Sibanye-Stillwater flags lower earnings after strike and lower commodity prices

Gold production was 77 percent lower due to no material gold production occurring during the three-month industrial action and from the Beatrix operation. Picture: Motshwari Mofokeng

Gold production was 77 percent lower due to no material gold production occurring during the three-month industrial action and from the Beatrix operation. Picture: Motshwari Mofokeng

Published Aug 18, 2022

Share

Sibanye-Stillwater shares dipped almost 6 percent yesterday after the miner flagged a decrease in earnings by nearly a half following a strike at its South African gold mines and after flooding impacted its US platinum group operations.

The shares closed at R39.42, having declined by 34.59 percent in the past year.

In a trading statement released yesterday, the precious metals miner said earnings per share (Eps) and headline earnings per share (Heps) for the first half of 2022 were expected to be between R4.02 or $0.26, and R4.47 or $0.29, compared to the first half of 2021 where Eps and Heps were at R8.43 or $0.58, representing a decline of 47 percent to 52 percent compared to the first half of 2021.

The decline was due to a second-quarter reduction in gold production from the South African gold operations that were affected by industrial action from March 9 to June 13.

“Gold production was 77 percent lower due to no material gold production occurring during the three-month industrial action and from the Beatrix operation, due to the suspension of processing operations to allow for precautionary reinforcement and buttressing of the Beatrix tailings facility (TSF) from December 28, 2021,” the group said.

Sibanye said production from the US platinum group metals (PGM) operations was significantly impacted by the severe regional flooding in Montana on June 12 and 13 , with the Stillwater operations being suspended for seven weeks.

Relative precious metals prices were also lower, with the average rand 4E platinum group metal (PGM) basket price being 19 percent lower for the reported period and the average US dollar 2E PGM basket price 15 percent lower than the first half of 2021.

“This decline in average commodity prices also resulted in a 45 percent decline in the share of results of equity-accounted investees after tax, compared to the half year 2021.

“These negative financial impacts were partially offset by lower royalties and mining and income taxes,” it said.

The Marikana smelting and refining operations of 25 346 4E ounces were 27 percent lower due to the winding down of two third-party purchases of concentrate contracts in the fourth quarter of 2021.

The group also concluded the acquisition of the Sandouville nickel refinery in Le Havre, which produced 3 499 tonnes of nickel metal, 1 066 tonnes of nickel salts, and 113 tonnes of cobalt chloride since the acquisition.

The company will release its half-year results on August 25.

Anchor Capital investment analyst Seleho Tsatsi said Sibanye’s earnings were guided to halve in the trading statement.

“The strike at Sibanye’s gold operations would have had a big effect on group profits. Gold volumes fell 77 percent because of the strike. That strike has ended and second-half earnings should normalise.

“The other drag on earnings is the decline in the PGM basket price. Platinum, palladium and rhodium were down about 17 percent, 19 percent and 30 percent, respectively, year-on-year. Like the rest of the platinum miners, Sibanye trades at a low multiple of near-term earnings because the market is concerned about the prospect of further declines in the PGM basket price,” he said.

BUSINESS REPORT

Related Topics: