Sibanye shoots the lights out at start of 2021

In a single quarter, SibanyeStillwater generated more earnings from its SA platinum group metal (PGM) mines than it paid for those assets in an aggressive race to go top of the world in mine-to-market supplies of those metals.

Sibanye made rapid-fire purchases of Aquarius Platinum and the Rustenburg mines owned by Anglo American Platinum before swooping on then-world number three platinum miner Lonmin, scooping all these assets up over a five-year period for R13.5bn.

In a record quarter to endMarch, the SA PGM assets delivered adjusted earnings before interest, tax, depreciation and amortisation (ebitda), which is not far removed from an operating profit metric, of R15.3bn, a near doubling from the same quarter a year earlier.

All divisions in Sibanye, comprising the Southern African PGM mines in SA and Zimbabwe, the US PGM operations and its SA gold mines, reported improved production and financial performances.

The group’s adjusted firstquarter ebitda was a record R19.83bn, up 78% from a year earlier before the Covid-19 pandemic led to closing mines and the broader economy in SA from March 2020.

“The SA PGM operations, in particular, benefited from a strong operational performance and sharply higher PGM prices,” CEO Neal Froneman said.

Sibanye said the increase in the basket, or collective price, of the four main PGMs — platinum, palladium, rhodium and gold — meant the “outlook for the year is very promising”.

The success of Sibanye’s aggressive growth strategy, which included the more than R30bn cash purchase of the US-based Stillwater mines and recycling operations which, at times, surpassed its market capitalisation, has been reflected in its share price.

The market cap now is R195bn compared to the R10bn when it listed in 2013.

Sibanye’s market cap is far greater than the R123bn of Gold Fields, which spun out its three deep-level gold mines to create Sibanye in 2013.

As the group brought its high debt levels under control after the 2017 Stillwater purchase, the company paid R11bn in dividends to shareholders in 2020 despite the disruptions to its SA and US operations from Covid-19.

Sibanye expects its Southern African PGM assets to deliver up to 1.85-million ounces of the four metals at an all-in sustaining cost of up to R19,500 an ounce.

The company will spend R3.8bn at the operations, with R800m of capital carried over from 2020, and R400m on the recently announced investments in restarting construction work at the partially built K4 mine and the new Klipfontein opencast PGM mine.

The US PGM assets will generate a maximum of 680,000oz of palladium and platinum at an all-in sustaining cost of up to $860/oz.

Expenditure on growth at the new Blitz mine will dominate spending of $320m (R4.56bn) at the operations in 2021.

The Kloof, Driefontein and Beatrix gold mines will produce up to 950,000oz at an allin sustaining cost of R815,000/kg at the top end of the estimate.

Sibanye will spend R4bn on the gold mines, of which R400m is carried over from 2020, and R425m on projects.