Strike-hit but upbeat Sibanye confident of value uplift as precious metals shine
JOHANNESBURG (miningweekly.com) – Precious metals company Sibanye-Stillwater expressed confidence on Thursday that the global precious metals surge would enable it to deliver value despite the prolonged strike challenge that the company is contending with.
The company reported 8%-lower earnings before interest, taxes, depreciation and amortisation (Ebitda) of R8.369-million and deleveraging net debt to 2.5 times Ebitda.
“We look forward to the value creation flowing into our market valuation as we deliver according to plan in a constructive global climate for precious metals,” an upbeat Sibanye-Stillwater CEO Neal Froneman said.
The Johannesburg- and New York-listed group is benefitting from the sharp increase in precious metals prices in the first two months of 2019, in particular palladium and rhodium, which are well supported by robust fundamentals, as well as a firming gold price.
The company said that the strike called by the Association of Mineworkers and Construction Union (AMCU) on November 21 last year interrupted an emerging recovery in the operational performance of Sibanye-Stilwater’s South African gold operations.
Now, response plans have been put in place to mitigate financial losses by optimising production through the concentration of underground mining activity to specific operating areas.
Switching off services and utilities across areas where production activity has been suspended has also lowered costs.
Despite other unions having secured a majority membership, the AMCU strike action has secured protected status.
Outside of the strike, certain gold operations' business units have experienced ongoing losses and formal restructuring consultations with employees and other stakeholders are under way.
"It was extremely pleasing to note the manner in which the team pulled together,” said Froneman said in a release to Creamer Media’s Mining Weekly Online, in which he stated that the industrial action hardships experienced had actually strengthened and better positioned Sibanye-Stillwater for superior value deliver to all stakeholders.
A safe production record has been set in the six-month period to end December when 6.5 million fatality free shifts were achieved by the group, which also benefitted the South African and US platinum group metals (PGMs) mines achieving production and cost guidance.
A high return project under way at the East Boulder mine is expected to add a further 5% to yearly production from US PGM operations by 2022.
Value creation is expected to flow through from PGM strategy as the PGM basket price increases into 2019, with the acquisition of SFA Oxford facilitating future strategic development in high-tech metals.
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