential strikes.
Outlook
With the expected increase in organizational effectiveness, group production for the June 2013 quarter is forecast to
increase by 14 per cent to approximately 10,600 kilograms (340,000 ounces). As a result of the increase in production
and ongoing cost reduction initiatives, total cash cost and NCE are expected to be 5 per cent lower than the March
2013 quarter, at approximately R290,000 per kilogram (US$975 per ounce) and R360,000 per kilogram (US$1,220 per
ounce) respectively.
Annual production is forecast at approximately 40,000 kilograms (1.29 million ounces) with average NCE for the
period of approximately R380,000 per kilogram.
8 May 2013
N. Froneman
Chief Executive Officer
Review of operations and capital expenditure. The NCE margin increased
Quarter ended 31 March 2013 compared with from a negative 13 per cent to a positive 24 per cent.
quarter ended 31 December 2012
Kloof
Driefontein
Mar 2013 Dec 2012
Mar 2013 Dec 2012 Ore milled - 000 tons 989 843
Ore milled - 000 tons 1,165 899 Gold produced - 000oz 113.1 94.5
Gold produced - 000oz 126.6 72.8 - kg 3,517 2,940
- kg 3,938 2,263 Yield - underground - g/t 7.2 6.7
Yield - underground - g/t 6.6 5.4 - combined - g/t 3.6 3.5
- combined - g/t 3.4 2.5 Total cash cost - R/kg 283,964 318,946
Total cash cost - R/kg 296,039 443,217 - US$/oz 994 1,144
- US$/oz 1,036 1,590 Notional cash
- R/kg 367,927 452,823
Notional cash expenditure
- R/kg 354,850 543,615 - US$/oz 1,287 1,625
expenditure
- US$/oz 1,242 1,950 NCE margin -% 22 6
NCE margin -% 24 (13)
Gold production increased by 20 per cent from 2,940
Gold production increased by 74 per cent from 2,263 kilograms (94,500 ounces ) in the December quarter to
kilograms (72,800 ounces) in the December quarter to 3,517 kilograms (113,100 ounces) in the March quarter.
3,938 kilograms (126,600 ounces) in the March quarter. This increase was due to a normalisation of production,
This increase was primarily due to a normalisation of following the lower production in the December quarter
production, following the illegal industrial action from 10 because of the illegal industrial action from 30 August to
September to 21 October 2012 and resumption of 5 September 2012 and again from the 13 October to 5
production at the Ya Rona shaft post the fire. November 2012.
Underground ore milled increased from 352,000 tons in Underground ore milled increased from 383,000 tons in
the December quarter 524,000 tons in the March the December quarter to 438,000 tons in the March
quarter. The underground yield increased from 5.4 quarter. The underground yield increased from 6.7
grams per ton (due to low grade clean-up during the grams per ton to 7.2 grams per ton. Surface production
illegal strike) to 6.6 grams per ton. Surface throughput increased from 460,000 million tons to 551,000 million tons
increased from 547,000 tons to 641,000 tons and the and the surface yield decreased marginally to 0.7 grams
surface yield increased from 0.7 grams per ton to 0.8 per ton.
grams per ton.
Operating profit increased from R470 million (US$54
Operating profit increased from R56 million (US$7 million) million) to R662 million (US$74 million) due to the increase
to R683 million (US$77 million) due to the increase in in production.
production.
Operating costs increased by 5 per cent from R943
Operating costs were 13 per cent higher at R1,166 million million (US$109 million) to R992 million (US$112 million).
(US$131 million) from R1,029 million (US$119 million) in the This increase was again due to an increase in labour and
December 2012 quarter. This increase was due to higher stores costs normalising after the illegal strike in the
wages and stores and electricity costs normalising, as previous quarter. Total cash cost for the quarter
production recovered after the illegal strike in the decreased from R318,946 per kilogram (US$1,144 per
previous quarter. Total cash cost for the quarter ounce) in the December quarter to R283,964 per
decreased from R443,217 per kilogram (US$1,590 per kilogram (US$994 per ounce) in the March quarter.
ounce) in the December quarter to R296,039 per
kilogram (US$1,036 per ounce) in the March quarter. Main development increased by 71 per cent from 2,766
metres to 4,722 metres and on-reef development
Main development increased by 102 per cent from 2,087 increased by 129 per cent from 367 metres to 841
metres to 4,216 metres and on-reef development metres. The average development value decreased
increased by 197 per cent from 403 metres to 1,199 from 2,061 centimetre grams per ton to 1,799 centimetre
metres. The average development value increased grams per ton.
from 1,077 centimetre grams per ton to 1,211 centimetre
grams per ton. Capital expenditure decreased from R388 million (US$45
million) to R302 million (US$34 million) mainly due to the
Capital expenditure increased from R202 million (US$23 timing of expenditure on growth and social and labour
million) to R231 million (US$26 million) mainly due to an plan projects.
increase in ore reserve development.
Notional cash expenditure decreased from R452,823 per
Notional cash expenditure decreased from R543,615 per kilogram (US$1,625 per ounce) to R367,927 per kilogram
kilogram (US$1,950 per ounce) to R354,850 per kilogram (US$1,287 per ounce) as a result of the improved
(US$1,242 per ounce) as a result of the improved production and lower capital expenditure. partly offset
production, partly offset by increased operating costs by the increase in operating costs. The NCE margin
increased from 6 per cent to 22 per cent.
Beatrix
Capital expenditure of R150 million (US$17 million was
Mar Dec 9 per cent lower than in the December 2012 quarter,
2013 2012 with the majority being spent on infrastructure upgrades
Ore milled - 000 tons 852 607 and ore reserve development.
Gold produced - 000oz 59.7 52.3
- kg 1,857 1,627 As a result, notional cash expenditure decreased from
Yield - underground - g/t 4.1 3.6 R481,659 per kilogram (US$1,728 per ounce) to R458,354
- combined - g/t 2.2 2.7 per kilogram (US$1,604 per ounce) and the NCE margin
Total cash cost - R/kg 371,804 373,610 increased from a negative 1 per cent to a positive 3
- US$/oz 1,301 1,338 per cent.
Notional cash
- R/kg 458,354 481,658 The underground fire has had a significant impact on
expenditure
- US$/oz 1,604 1,728 the profitability of Beatrix West Section, which continues
to lose 61 kilograms of gold per month (1,962 ounces)
NCE margin -% 3 -1
from the fire affected area and has threatened the
commercial viability of the mine. As a result, Sibanye
The recovery in gold production from the Beatrix Gold has entered into a period of consultation with
operations was limited by the impact of the fire at West affected stakeholders in terms of Section 189 of the
Section, which resulted in the loss of 100 kilograms Labour Relations Act, in order to explore the options
(3,215 ounces) during the quarter. Total gold produced available to it. Stakeholder will be kept informed of the
progress during this period of consultation.
increased by 14 per cent from 1,627 kilograms (52,300
ounces) in the December 2012 quarter to 1,857
kilograms (59,700 ounces) in the March 2013 quarter. This
was as a result of a recovery from the illegal strike
activity in the December 2013 quarter. The underground
yield increased from 3.6 to 4.1 grams per ton due to
higher underground grade and a decrease in stoping
width.
Underground tons milled remained fairly constant at
431,000 tons. Underground tons were supplemented by
surface material which increased from 171,000 tons to
421,000 tons. Surface yield remained unchanged at 0.3
grams per ton.
Operating profit increased from R159 million (US$18
million) in the December quarter to R173 million (US$20
million) in the March quarter due to the increased gold
production.
Operating costs increased by 13 per cent from R619
million (US$71 million) to R702 million (US$79 million).
Costs in the December 2012 quarter benefited from
variable cost savings resulting from lower production
during the illegal strike in the previous quarter. As a result
of the increased production in the March 2013 quarter,
total cash cost decreased from R373,610 per kilogram
(US$1,338 per ounce) to R371,836 per kilogram (US$1,301
per ounce).
Main development increased from 3,863 metres in the
December quarter to 3,993 metres in the March quarter.
On-reef development decreased from 861 metres to 610
metres as a result of the fire at the West Section and
safety related stoppages at the North Section. The
weighted average value of the main reef development
increased from 1,067 centimetre grams per ton to 1,143
centimetre grams per ton.
Development results
Development values represent the actual results of sampling and no allowance has been made for any adjustments which may be necessary when
estimating ore reserves. All figures below exclude shaft sinking metres, which are reported separately where appropriate.
Driefontein March 2013 quarter December 2012 quarter
Reef Carbon Leader Main VCR Carbon Leader Main VCR
Advanced (m) 2,813 754 649 1,347 402 338
Advanced on
(m) 665 300 234 285 113 5
reef
Sampled (m) 498 222 144 246 120 54
Channel width (cm) 79 49 60 86 57 68
Average value (g/t) 15.1 16.6 28.7 14.0 15.3 18.5
(cm.g/t) 1,187 810 1,723 1,207 870 1,254
Kloof March 2013 quarter December 2012 quarter
Reef Kloof Main Libanon VCR Kloof Main Libanon VCR
Advanced (m) 169 865 7 3,681 55 559 30 2,123
Advanced on reef (m) 67 204 7 563 2 107 30 228
Sampled (m) 45 225 3 339 2 120 15 228
Channel width (cm) 136 107 104 120 126 90 118 134
Average value - (g/t) 2.6 7.4 7.0 20.6 3.7 16.8 2.7 18.9
(cm.g/t) 350 795 728 2,464 466 1,518 322 2,527
Beatrix March 2013 quarter December 2012 quarter
Reef Beatrix Kalkoenkrans Beatrix Kalkoenkrans
Advanced (m) 3,263 730 2,980 884
Advanced on reef (m) 435 175 715 142
Sampled (m) 525 126 651 195
Channel width (cm) 159 70 141 90
Average value (g/t) 7.6 12.9 5.6 22.1
(cm.g/t) 1,201 898 791 1,985
7 | Sibanye Gold Production Report - Quarter One 2013
ADMINISTRATION AND CORPORATE INFORMATION
Investor Enquiries Sibanye Gold Limited Office of the United Kingdom Transfer Secretaries
James Wellsted Incorporated in the Republic Secretaries South Africa
Head of Corporate Affairs of South Africa London Computershare Investor
Sibanye Gold Limited Registration number St Jamess Corporate Services (Proprietary) Limited
+27 83 453 4014 2002/031431/06 Services Limited Ground Floor
+27 11 278 9600 Share code: SGL 6 St Jamess Place 70 Marshall Street
james.wellsted@sibanyegold.co.za Issuer code: SGL London Johannesburg, 2001
ISIN ZAE E000173951 SW1A 1NP P O Box 61051
Corporate Secretary United Kingdom Marshalltown, 2107
Cain Farrel Listings Tel: +44 20 7499 3916 Tel: +27 11 370 5000
Tel: +27 10 001 1122 JSE : SGL Fax: +44 20 7491 1989 Fax: +27 11 688 5248
Fax: +27 11 278 9863 NYSE : SBGL
cain.farrel@sibanyegold.co.za
Website American Depository Transfer Secretaries
Registered Office www.sibanyegold.co.za Receipts Transfer Agent United Kingdom
Libanon Business Park Bank of New York Mellon Capita Registrars
1 Hospital Street, Directors: BNY Mellon Shareowner The Registry
(Off Cedar Ave), Matthews Moloko* Services 34 Beckenham Road
Libanon, Westonaria, (Chairman) Neal Froneman P O Box 358516 Beckenham
1780 (CEO) Pittsburgh, PA15252-8516 Kent BR3 4TU
South Africa Charl Keyter (CFO) US toll-free telephone: +1 888 England
Timothy Cumming* 269 2377 Tel: 0871 664 0300 [calls
Private Bag X5 Barry Davison* Tel: +1 201 680 6825 cost 10p a minute plus
Westonaria, Rick Menell* e-mail: network extras, lines are
1780 Nkosemntu Nika* shrrelations@bnymellon.com open 8.30am 5pm Mon-
Fri] or [from overseas]
South Africa Keith Rayner*
+44 20 8639 3399
Susan van der Merwe*
Fax: +44 20 8658 3430
Tel: +27 11 278 9600 Jerry Vilakazi*
e-mail:
Fax: +27 11 278 9863 Cain Farrel (Company
ssd@capitaregistrars.com
Secretary)
*Non-Executive
FORWARD LOOKING STATEMENTS
Certain statements in this document constitute forward looking statements within the meaning of Section 27A of the US Securities Act of 1933 and
Section 21E of the US Securities Exchange Act of 1934.
Such forward looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results,
performance or achievements of the company to be materially different from the future results, performance or achievements expressed or implied
by such forward looking statements. Such risks, uncertainties and other important factors include among others: economic, business and political
conditions in South Africa and elsewhere; the ability to achieve anticipated efficiencies and other cost savings in connection with past and future
acquisitions, exploration and development activities; decreases in the market price of gold and/or copper; hazards associated with underground and
surface gold mining; labour disruptions; availability, terms and deployment of capital or credit; changes in government regulations, particularly
environmental regulations and new legislation affecting mining and mineral rights; changes in exchange rates, currency devaluations, inflation and
other macro-economic factors; industrial action; temporary stoppages of mines for safety and unplanned maintenance reasons; and the impact of
the AIDS crisis in South Africa. These forward looking statements speak only as of the date of this document.
The company undertakes no obligation to update publicly or release any revisions to these forward looking statements to reflect events or
circumstances after the date of this document or to reflect the occurrence of unanticipated events.
Date: 08/05/2013 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
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indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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