Business In The News South Africa

Sibanye blames gold price and lower production for interim losses

JOHANNESBURG, August 30 – Sibanye Gold on Wednesday pointed to lower average gold price and gold production as the group recorded a net loss of R4.8 billion, or $364 million, for the six months ended 30 June compared with a R88 million, or $6 million, net profit during the same period in 2016.
Gold produced was eight percent lower primarily due to the suspension of operations at Cooke 4 during the second half of 2016, the impact of illegal mining at the Cooke Operations, and lower volumes and grades from Beatrix West.
Sibanye’s net other losses for the six months amounted to R5.7 billion, or $438 million, primarily due to non-recurring expenses including impairments, mainly at Cooke and Beatrix of R2.7 billion. Thus, Sibanye’s operating profit declined to R2.3 billion.
Sibanye said despite the challenging economic environment, the SA gold operations have generally performed satisfactorily, barring the Cooke Operations and the Beatrix West mine.
The miner said continuing to operate the Cooke and Beatrix West business units at a loss was unsustainable and threatened the sustainability of other operations.
As such, Sibanye issued a notice to all stakeholders and section 189 consultations have begun to lay off approximately 7,400 employees at all levels as a result of the proposed restructuring.
Meanwhile, Sibanye Gold announced a change in its trading name to Sibanye-Stillwater as a result of the significant transformation undergone by the group over the course of the last year.
This comes after Sibanye in May completed the acquisition of Stillwater, the United State’s sole provider of platinum and palladium, for $2.2 billion (about R30 billion), in a bid to create a premier global precious metals miner.
Sibanye said the timing of the Stillwater Transaction has been most opportune, with palladium among the top performing commodities in 2017.
Neal Froneman, Sibanye chief executive, said the company remained confident that the strategic rationale and timing of the move into the platinum group metals (PGM) sector were sound, and that the PGM operations will contribute strongly to the group and create significant shareholder value.
“We are restructuring the SA Gold operations for further sustainability and profitability and the outlook is positive,” Froneman said.
“The group, as a whole, has undergone significant change and done so under challenging circumstances, with commodity prices subdued and the South African operating environment uncertain. Sibanye-Stillwater is now well positioned to benefit from any upside in precious metal prices.”
Instead of paying dividends, Sibanye resolved to issue two capitalisation shares per 100 held to shareholders, saying that it needed to refinance the remaining $361 million Stillwater bridge facility and possible restructuring costs in the second half of the year.


Leave a Reply

Your email address will not be published. Required fields are marked *