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Trading statement and operating guidance for the six months ended 30 June 2017
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” or “the Company”)
Trading statement and operating guidance for the six months ended 30
June 2017
Westonaria, 17 August 2017: In terms of paragraph 3.4(b) of the Listings
Requirements of the JSE Limited (JSE), issuers are required to publish a
trading statement as soon as they are satisfied that a reasonable degree of
certainty exists that the financial results for the period to be reported
upon next will differ by at least 20% from those of the previous
corresponding period.
Shareholders are advised that Sibanye has a reasonable degree of certainty
that it will report an attributable loss of at least R4.8 billion (US$360
million) for the six-months ended 30 June 2017 (“relevant period”), compared
with attributable earnings of R333 million (US$22 million) for the six
months ended 30 June 2016 (“comparative period”).
The decrease in earnings is primarily attributable to non-recurring items
which were four fold higher than for the comparative period, and the 14%
appreciation of the average rand relative to the US dollar, which impacted
Group revenue. Non-recurring items of approximately R4.4 billion (US$333
million) for the period include, inter alia:
- a R2.8 billion (US$211 million) impairment charge relating to the
cessation of the loss making Cooke and Beatrix West operations, which
was announced on 3 August 2017
- a R1.1 billion (US$82 million) Occupational healthcare provision,
relating to possible settlement of the silicosis class action
litigation and related costs and
- R402 million (US$30 million) costs associated with the acquisition of
Stillwater Mining Company (Stillwater) during the period
Earnings per share (“EPS”) and headline earnings per share (“HEPS”) for the
period, are further affected by 1,195,787,294 new ordinary Sibanye shares
which were issued pursuant to the c.US$1 billion equity rights offer which
closed on 9 June 2017. As a result, Sibanye has a reasonable degree of
certainty that loss per share will be at least 320 cents (24 US cents) for
the period, with headline loss per share at least 145 cents (11 US cents).
EPS and HEPS for comparative period (adjusted to reflect the bonus element
of the rights issue) were 24 cents (2 US cents) and 79 cents (5 US cents),
respectively. This represents a 1,433% decrease in respect of EPS and a 284%
decrease in respect of HEPS.
Normalised loss per share (which is adjusted for gains and losses on foreign
exchange and financial instruments, non-recurring items and share of result
of associates after tax) is expected to be at least 65 cents (5 US cents)
compared to normalised earnings per share (adjusted to reflect the bonus
element of the rights issue) of 152 cents (10 US cents) for the comparative
period, or a decrease of at least 143%.
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The financial information on which the trading statement has been based, has
not been reviewed or reported on by the Group’s auditors.
Operating guidance
SA Gold Operations
Gold produced for the six months ended 30 June 2017 declined by 8% relative
to the comparable period to 21,418kg (688,600oz). This was mainly due to the
suspension of operations at Cooke 4 during the second half of 2016, the
impact of illegal mining at the Cooke Operations and lower volumes and
grades from Beatrix West. Action to address these underperforming operations
has been taken, with S189 consultations underway (refer to
https://www.sibanyegold.co.za/investors/news/company-announcements/2017 the
announcement issued on 3 August 2017.
Operating costs at the SA gold operations increased in absolute terms by
approximately 3% to R8,923 million, relative to the comparable period, with
unit costs 4% higher at R900/tonne milled. Total cash cost (TCC) and All-in
sustaining cost (AISC) increased by 9% and 8%, respectively to R414,902/kg
and R485,441/kg, respectively, reflecting lower gold output. Excluding the
cost structures associated with the Cooke and Beatrix West operations and
production from these operations, AISC would have been approximately
R25,000/kg lower.
SA PGM Operations
The continuing integration of the SA PGM operations has been pleasing, with
the solid performance delivered toward the end of 2016 being maintained
during the first half of 2017.
Attributable 4E PGM production of approximately 590,000oz is well on track
to achieve the upper end of annual guidance with average operating cost for
the six months ended 30 June 2017 of approximately R10,400/4Eoz, well below
average cost guidance for the year. This reflects the positive progress made
in realising cost and operational synergies and reflects possible upside to
the initial R800 million in annual benefits identified.
US PGM Operations
The US PGM Operations, comprising the Stillwater Mine, East Boulder Mine,
Columbus processing facilities, recycling operations and the Blitz project
have been incorporated into the Group effective from 4 May 2017.
Mined 2E PGM production for the two months under Sibanye’s control of
approximately 93,800oz at AISC of US$622/2Eoz, is expected. On an annualised
basis, this compares favourably with reported production of 549,000oz and
average AISC of US$622/2Eoz in 2016. Average PGM ounces fed and sold of
approximately 340,000oz and 255,000oz, respectively at the Recycling
operations are well ahead of averages achieved in 2016. With average 2E PGM
basket prices currently over US$150/2Eoz higher than for 2016, the outlook
for the US Region operations is favourable.
Further detail on the Occupational healthcare provision
An industry working group (comprising Sibanye, Harmony Gold Mining Company
Limited, African Rainbow Minerals Limited, Anglo American South Africa
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Limited, AngloGold Ashanti Limited and Gold Fields Limited) was formed in
2014 to address issues relating to the compensation and medical care for
occupational lung diseases (“OLD”)in the South African gold mining
industry(the “Working Group”).
Sibanye and the other companies in the Working Group, amongst others, were
served with a consolidated class action application on 21 August 2013. The
companies do not believe that they are liable in respect of the claims
brought, and they are defending these. They do, however, believe that they
should work together to seek a solution to this South African mining
industry legacy issue.
On 13 May 2016, the South African South Gauteng High Court (“High Court”)
ordered, among other things: (1) the certification of two classes: (a) a
silicosis class comprising current and former mine workers who have
contracted silicosis and the dependents of mine workers who have died of
silicosis; and (b) a tuberculosis class comprising current and former mine
workers who have worked on the mines for a period of not less than two years
and who have contracted pulmonary tuberculosis and the dependents of
deceased mine workers who died of pulmonary tuberculosis; and (2) that the
common law be developed to provide that, where a claimant commences suing
for general damages and subsequently dies before close of pleadings, the
claim for general damages will transmit to the estate of the deceased
claimant. The progression of the classes certified will be done in two
phases: (i) a determination of common issues, on an opt-out basis, and (ii)
the hearing and determination of individualised issues, on an opt-in basis.
In addition, costs were awarded in favour of the claimants. The High Court
ruling did not represent a ruling on the merits of the cases brought by the
claimants. The amount of damages has not yet been quantified for any of the
claimants in the Consolidated Class Application or for any other members of
the classes.
Sibanye and the other respondents believed that the judgement addressed a
number of highly complex and important issues, including a far reaching
amendment of the common law, that have not previously been considered by
other courts in South Africa. The High Court itself found that the scope and
magnitude of the proposed claims is unprecedented in South Africa and that
the class action would address novel and complex issues of fact and law. The
respondents applied for leave to appeal against the judgement because they
believed that the court’s ruling on some of these issues is incorrect and
that another court may come to a different decision.
On 24 June 2016, the High Court granted the mining companies leave to appeal
against the finding amending the common law in respect of the
transmissibility of general damages claims. It refused leave to appeal on
the certification of silicosis and tuberculosis classes. On 15 July 2016,
Sibanye and the other respondents each filed petitions to the Supreme Court
of Appeal for leave to appeal against the certification of the two separate
classes for silicosis and tuberculosis. In an attempt to shorten any delay
due to an appeal process, it is permissible to request that the appeals be
dealt with on an expedited basis. On 21 September 2016, the Supreme Court of
Appeal granted the respondents leave to appeal against all aspects of the
class certification judgement of the High Court delivered in May 2016. The
appeal hearing before the Supreme Court of Appeal is scheduled to be heard
from 19 – 23 March 2018.
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As a result of the progress made by the Working Group on a variety of
issues, management is now in a position to reliably estimate, within an
acceptable range, the Company’s potential share of a possible settlement of
the class action claims and related costs. As a result, the Company has
provided R1,1 billion (US$82 million) before tax, for this obligation which
impacts negatively on earnings for the period.
The ultimate outcome of these negotiations and the court sanction of the
agreement remains uncertain and accordingly the provision is subject to
adjustment in the future.
Results presentation
Sibanye is finalising its Operating and Financial Results for the six-months
ended 30 June 2017, which will be released on SENS at 08:00 (CAT) on
Wednesday, 30 August 2017. The 10:00 (CAT) results presentation will be
preceded by an event at the JSE (starting at 08:00 for 08:30 (CAT), to mark
the incorporation of the Stillwater Operations into the Sibanye Group. For
more information, please refer to www.sibanyegold.co.za.
Contact:
James Wellsted
Head of Investor Relations
+27 (0) 83 453 4014
email: ir@sibanyegold.co.za
Sponsor: J.P. Morgan Equities South Africa (Proprietary) Ltd
FORWARD LOOKING STATEMENTS
This announcement includes “forward-looking statements” within the meaning
of the “safe harbour” provisions of the United States Private Securities
Litigation Reform Act of 1995. Forward-looking statements may be identified
by the use of words such as “target”, “will”, “forecast”, “expect”,
“potential”, “intend”, “estimate”, “anticipate”, “can” and other similar
expressions that predict or indicate future events or trends or that are not
statements of historical matters. The forward-looking statements set out in
this announcement involve a number of known and unknown risks, uncertainties
and other factors, many of which are difficult to predict and generally
beyond the control of Sibanye, that could cause Sibanye’s actual results and
outcomes to be materially different from historical results or from any
future results expressed or implied by such forward-looking statements.
These forward-looking statements speak only as of the date of this
announcement. Sibanye 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 announcement or to reflect the
occurrence of unanticipated events, save as required by applicable law.
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Date: 17/08/2017 09:15:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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