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SIBANYE GOLD LIMITED - Results for the six months ended 20 June 2019

Release Date: 29/08/2019 14:00
Code(s): SGL     PDF:  
 
Wrap Text
Results for the six months ended 20 June 2019

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”)

RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2019 – SHORT FORM ANNOUNCEMENT

Extended strike at the SA Gold operations significantly disrupted operations, with these
losses being offset by improved financial results from the SA and US PGM operations

Johannesburg, 29 August 2019: Sibanye Gold Limited trading as Sibanye-Stillwater
(Sibanye-Stillwater or the Group) (JSE: SGL and NYSE: SBGL) is pleased to report its
operating and financial results for the six months ended 30 June 2019.

KEY FEATURES FOR THE SIX MONTHS ENDED 30 JUNE 2019
- SA gold operations achieve milestone of seven million shifts with no fatalities –
  365 days fatality free
  - Two fatal incidents in SA PGM in H1 2019, down from 21 Group wide in H1 2018
- Post strike production build up at SA gold operations safely achieved – outlook for
  H2 2019 significantly better
- Commodity and geographical diversification benefits clearly evident:
  - US PGM operations’ adjusted EBITDA 36% higher to US$208 million (R3.0 billion) –
    strong performance in Q2 2019
  - SA PGM operations’ adjusted EBITDA 106% higher to R2.1 billion (US$145 million) –
    steady operational performance
  - Diversification cushioned impact of strike at the SA gold operations – R2.9 billion
    (US$205 million) adjusted EBITDA loss reported
- Group adjusted EBITDA of R2.1 billion (US$146 million) – significant increase
  forecast in H2 2019 due to more stable operations and higher spot precious metals
  prices
- Lonmin transaction concluded – review of Marikana operations well advanced
- Leverage well below covenant ceiling of 3.5x with net debt:adjusted EBITDA of 2.5x
  (including Marikana operations pro-forma for covenant evaluation) at the end of H1
  2019

KEY OPERATING RESULTS
        US dollar                                                                           SA rand
    Six months ended                                                                    Six months ended
    Jun      Dec                                                                        Jun      Dec      Jun
   2018     2018 Jun 2019                        KEY STATISTICS                        2019     2018     2018
                                          UNITED STATES (US) OPERATIONS
                                                PGM operations1
 293,959   298,649   284,773   oz                2E PGM2 production             kg     8,857     9,289     9,143
 360,246   326,346   421,450   oz                   PGM recycling1              kg    13,109    10,151    11,205
     996     1,016     1,285   US$/2Eoz        Average basket price         R/2Eoz    18,247    14,407    12,260
   153.3     160.3     208.4   US$m               Adjusted EBITDA3              Rm   2,959.1   2,264.5   1,887.4
      25        27        26   %              Adjusted EBITDA margin3            %        26        27        25
     653       701       772   US$/2Eoz       All-in sustaining cost4       R/2Eoz    10,965     9,929     8,045
                                          SOUTHERN AFRICA (SA) OPERATIONS
                                                   PGM operations5
 569,166   606,506   627,991 oz                  4E PGM2 production             kg    19,533    18,864    17,703
   1,051     1,039     1,224 US$/4Eoz          Average basket price         R/4Eoz    17,377    14,729    12,941
    81.3     136.3     145.2 US$m                 Adjusted EBITDA3              Rm   2,060.9   1,880.7   1,001.1
         15       22         33 %            Adjusted EBITDA margin3             %       33        22        15
        821      755        932 US$/4Eoz     All-in sustaining cost4        R/4Eoz   13,228    10,706    10,106
                                                Gold operations5
    598,517   578,188   344,752 oz                Gold produced                 kg    10,723    17,984    18,616
      1,314     1,212     1,308 US$/oz         Average gold price             R/kg   597,360   552,526   519,994

       81.8     21.0    (204.6)US$m             Adjusted EBITDA3                Rm (2,904.8)     355.3   1,007.1
         10        4       (48)%             Adjusted EBITDA margin3             %      (48)         4        10
      1,315    1,308     1,904 US$/oz        All-in sustaining cost4          R/kg 869,141     596,100   520,488



                                                     GROUP

        6.4   (195.1)    (18.9)US$m              Basic earnings                 Rm   (265.2) (2,576.3)     76.7

        8.2    (9.5)     (89.0)US$m             Headline earnings               Rm (1,263.1)   (117.6)     101.0
      316.4    315.6     145.8 US$m              Adjusted EBITDA                Rm 2,069.4     4,473.8   3,895.6
      12.31    14.18     14.20 R/US$          Average exchange rate
1   The US PGM operations’ underground production is converted to metric tonnes and kilograms, and
    performance is translated to SA rand. In addition to the US PGM operations’ underground production, the
    operation treats recycling material which is excluded from the 2E PGM production, average basket price
    and All-in sustaining cost statistics shown. PGM recycling represents palladium, platinum, and rhodium
    ounces fed to the furnace
2   Platinum Group Metals (PGM) production in the SA operations is principally platinum, palladium, rhodium
    and gold, referred to as 4E (3PGM+Au), and in the US operations is principally platinum and palladium,
    referred to as 2E (2PGM)
3   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.
    For a reconciliation of profit/loss before royalties and tax to adjusted EBITDA, see note 11.1 of the
    condensed consolidated interim financial statements. Adjusted EBITDA margin is calculated by dividing
    adjusted EBITDA by revenue
4   See “salient features and cost benchmarks for the six months ended 30 June 2019, 31 December 2018 and
    30 June 2018” for the definition of All-in sustaining cost
5   The SA PGM operations’ results for the six months ended 30 June 2019 included the Marikana operations
    for the one month since acquisition and the gold operations’ results for the six months ended 31
    December 2018 included DRDGOLD for the five months since acquisition


Considering the impact of the extended strike at the SA gold operations, which
significantly disrupted operations for the entire six month period, the Group operating
and financial results for the six months ended 30 June 2019 are solid, with improved
financial results from the SA and US PGM operations offsetting losses from the SA gold
operations.
The results clearly validate the successful strategic commodity and geographical growth
and diversification of the Group into the Platinum Group Metals (PGM) sector and
internationally, through the acquisition of the Stillwater Mining Company. This
diversification continues to provide the company with significant operational
flexibility.
Commenting on the results, Neal Froneman CEO of Sibanye-Stillwater, said: “Over the
last 18 months the Group has been confronted with a series of unprecedented challenges.
We have successfully navigated our way through this challenging period and I am confident
that we have emerged in a stronger position. The Group has been re-energised and we are
well positioned to continue delivering very significant value to all of our stakeholders
in the future.”
The production build up at the SA gold operations post the gold strike, incorporating
the downscaled and re-structured operating footprint at Driefontein and Beatrix, has
been safely implemented. Due to cost saving measures implemented during the strike, a
more measured and prolonged build up was required to make the operations production
ready and to manage the safe resumption of operations. Despite production for Q2 2019
increasing by 41% relative to Q1 2019, the Q2 2019 financial performance only improved
marginally due to full labour costs and other overheads being incurred during May and
June following the cessation of the strike.
The US PGM operations delivered another robust and improved financial result and
continued to provide valuable diversification benefits for the Group. Despite a slow
operational start to the year, adjusted EBITDA increased by 36% year-on-year to
R2,959 million (US$208 million), offsetting the R2,904 million (US145 million) adjusted
EBITDA loss incurred at the SA gold operations.
The SA PGM operations again delivered steady operating results, with solid cost
management delivering significant leverage to the increased rand PGM basket price and
boosting financial results. A 34% increase in the average rand PGM basket price resulted
in adjusted EBITDA for H1 2019 increasing by 106% year-on-year to R2,061 million (US$145
million).
Deleveraging continues to be a strategic priority, with current balance sheet leverage
elevated compared with the historical levels maintained by the Group prior to the
acquisition of Stillwater. The planned Group deleveraging has been delayed due to the
impact of the operational disruptions at the SA gold operations in 2018 and H1 2019 on
Group adjusted EBITDA and cash flow.
“Under the current supportive precious metals price environment and with a more positive
operational outlook, driven by the return to profitability of the SA gold operations,
continued production growth at the US PGM operations, no major operational disruptions
and the realisation of synergies from the Marikana operations will contribute positively
to earnings and cash flow in H2 2019 and beyond, which would facilitate rapid
deleveraging, supporting the possible resumption of cash dividends during 2020.”,
Froneman concluded.

KEY FINANCIAL RESULTS
- No ordinary cash dividend declared for H1 2019 (H1 2018: nil)
        US dollar                                                                     SA rand
    Six months ended                                                             Six months ended
     Jun      Dec       Jun                                                       Jun        Dec      Jun
    2018     2018      2019                KEY STATISTICS                        2019       2018     2018
                                                GROUP
   1,942     1,884    1,657                    Revenue                         23,535      26,746   23,910
       -       (9)       (1)      Basic earnings per share (cents)                (11)      (114)        3
       -         -       (4)     Headline earnings per share (cents)              (54)        (5)        4

GROUP PRODUCTION AND COST GUIDE FOR THE YEAR ENDED 31 DECEMBER 2019
For this financial year, we maintain our full year guidance as follows:
 Segment                                Production   All-in sustaining costs                Total capital
 US PGM operations                625koz – 640 koz             US$740/2Eoz –             US$235 million –
                                     (2E PGMs mine               US$755/2Eoz                US$245million
                                       production)
                                                              R12,500/4Eoz –
                                                                R13,200/4Eoz
 SA PGM operations2               1.0Moz – 1.1 Moz            (US$922/4Eoz –           R1,400 million
 (excluding Lonmin)                     (4E PGMs)2             US$974/4Eoz)1        (US$103 million)¹
                                                               R715,000/kg –
                                                                 R750,000/kg
 SA gold operations            24,000kg – 25,000kg            (US$1,640/oz –               R2,350 million
 (excluding DRDGOLD)             (772koz – 804koz)              US$1,725/oz)             (US$173 million)
Source: Company forecasts
1   Estimates are converted at an exchange rate of R13.55/US$
2   SA PGM operations’ production guidance include the 50% attributable Mimosa production, although AISC
    and capital exclude Mimosa due to it being equity accounted
This short-form announcement is the responsibility of the board of directors of the
Company (Board).
Shareholders are advised that this short-form announcement represents a summary of
the information contained in the full announcement (results booklet) and does not
contain full or complete details published on the Stock Exchange News Service (SENS),
via the JSE link and on Sibanye-Stillwater’s website (www.sibanyestillwater.com) on
29 August 2019.
The financial results as contained in the condensed consolidated interim financial
statements for the six months ended 30 June 2019 have been reviewed by EY, who
expressed an unmodified review conclusion thereon.
Any investment decisions by investors and/or shareholders should be based on a
consideration of the full announcement as a whole and shareholders are encouraged to
review the full announcement (results booklet), which is available for viewing on the
Company’s website at www.sibanyestillwater.com/news-
investors/reports/quarterly/h12019-booklet to above and via the JSE link.
The full announcement is also available for inspection at the registered office of
the Company, Constantia Office Park, Bridgeview House, Building 11, Ground Floor,
Corner 14th Avenue and Hendrik Potgieter Road, Weltevreden Park, 1709 during normal
business hours.
The JSE link is as follows:
https://senspdf.jse.co.za/documents/2019/jse/isse/SGL/Sibanye.pdf


Contact:
Email: ir@sibanyestillwater.com

James Wellsted
Head of Investor Relations
+27(0)83 453 4014

Sponsor: J.P. Morgan Equities South Africa Proprietary Limited
FORWARD LOOKING STATEMENTS
The information in this announcement may contain forward-looking statements within the meaning of the
“safe harbour” provisions of the United States Private Securities Litigation Reform Act of 1995. These
forward-looking statements, including, among others, those relating to Sibanye Gold Limited’s (trading
as Sibanye-Stillwater) (Sibanye-Stillwater or the “Group”) financial positions, business strategies,
plans and objectives of management for future operations, are necessarily estimates reflecting the best
judgment of the senior management and directors of Sibanye-Stillwater.
All statements other than statements of historical facts included in this announcement may be forward-
looking statements. Forward-looking statements also often use words such as “will”, “forecast”,
“potential”, “estimate”, “expect” and words of similar meaning. By their nature, forward-looking
statements involve risk and uncertainty because they relate to future events and circumstances and
should be considered in light of various important factors, including those set forth in this disclaimer
and in the Group’s Annual Integrated Report and Annual Financial Report, published on 29 March 2019, and
the Group’s Annual Report on Form 20-F filed by Sibanye-Stillwater with the Securities and Exchange
Commission on 5 April 2019 (SEC File no. 001-35785). Readers are cautioned not to place undue reliance
on such statements.
The important factors that could cause Sibanye-Stillwater’s actual results, performance or achievements
to differ materially from those in the forward-looking statements include, among others, our future
business prospects; financial positions; debt position and our ability to reduce debt leverage;
business, political and social conditions in the United Kingdom, South Africa, Zimbabwe and elsewhere;
plans and objectives of management for future operations; our ability to obtain the benefits of any
streaming arrangements or pipeline financing; our ability to service our bond Instruments (High Yield
Bonds and Convertible Bonds); changes in assumptions underlying Sibanye-Stillwater’s estimation of their
current mineral reserves and resources; the ability to achieve anticipated efficiencies and other cost
savings in connection with past, ongoing and future acquisitions, as well as at existing operations; our
ability to achieve steady state production at the Blitz project; the success of Sibanye-Stillwater’s
business strategy; exploration and development activities; the ability of Sibanye-Stillwater to comply
with requirements that they operate in a sustainable manner; changes in the market price of gold, 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; the ability to hire and retain senior management or
sufficient technically skilled employees, as well as their ability to achieve sufficient representation
of historically disadvantaged South Africans’ in management positions; failure of information technology
and communications systems; the adequacy of insurance coverage; any social unrest, sickness or natural
or man-made disaster at informal settlements in the vicinity of some of Sibanye-Stillwater’s operations;
and the impact of HIV, tuberculosis and other contagious diseases. These forward-looking statements
speak only as of the date of the content. Sibanye-Stillwater expressly disclaims any obligation or
undertaking to update or revise any forward-looking statement (except to the extent legally required).

Date: 29/08/2019 02:00:00
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