Wrap Text
Sibanye-Stillwater strategic update
Sibanye Gold Limited
Trading as Sibanye-Stillwater
Incorporated in the Republic of South Africa
Registration number 2002/031431/06
Share code: SGL
ISIN – ZAE000173951
Issuer code: SGL
(“Sibanye-Stillwater” or “the Group” or “the Company”)
Sibanye-Stillwater strategic update
Salient points
- The Group achieved a record safety milestone of 5 million fatality free shifts
on 4 January 2019
- Production from the second stope at the Blitz project commenced in October
2018. Together with record palladium prices, this is expected to provide a
significant increase in revenue from the US PGM operations
- The SA PGM operations have benefited from higher rand PGM basket prices in H2
2018 with consistently good operational performance and 4E PGM production for
2018 of approximately 1.17 Moz, which is ahead of guidance for the year
- Post the South African Competition Tribunal’s approval of the Lonmin
Acquisition (subject to certain specific conditions imposed on Sibanye-
Stillwater), AMCU filed an appeal on 19 December 2018. The parties await a
final hearing date to be set down
- Industrial action affecting the SA gold operations since 21 November 2018
continues. Strike plans have successfully been implemented to limit losses
during the ongoing strike action with approximately 34,600kg (1,1Moz) of gold
produced for 2018
- Group liquidity remains sound. The debt maturity profile has been prudently
structured, with major debt repayments only due from mid-2022
Johannesburg. 10 January 2019. Sibanye-Stillwater (Tickers JSE: SGL and NYSE:
SBGL) wishes to update stakeholders on relevant events since it last updated the
market on 1 November 2018.
Record safety milestone achieved
On 10 December 2018, Sibanye-Stillwater’s South African operations (both gold and
PGM), achieved a notable safety milestone of 4 million fatality free shifts, with
the Group recording 5 million fatality free shifts on 4 January 2019. These safety
milestones represent are notable and represent a record safety performance for the
Sibanye-Stillwater Group. Sibanye-Stillwater remains committed to providing a safe
working environment for all employees.
The considerably higher palladium price and continued production build up at
Blitz, benefits revenues from the US PGM operations
The palladium price has increased by more than 75% from US$744/oz to over
US$1,300/oz, since the acquisition of Stillwater was announced on 9 December 2016.
The current 2E PGM basket price of US$1,190/oz is 19% higher than the average 2018
2E PGM basket price of US$996/oz. Higher basket prices, together with increased
production due to initiation of mining operations in a second stope block at Blitz
in October 2018, is expected to positively impact revenue at the US PGM
operations. 2E PGM mined production for 2018 is expected to be approximately
590,000oz, in line with guidance for the year.
Robust performance from the SA PGM operations sustained
The SA PGM operations continue to perform well, with 4E PGM production for 2018
expected to be approximately 1.17Moz, ahead of published annual guidance and costs
at the bottom end of guidance. The robust palladium and rhodium prices (up more
than 40% in US$ terms in 2018), together with the weaker rand:dollar exchange rate
(depreciating by 16% during 2018), boosted the rand 4E PGM basket price by 19%
during the course of the 2018 year to more than R15,700/oz, significantly
enhancing revenue.
Approximately 74% of the Group’s adjusted EBITDA* in the first six months of the
year was derived from the PGM operations, increasing to 85% in Q3 2018. In Q3
2017, PGMs contributed 49% of Group adjusted EBITDA. The strategic benefits of the
Group’s commodity and geographic diversification are clearly evident, with
operational disruptions in the gold division offset by rising PGM prices and the
solid operational performance of the PGM operations.
Strike action at the SA gold operations
Strike plans at the SA gold operations have been implemented in order to limit
losses during the Association of Mineworkers and Construction Union (AMCU) strike
action, which has been ongoing since 21 November 2018. This has been achieved by
optimising production through the active deployment of employees reporting for
work to specific production areas and minimising overhead costs by shutting down
services (ventilation, refrigeration, etc.) to areas which are not operational. As
per convention, employees who do not report for work are not paid, with wages
generally accounting for around 50% of operating costs at the deep level gold
mines.
Due in part to the successful implementation of these strike plans, gold
production (excluding DRDGOLD production) for 2018 is expected to be approximately
34,600kg (1.1Moz), which is marginally below previous guidance of between 35,000kg
and 36,000kg (1.13Moz and 1.16Moz) for the year.
We are saddened that there have been four employee fatalities, and several other
employees have sustained injuries as a result of violent behaviour related to the
strike. Sibanye-Stillwater condemns this intimidation and violence, and has
engaged the unions directly and ultimately through the Labour court (the Court)
and the Commission for Conciliation, Mediation and Arbitration (CCMA) in order to
try and restore peace and stability to the operations.
Despite an apparent moderation in incidents of violence and intimidation following
an interdict on violence from the Labour Court and the establishment of picketing
rules by the CCMA at the end of November 2018, violent episodes, including burning
of houses occupied by non-AMCU members in Blybank near Carletonville, have resumed
in 2019.
During the course of the strike, the collective membership of the National Union
of Mineworkers (NUM), UASA and Solidarity has increased to over 50% of the
employees at the South African gold operations and on 13 December 2018, an amended
wage agreement was signed with NUM, UASA and Solidarity, which allowed the
agreement which was reached on 14 November 2018, to be extended to all employees
at its South African gold operations, in terms of Section 23(1)(d) of the Labour
Relations Act, No 66 of 1995 (S23(1)(d)).
On 22 December 2018, the Court ordered the CCMA to complete an independent
verification exercise and report back to the Court on 7 January 2019. Management
and AMCU have not been able to agree on the terms of reference for the
verification exercise and the CCMA adjourned the proceedings. The CCMA has
subsequently received guidance from the Court on the way forward with regards to
the verification exercise, which will now proceed. We continue to pursue a
peaceful end to this strike and are confident about the veracity of the employee
union affiliations presented to the Court.
For reference to more information on the strike action, please refer to the
various media releases on https://www.sibanyestillwater.com/investors/news/2018-
gold-wage-negotiations.
The Lonmin acquisition
Approval by the South African Competition Tribunal for the proposed acquisition of
Lonmin Plc (Lonmin), was received on 21 November 2018, subject to certain specific
conditions imposed on Sibanye-Stillwater.
On 19 December 2018, AMCU filed an appeal against this decision with the South
African Competition Appeal Court. Sibanye-Stillwater and Lonmin are awaiting a
final hearing date to be set down.
Sibanye-Stillwater remains fully committed to the transaction, which it considers
to remain compelling from both a strategic and value creation perspective and will
enhance the sustainability of the Lonmin operations for the benefit of all
stakeholders.
*For further information in relation to the expected synergies, please refer to page 17 and pages 58
to 60 of the offer announcement dated 14 December 2017, available on
https://www.sibanyestillwater.com/investors/transactions/lonmin/documents.
Balance sheet strength and flexibility
Group liquidity remains sound with the 2018 Stream financing allowing for a 28%
reduction in bond obligations (from US$1,500 million to US$1,085 million). The
Group’s debt maturity profile has been carefully structured, with major debt
repayments only due from mid-2022. As at 31 December 2018 the Group had
approximately US$417 million (R6 billion at exchange rate of US$/R14.48) undrawn
and available within its revolving credit facilities.
2018 Year end results presentation
Sibanye-Stillwater’s operating and financial results for the six months and the
year ended 31 December 2018 are expected to be released on Thursday, 21 February
2019.
* The Group reports adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA)
based on the formula included in the facility agreements for compliance with the debt covenant
formula. Adjusted EBITDA may not be comparable to similarly titled measures of other companies.
Adjusted EBITDA is not a measure of performance under IFRS and should be considered in addition to
and not as a substitute for, other measures of financial performance and liquidity.
Ends.
Investor relations contact:
James Wellsted
Head of Investor Relations
+27 (0) 83 453 4014
Email: ir@sibanyestillwater.com
Sponsor: J.P. Morgan Equities South Africa Proprietary Limited
FORWARD LOOKING STATEMENTS
This announcement contains forward-looking statements, including “forward-looking
statements” within the meaning of Section 27A of the U.S. Securities Act of 1933 and 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”, “would”, “expect”, “can”, “unlikely”, “could” and other similar expressions that
predict or indicate future events or trends or that are not statements of historical
matters. These forward-looking statements, including among others, those relating to our
future business prospects, financial positions, debt position and our ability to reduce
debt leverage, plans and objectives of management for future operations, plans to raise
capital through streaming arrangements or pipeline financing, our ability to service our
Bond Instruments (High Yield Bonds and Convertible Bonds), our ability to achieve steady
state production at the Blitz project and the anticipated benefits and synergies of our
acquisitions are necessarily estimates reflecting the best judgement of our senior
management and 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-Stillwater, that could cause Sibanye-Stillwater’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. As a consequence, these forward-looking
statements should be considered in light of various important factors, including those set
forth in the Group’s Annual Integrated Report and Annual Financial Report, published on 2
April 2018, and the Group’s Annual Report on Form 20-F filed by Sibanye-Stillwater with
the Securities and Exchange Commission on 2 April 2018 (SEC File no. 001-35785). These
forward-looking statements speak only as of the date of this announcement. Sibanye-
Stillwater 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.
Date: 10/01/2019 07:05:00 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
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
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.
Sharenet Sites 
