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Sibanye strategic update
Sibanye Gold Limited
Incorporated in the Republic of South Africa
Registration number 2002/031431/06
Share code: SGL
ISIN – ZAE000173951
Issuer code: SGL
(“Sibanye” or “the Group”)
Sibanye Strategic Update
Westonaria, 28 July 2014: As announced on 7 July 2016, Sibanye
(JSE: SGL & NYSE: SBGL) is hosting a strategic update for
investors, analysts and media at the Sibanye Academy near the
Kloof Operations on 28 July 2016 and will be hosting an
operational visit on 29 July 2016. The Company wishes to advise
stakeholders that it will be releasing new material information
on 28 July 2016, which may be price sensitive.
Stakeholders are therefore advised to take careful note of the
contents of this release, and if requiring more detail, are
recommended to participate in the live webcast of the
presentations, at www.sibanyegold.co.za from 08:00 (CAT) on
28 July 2016. Recordings of the webcast and copies of the
presentations will also be available on the Company’s website
after 28 July 2016. The presentations will provide a
comprehensive update of the Group’s strategic thrusts, operations
and organic growth projects.
SALIENT POINTS
- Sibanye’s current and future value creation strategy
continues to be underpinned by:
o Strongly cash generative gold operations
o The Sibanye operating model and strong balance sheet
o Gold projects in development with a post-tax NPV of
approximately R7 billion (at R600,000/kg)
- The Group has delivered a total share price return of over
400% since listing and a compound annual total shareholder
return of 55% over the last 3 years
- Sibanye’s platinum assets are well positioned to deliver
significant value in the medium term
Since its listing in February 2013 Sibanye has successfully
created a solid operating base at its core operations of Beatrix,
Driefontein and Kloof, by reducing costs and increasing
production. It has also secured the longer term future of its
Gold Division through the acquisitions of the Cooke surface and
underground operations (“Cooke”), Witwatersrand Consolidated Gold
Resources Limited (“Wits Gold”) in 2015. The acquisition of the
Burnstone project that year, also provided a robust, short lead
time growth project and expanded Sibanye’s regional presence
across the entire Witswatersrand Basin. Sibanye’s strategy has
resulted in production from the Gold Division increasing from
approximately 1.2 Moz in 2012 (pre-unbundling from Gold Fields)
to approximately 1.5 Moz in 2015, with gold Reserves increasing
from approximately 13.5 Moz to approximately 31.0 Moz as at 31
December 2015. This places Sibanye comfortably in the top ten
gold producers globally (in terms of production and gold
reserves).Sibanye also now occupies a lower-quartile All-in-
Sustaining Cost (“AISC”) position amongst the global top ten
global producers.
The cash generative nature of the gold operations allowed the
Group to reduce gross debt from approximately R4.5 billion in
2013 to approximately R2 billion (excluding the Burnstone debt)
by the end of 2015, making it one of the gold companies with the
lowest financial gearing in the world and enabling it to pay
shareholders an industry leading dividend, consistently since
2013.
“Since listing, Sibanye has delivered a total shareholder return
(share price appreciation and accumulated dividends) in excess of
400%, giving a CAGR of 55% per annum, which is exceptional for
any industry”, Neal Froneman CEO of Sibanye said. “The improved
price outlook for gold and a the weak rand has positioned us to
continue to deliver superior returns”, he concluded.
Sibanye’s robust balance sheet and strong forecast cash flow have
also enabled the company to deliver significant value to other
stakeholders, including employees, its communities and the South
African Government, as well as enable it to invest in economic
and environmental sustainably and value accretive growth.
Stakeholders are advised that further detail relating to the
Group strategy and Sibanye’s Gold Division will be available at:
www.sibanyegold.co.za, at 08:00 and 08:50(CAT) today.
In 2015, capital investment in organic growth projects of
approximately R3.6 billion was approved by the Sibanye Board. The
projects which include below infrastructure, depth extensions at
Kloof and Driefontein and a revised development plan at
Burnstone, will realise over 4 Moz of additional gold production
and extended the Gold Division’s life of Mine (“LoM) beyond 2040.
More importantly, Sibanye expects to maintain gold production at
over 1 Moz pa for at least 12 more years (until 2028).
All of the above mentioned projects exceed Sibanye’s 15% project
hurdle rate (real, after tax) at a real gold price of
R450,000/kg, which was applied in 2015. At an applied gold price
of R600,000/kg (the 2016 YTD average gold price is approximately
R605,000/kg), these projects have a collective net present value
(“NPV”) of approximately R7 billion, with internal rates of
return (“IRR”) between 20% and 30%.
Wayne Robinson, CEO: Sibanye Gold Division said: “ the Gold
Division is the backbone of the company and is positioned to
continue producing strong cash flow to support the company’s
dividend strategy in future”.
Stakeholders are advised that further detail relating to the
Sibanye’s gold growth projects will be available at:
www.sibanyegold.co.za, at 10:00 and 11:00(CAT) today.
An important organic project which will be significantly value
accretive for Sibanye and offer an early and sustainable
environmental rehabilitation solution for the West Wits region,
is the West Rand Tailings Retreatment Project (“WRTRP”). The
WRTRP is a large-scale, long-life surface tailings retreatment
project which gained critical mass and economic viability as a
result of the acquisition of the Cooke surface assets in 2015,
from Gold One Limited. The WRTRP has Gold Reserves of
approximately 10.3 Moz and Uranium Reserves of approximately 99.9
Mlbs. The WRTRP has been designed to be developed in a number of
phases and different configurations, ensuring the group retains
capital flexibility.
The feasibility study concluded in 2015, focuses on four high-
grade anchor resources (containing approximately 2.4 Moz of gold
and 53 Mlbs of uranium) which will produce approximately
100,000oz pa of gold and approximately 2.2 Mlbs pa of uranium at
steady state, over an 18 year initial LoM. Sibanye has recently
entered into memorandums of understanding with third parties to
explore funding options.
Stakeholders are advised further detail relating to the WRTRP
will be available at: www.sibanye gold.co.za, at 11:40(CAT)
today.
Sibanye’s robust financial position and strong cash flow, provide
the Group with a competitive advantage to create further value
for stakeholders, through value accretive and innovative
acquisitions. The Groups existing regional presence and strategic
focus on growth in South Africa provides an additional
competitive advantage.
In 2015, the Group announced the proposed acquisitions of the
Rustenburg platinum assets (“Rustenburg”) from Anglo American
Platinum Limited (“Anglo Platinum”) and Aquarius Platinum Limited
(“Aquarius”). The Aquarius acquisition was successfully concluded
in April 2016 and with the Rustenburg acquisition anticipated to
be concluded in the latter half of 2016.
The conclusion of the Rustenburg and Aquarius acquisitions will
provide Sibanye with high-quality operations on the Western Limb
of the Bushveld Complex and the Great Dyke in Zimbabwe and result
in Sibanye becoming the fifth largest platinum group metals
(“PGM”) producer globally.
Rustenburg and Aquarius’ Kroondal operations are contiguous, with
delivery of R800 million in annual cost and operational synergies
forecast within four years of concluding both transactions. The
operations are strategically positioned for further value
accretive consolidation of the fragmented South African platinum
industry. The scale of the combined Sibanye Platinum Division
should provide Sibanye with the ability to play an influential
role in the industry..
“While long term PGM fundamentals are robust, the current PGM
price environment is challenging and this situation is
exacerbated by unplanned operational disruptions often as a
result of interventions by the regulators in South Africa and
issues with organised labour, which we are currently addressing,”
said Jean Nel, CEO Sibanye Platinum Division. “We remain
confident however, that the platinum investment will deliver
significant value to Sibanye stakeholders in coming years”.
Stakeholders are advised further detail relating to Sibanye’s
Platinum Division will be available at: www.sibanye gold.co.za,
at 13:30 (CAT) today.
Neal Froneman CEO of Sibanye commented that: “the Group has not
focused only on providing returns to shareholders, but consistent
with the Group’s vision, it has and will, continue to deliver
superior value to all stakeholders. This, importantly includes
ensuring a sustainable environment. A clean environment is not
only critical to the health and prosperity of the country’s
citizens, but also to the sustainability of the business. Sibanye
is actively pursuing and investing in the environment and future
of the country, through initiatives such as the WRTRP, our water
management programme, SibanyeAMANZI, and environmentally clean
energy initiatives such as our solar photovoltaic project”.
Stakeholders are advised further detail relating to Sibanye’s
Energy strategy and water management strategy will be available
at: www.sibanye gold.co.za, at 14:20 and 15:30 (CAT) today.
CONTACT
James Wellsted
SVP Investor Relations
Sibanye Gold Limited
+27 83 453 4014
james.wellsted@sibanyegold.co.za
Sponsor: J.P. Morgan Equities South Africa Proprietary Limited
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.
These forward-looking statements, including, among others, those
relating to Sibanye’s future business prospects, revenues and
income, wherever they may occur in this document and the exhibits
to this document, are necessarily estimates reflecting the best
judgment of the senior management and directors of Sibanye, and
involve a number of known and unknown risks and uncertainties
that could cause actual results, performance or achievements of
the Group to differ materially from those suggested by the
forward-looking statements. As a consequence, these forward-
looking statements should be considered in light of various
important factors, including those set forth in this document.
Important factors that could cause the actual results to differ
materially from estimates or projections contained in the
forward-looking statements include, without limitation: economic,
business, political and social conditions in South Africa,
Zimbabwe and elsewhere; changes in assumptions underlying
Sibanye’s estimation of its current Mineral Reserves and
Resources; the ability to achieve anticipated efficiencies and
other cost savings in connection with past and future
acquisitions, as well as at existing operations; the ability of
Sibanye to successfully integrate acquired businesses and
operations (whether in the gold mining business or otherwise)
into its existing businesses; the success of Sibanye’s business
strategy, exploration and development activities; the ability of
Sibanye to comply with requirements that it operate in a
sustainable manner; changes in the market price of gold, platinum
group metals (“PGMs”) and/or uranium; the occurrence of hazards
associated with underground and surface gold, PGMs and uranium
mining; the occurrence of labour disruptions and industrial
action; the availability, terms and deployment of capital or
credit; changes in relevant government regulations, particularly
environmental, tax health and safety regulations and new
legislation affecting water, mining, mineral rights and business
ownership, including any interpretations thereof which may be
subject to dispute; the outcome and consequence of any potential
or pending litigation or regulatory proceedings or other
environmental, health and safety issues; power disruptions,
constraints and cost increases; supply chain shortages and
increases in the price of production inputs; fluctuations in
exchange rates, currency devaluations, inflation and other macro-
economic monetary policies; the occurrence of temporary stoppages
of mines for safety incidents and unplanned maintenance;
Sibanye’s ability to hire and retain senior management or
sufficient technically skilled employees, as well as its ability
to achieve sufficient representation of historically
disadvantaged South Africans’ in its management positions;
failure of Sibanye’s information technology and communications
systems; the adequacy of Sibanye’s insurance coverage; any social
unrest, sickness or natural or man-made disaster at informal
settlements in the vicinity of some of Sibanye’s operations; and
the impact of HIV, tuberculosis and other contagious diseases.
These forward-looking statements speak only as of the date of
this document.
The Group 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.
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