Sibanye asks for relief from lenders
• CEO Neal Froneman says focus remains on balance sheet after R5.6bn knock to ebitda
Sibanye-Stillwater, one of SA’s largest private sector employers, has approached its lenders to temporarily raise its lending covenants after its earnings before interest, taxes, depreciation and amortisation (ebitda) in the first quarter plunged by two-thirds. The group said on Friday that its adjusted ebitda fell from R7.76bn to R2.14bn in the quarter under review as platinum group metal (PGM) prices continued to remain in the doldrums. Sibanye CEO Neal Froneman said there was no evidence to suggest there was “systemic change in the market fundamentals to justify the price collapse observed during 2023”.
Sibanye-Stillwater, one of SA’s largest private sector employers, has approached its lenders to temporarily raise its lending covenants after its earnings before interest, taxes, depreciation and amortisation (ebitda) in the first quarter plunged by twothirds.
The group said on Friday that its adjusted ebitda, a measure of operating profit as a percentage of its revenue, fell from R7.76bn to R2.14bn in the quarter under review as platinum group metal (PGM) prices continued to remain in the doldrums.
Sibanye CEO Neal Froneman said there was no evidence to suggest there was “systemic change in the market fundamentals to justify the price collapse observed during 2023”.
He said the company was of the view that the drivers of this decline were temporary.
“We are cognisant of our decreasing 12-month trailing adjusted ebitda due to lower PGM commodity prices, impacting negatively on our covenant ratios and therefore continue to focus on the balance sheet with a view to increasing liquidity through a number of non-debt instruments, such as prepays and streams and proactively engaging our lenders on temporarily raising our lending covenants,” Froneman said.
“The significant decline in PGM prices during the course of 2023, compounded by lower production and higher residual cost from the restructuring of the SA gold and PGM operations, resulted in group adjusted ebitda declining significantly. Average 2E PGM and 4E PGM basket prices were 32% and 34% lower year on year.”
Sibanye ended the 2023 financial year with net debt of R11.9bn, excluding debt on its now discontinued Burnstone gold project.
The plunge in ebitda in the first quarter of Sibanye’s financial year follows a terrible 2023 financial year, which saw the group report a loss of R37.4bn, compared with profit of R19bn in 2022.
It impaired R47.5bn against various assets due to the plunge in metals prices.
RESTRUCTURING
Sibanye said the restructuring and capital preservation the group undertook in the second half of 2023 and the first quarter of 2024 had improved US PGM operations, “with the benefits at the SA operations expected to manifest in a phased manner over an extended period”.
In February, the group cut 2,600 jobs across its local PGM operations. This was less than the 4,000 jobs that were initially on the line when the company announced the restructuring in October.
The restructuring affected the Simunye shaft at Kroondal, the 4Belt shaft at Marikana, the Rowland shaft at Marikana and the Siphumelele shaft at its Rustenburg operations.
“We are confident that the restructuring that has taken place to date at the SA operations as well as the current regional restructuring will secure a lower cost structure for the SA region, despite the phased closure cost and initial disruption which has impacted the first quarter of 2024,” Froneman said.
“At the SA PGM operations, lower production from the four loss-making shafts that were the subject of section 189 consultations, as well as lost production from Siphumelele shaft as a result of the head gear incident, was offset by the consolidation of an additional 50% of Kroondal production following the early closing of the acquisition of Anglo American Platinum’s 50% shareholding in November 2023,” he said.
Sibanye’s first-quarter update also shows gold production from its SA operations was 18% lower than in the same period in 2023, “primarily due to cessation of production from Kloof 4 shaft during 2023 but with costs still being incurred during the first quarter due to the phased closure process”.
The group, whose share price has tanked 58% over the past three years, is restructuring its SA gold mining operations, which could result in 4,000 job losses. In April, the company — the biggest employer in the sector — said about 3,000 permanent jobs and 915 contractors were at risk.
After gaining as much as 6.3% in intraday trade, Sibanye’s share price closed 3.1% higher at R22.90 on Friday. In March 2022 it peaked above R75.