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SIBANYE GOLD LIMITED - Conclusion of S189 consultation process and 2019 SA gold operations production guidance

Release Date: 05/06/2019 10:55
Code(s): SGL     PDF:  
 
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Conclusion of S189 consultation process and 2019 SA gold operations production guidance

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”)

Conclusion of S189 consultation process and 2019 SA gold operations
production guidance

Johannesburg, 5 June 2019: Sibanye-Stillwater (Tickers JSE: SGL and NYSE:
SBGL) is pleased to advise that it has successfully concluded the
consultation process with relevant stakeholders in terms of Section 189A
(S189) of the Labour Relations Act, 66 of 1995 (LRA), regarding the
proposed restructuring of its SA gold operations and associated services,
previously announced on 14 February 2019. The S189 process was a
consequence of ongoing financial losses experienced at the Beatrix 1 shaft
and Driefontein 2,6,7 and 8 shafts since 2017, with approximately 5,870
employees   and   800  contractors   potentially   being   affected   upon
announcement.

The outcome of the S189 process, following consultations with stakeholders,
is as follows:
- Job losses were nearly halved, with approximately 3,450 employees finally
  affected by the restructuring. Voluntary separation, early retirement
  and natural attrition accounted for the bulk of the affected jobs, with
  forced retrenchments limited to approximately 800 employees and 550
  contract workers
- Pleasingly agreements have been reached with stakeholders that
  Driefontein 8 shaft will remain in operation for as long as it makes a
  profit, on average, over any continuous period of three months, after
  accounting for all-in sustaining costs, providing extended employment
  for approximately 970 employees and 55 contractors. In the event that
  this operation becomes loss making again, it will be placed on care and
  maintenance with immediate effect
- No viable alternatives were found for the Beatrix 1 shaft and Driefontein
  2, 6 and 7 shafts, as well as Beatrix 2 plant. As such Beatrix 1 and
  Driefontein 2 shafts will be placed on care and maintenance, while
  Driefontein 6 and 7 shafts and Beatrix 2 plant will be closed
- Additional cost reductions are envisaged through the rationalisation of
  single accommodation units, training facilities, occupational healthcare
  centres and primary healthcare facilities amongst others
- In addition strategic initiatives to allow for controlled re-watering,
  associated with a reduction in pumping costs, are being considered
  including rationalisation of pumping infrastructure at Driefontein 10
  shaft

Production guidance for the SA Gold operations

The build-up to normalised production at the SA gold operations, following
the conclusion of the five month strike, is proceeding steadily. The re-
training of employees and re-integration of work teams have been concluded
                                                                          1
and the environmental conditions in the working areas, many of which were
dormant for months, have been restored to appropriate levels. In order to
ensure that production is restored safely, a measured build-up in
production will be taken, with normalised production levels expected in
early Q3 2019. As such the H2 2019 production guidance is forecast between
16,000kg and 17,000kg (514koz and 546koz), which is more reflective of
forecast production levels prior to the strike and an implied annualised
run rate of approximately 34,000kg to 35,000kg (1,090koz to 1,150koz).

Annual production from the gold operations (excluding DRDGOLD) for 2019
including Q1 and Q2 (impacted by the AMCU strike) is forecast at between
24,000kg to 25,000kg (772koz to 804koz).

Whilst the normalisation of production will significantly reduce unit costs
in H2 2019, higher than normal levels of capital expenditure (to compensate
for capital underspend in H1 2019) and restructuring costs, will result
in temporarily elevated All-in Sustaining Cost (AISC) of between
R590,000/kg and R630,000/kg (or US$1,350/oz and US$1450/oz) for H2.
Indicatively, AISC would have been between approximately R550,000/kg and
R580,000/kg (or US$1,260/oz and US$1,330/oz) if a normalised, pre-strike
forecast production and capital expenditure is assumed during H2.

On an annual basis for 2019, AISC will remain elevated on average, at
between R715,000/kg and R750,000/kg (or US$1,640/oz and US$1,725/oz), due
to the higher unit costs from H1 2019 as a result of the strike.

Capital expenditure for 2019 is forecast at about R2,350 million (US$173
million), which includes approximately R220 million (US$16 million) of
project capital. Approximately R1,900 million (US$140 million) of this
capital expenditure has been scheduled for H2 2019. The dollar costs are
based on an average exchange rate of R13.55/US$.

Sibanye-Stillwater CEO, Neal Froneman commented: “We have come through a
difficult period, but have strategically positioned the Group for the
platinum wage negotiations and the integration of Lonmin.  Restructuring
and consultations proceeded despite the ongoing strike. We are therefore
pleased to have concluded the S189 consultation and successfully reduced
the footprint of the operations in a responsible manner and resulted in
over 2,650 potential job losses being avoided. Although restructuring is
a difficult and emotive process, the sustainability of our remaining
operations is our primary focus. To ensure further sustainability of the
West Rand gold mines, avoiding premature mine closure will require an
ongoing regional approach to reduce costs through the rationalisation of
infrastructure and services, including a regional mine water management
solution.

We are now focused on restoring profitability at our SA gold operations
in a steady and safe manner. Our SA gold operations recently achieved a
record five million fatality free shifts, during a particularly difficult
and disruptive period, which is a noteworthy achievement.”


Ends.

Investor relations contact:

James Wellsted
                                                                          2
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 includes “forward-looking statements” within the meaning
of the “safe harbour” provisions of the United States Private Securities
Litigation Reform Act of 1995, including the statements related to expected
production volumes. 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-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. 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.




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