Wrap Text
Results for the six months and year ended 31 December 2019
Sibanye Gold Limited
Trading as Sibanye-Stillwater
Incorporated in the Republic of South Africa
Registration number 2002/031431/06
Share code: SSW
ISIN – ZAE000259701
Issuer code: SSW
(“Sibanye-Stillwater” or “the Group” or “the Company”)
Results for the six months and year ended 31 DECEMBER 2019 – Short form announcement
Johannesburg, 19 February 2020: Sibanye Gold Limited trading as Sibanye-Stillwater
(Sibanye-Stillwater or the Group) (JSE: SSW & NYSE: SBGL) is pleased to report operating
and financial results for the six months ended 31 December 2019, and reviewed condensed
consolidated provisional financial statements for the year ended 31 December 2019.
SALIENT FEATURES FOR THE SIX MONTHS AND YEAR ENDED 31 DECEMBER 2019
- Continued improvement in Group safe production including zero fatalities at SA gold
operations (+10 million fatality free shifts)
- 44% increase in revenue to R73 billion (US$5.0 billion) and R432 million profit for
2019 (loss of R2.5 billion (US$191 million for 2018)
- 79% increase in adjusted EBITDA to record R14,956 million (US$1,034 million)
- Business significantly de-risked – ND:adjusted EBITDA reduced to 1.25x (from 2.5x at
end 2018), well below debt covenants
- Solid operational recovery in H2 2019 following strike and other operational disruptions
in H1 2019
- Successful Integration and restructuring at the Marikana operation – R1.2 billion of
annualised synergies by end 2020 (64% higher than forecast)
KEY OPERATING RESULTS
US dollar SA Rand
Year ended Six months ended Six months ended Year ended
Dec 2018 Dec 2019 Dec 2018 Jun 2019 Dec 2019 KEY STATISTICS Dec 2019 Jun 2019 Dec 2018 Dec 2019 Dec 2018
UNITED STATES (US) OPERATIONS
PGM operations1,2
592,608 593,974 298,649 284,773 309,202 oz 2E PGM2 production kg 9,617 8,857 9,289 18,475 18,432
686,592 853,130 326,346 421,450 431,681 oz PGM recycling1 kg 13,427 13,109 10,151 26,535 21,355
1,007 1,403 1,016 1,285 1,508 US$/2Eoz Average basket price R/2Eoz 22,150 18,247 14,407 20,287 13,337
313.6 504.2 160.3 208.3 295.9 US$m Adjusted EBITDA3 Rm 4,332.5 2,958.4 2,264.5 7,290.9 4,151.9
26 27 27 26 28 % Adjusted EBITDA margin3 % 28 26 27 27 26
677 784 701 772 795 US$/2Eoz All-in sustaining cost4 R/2Eoz 11,678 10,965 9,929 11,337 8,994
SOUTHERN AFRICA (SA) OPERATIONS
PGM operations2,5
1,175,672 1,608,332 606,506 627,991 980,343 oz 4E PGM2 production kg 30,492 19,533 18,864 50,025 36,567
1,045 1,383 1,039 1,224 1,475 US$/4Eoz Average basket price R/4Eoz 21,671 17,377 14,729 19,994 13,838
217.6 608.3 136.3 143.8 464.5 US$m Adjusted EBITDA3 Rm 6,753.2 2,043.0 1,880.7 8,796.2 2,881.8
19 32 22 33 32 % Adjusted EBITDA margin3 % 32 33 22 32 19
787 1,027 755 932 1,074 US$/4Eoz All-in sustaining cost4 R/4Eoz 15,779 13,228 10,706 14,857 10,417
Gold operations5
1,176,700 932,659 578,188 344,752 587,908 oz Gold production kg 18,286 10,723 17,984 29,009 36,600
1,259 1,395 1,212 1,308 1,432 US$/oz Average gold price R/kg 676,350 597,360 552,526 648,662 535,929
102.8 (67.0) 21.0 (207.0) 140.0 US$m Adjusted EBITDA3 Rm 1,967.7 (2,937.1) 355.3 (969.4) 1,362.4
7 (5) 4 (49) 16 % Adjusted EBITDA margin3 % 16 (49) 4 (5) 7
1,309 1,544 1,308 1,904 1,347 US$/oz All-in sustaining cost4 R/kg 636,405 869,141 596,100 717,966 557,530
GROUP
(189.0) 4.5 (195.4) (18.1) 22.6 US$m Basic earnings Rm 316.8 (254.7) (2,576.3) 62.1 (2,499.6)
(1.3) (69.7) (9.5) (89.0) 19.3 US$m Headline earnings Rm 254.9 (1,263.1) (117.6) (1,008.2) (16.6)
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632.0 1,034.3 315.6 141.9 892.4 US$m Adjusted EBITDA3 Rm 12,937.5 2,018.5 4,473.8 14,956.0 8,369.4
13.24 14.46 14.18 14.20 14.69 R/US$ Average exchange rate
1 The US PGM operations’ underground production is converted to metric tonnes and
kilograms, and performance is translated into SA rand. In addition to the US PGM
operations’ underground production, the operation processes recycling material which
is excluded from the 2E PGM production, average basket price and All-in sustaining cost
statistics shown. PGM recycling represents palladium, platinum, and rhodium ounces fed
to the furnace.
2 The Platinum Group Metals (PGM) production in the SA Region is principally platinum,
palladium, rhodium and gold, referred to as 4E (3PGM+Au), and in the US Region is
principally platinum and palladium, referred to as 2E (2PGM)
3 The Group reports adjusted earnings before interest, taxes, depreciation and
amortisation (EBITDA) based on the formula included in the facility agreements for
compliance with the debt covenant formula. For a reconciliation of profit/loss before
royalties and tax to adjusted EBITDA, see note 11 of the condensed consolidated
provisional financial statements. Adjusted EBITDA margin is calculated by dividing
adjusted EBITDA by revenue
4 See “salient features and cost benchmarks – six months” included in the full
announcement (results booklet) for the definition of All-in sustaining cost
5 The SA PGM operations’ results for the six months and year ended 31 December 2019
include Marikana operations for the one month and seven months since acquisition,
respectively. The gold operations’ results for the six months and year ended 31
December 2018 include DRDGOLD for the five months since acquisitions
Statement by Neal Froneman, Chief Executive Officer of Sibanye-Stillwater
The Group made significant progress delivering on all near-term strategic imperatives
during the course of 2019, significantly de-risking the business and in the process
establishing a solid base for the delivery of further value to stakeholders.
Most pleasing has been continued progress and improvement in safe production, with Group
safety for 2019 improving from the fatalities which significantly affected our SA gold
operations in H1 2018. On 27 January 2020, the SA gold operations achieved a significant
milestone of 10 million fatality free shifts over a 17-month period. This is an
unparalleled achievement in the history of our gold operations and in underground deep
level mining. Milestones like these illustrate what can be achieved when all stakeholders
work together and contribute constructively, and our appreciation goes to our employees,
their union representatives and the Department of Minerals Resources and Energy for their
invaluable assistance and input.
The consistent operational delivery from the SA PGM operations continued, despite the
integration and restructuring of the Marikana operation, the PGM wage negotiations, and
the impact of load shedding towards the end of the year. 4E PGM production of 1,608,332
4Eoz (including the Marikana operation for seven months since acquisition), was 37%
higher year-on-year, with 4E PGM production (excluding the Marikana operation) of
1,100,734 4Eoz above the upper end of annual guidance.
The US PGM operations reported 2E PGM production of 593,974 2Eoz which was in line with
the revised annual guidance. The operational issues which affected the East Boulder mine
and Stillwater West mine during 2019 were successfully addressed during the remaining
months in 2019, with both operations achieving normalised production run rates by year-
end.
The SA gold operations produced 29,009kg (932,659oz) (Including DRDGOLD) for 2019 and
23,427kg (753,194oz) (excluding DRDGOLD) for 2019. Normalised production run rates for
the reduced operating footprint at the SA gold operations were achieved during Q4 2019,
following the conclusion of the AMCU strike in April 2019 and a steady production build-
up.
The strike at the SA Gold operations which was initiated by the Association of Mineworkers
and Construction Union (AMCU) in November 2018, lasted approximately five months before
it was resolved in April 2019. The agreed settlement as in Sibanye-Stillwater’s favour,
with AMCU accepting the same three-year agreement, on the same terms that had been agreed
with the other unions six-months earlier. While the financial impact of the AMCU strike
was significant, we have consistently maintained that absorbing the strike impact was
necessary for us to re-establish respectful and more co-operative relations with AMCU.
The significant increase in the profitability of the SA PGM operations for H2 2019 is
further testament to the appropriateness of the decisions and position adopted during
the SA gold operations strike. The current three-year wage agreements have secured a
period of stability at both the SA gold and the SA PGM operations, which will facilitate
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the optimisation of the operations and enable significant generation of value from these
operations for the benefit of all stakeholders.
The financial results for 2019 were significantly improved relative to 2018, despite
strike related losses incurred during H1 2019 at the SA gold operations. Group revenue
increased by 44% year-on-year to R72,925 million (US$5,043 million), driven by rising
precious metals prices and an improving or steady operating performance across the Group
during 2019, as well as the inclusion of the Marikana operations from June 2019 boosting
Group adjusted EBITDA for 2019 by 79% year-on-year to R14,956 million (US$1,034 million).
Group profit of R433 million (US$30 million) for 2019, improved significantly from a loss
of R2,521 million (US$191 million) for 2018, with H2 2019 profit of R604 million (US$42
million) offsetting the H1 2019 loss of R171 million (US$12 million). Group profit was
affected by various non-recurring and/or non-cash items, the most prominent for 2019
being a R1,103 million (US$77 million) gain on acquisition of Lonmin Plc (Marikana
operations), a R1,567 million (US$110 million) deferred tax credit recognised by the US
PGM operations and recognition of a R3,912 million (US$271 million) fair value loss on
the US$ convertible bonds, following the 258% increase in the Sibanye-Stillwater share
price during 2019, resulting in the bonds trading well above par value.
As a result of the strong operating and financial performance achieved in H2 2019,
progress on deleveraging the balance sheet has accelerated. Proforma net debt:adjusted
EBITDA (ND:adjusted EBITDA) reduced from 2.5x at 30 June 2019 to 1.25x at year end, well
below existing debt covenants and our 1.8x target for the 2019 year-end. Group leverage
should continue to decline naturally over the next two quarters as the adjusted EBITDA
from Q1 and Q2 2019, which were negatively impacted by the five-month strike at the SA
gold operations and the change from a Purchase of Concentrate (PoC) to toll processing
arrangement with Anglo American Platinum, fall out of the rolling total. If the run rate
that has been achieved over H2 2019 is sustained, our net debt to EBITDA ratio should
fall below 1.0x by mid-year. This is without considering the effects of reductions in
net debt that should be achieved through application of free cash generated to repaying
debt.
We are now highly confident about sustained deleveraging of the company’s balance sheet.
Moreover, with the balance sheet further de-risked, we are well positioned to resume cash
dividends during 2020 based on the current deleveraging trajectory and subject to current
commodity prices.
KEY FINANCIAL RESULTS
US dollar SA rand
Year ended Six months ended Six months ended Year ended
Reviewed
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Revised Unaudited Reviewed Audited
Dec 2018 Dec 2019 Dec 2018 Jun 2019 Dec 2019 Dec 2019 Jun 2019 Dec 2018 Dec 2019 Dec 2018
3,826.0 5,043.3 1,883.7 1,657.4 3,385.9 Revenue (million) 49,390.5 23,534.9 26,746.4 72,925.4 50,656.4
(8) - (9) (1) 1 Basic earnings per share (cents) 12 (11) (114) 2 (110)
- (3) - (4) 1 Headline earnings per share (cents) 10 (54) (5) (40) (1)
No ordinary cash dividend declared for 2019 (2018: nil)
This short-form announcement is the responsibility of the board of directors of the
Company (Board).
The information disclosed is only a summary and does not contain full or complete
details. Any investment decisions by investors and/or shareholders should be based on a
consideration of the full announcement as a whole and shareholders are encouraged to
review the full announcement (results booklet), which is available for viewing on the
Company’s website at https://www.sibanyestillwater.com/news-
investors/reports/quarterly/h22019-booklet to above and via the JSE link. The full
results announcement is available for inspection at the Company’s registered office and
the office of our sponsors during normal business hours and is available at no charge.
Alternatively, copies of the full announcement may be requested from the Company’s
Investor relations department.
The financial results as contained in the condensed consolidated provisional financial
statements for the year ended 31 December 2019 have been reviewed by EY, who expressed
an unmodified review conclusion thereon.
The JSE link is as follows:
https://senspdf.jse.co.za/documents/2020/jse/isse/sswe/Sibanye.pdf
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Contact:
Email: ir@sibanyestillwater.com
James Wellsted
Head of Investor Relations
+27(0)83 453 4014
Sponsor: J.P. Morgan Equities South Africa Proprietary Limited
FORWARD LOOKING STATEMENTS
This announcement contains forward-looking statements within the meaning of the “safe
harbour” provisions of the United States Private Securities Litigation Reform Act of
1995. These forward-looking statements, including, among others, those relating to
Sibanye Gold Limited’s (trading as Sibanye-Stillwater)(Sibanye-Stillwater or the Group)
financial positions, business strategies, plans and objectives of management for future
operations, are necessarily estimates reflecting the best judgment of the senior
management and directors of Sibanye-Stillwater.
All statements other than statements of historical facts included in this announcement
may be forward-looking statements. Forward-looking statements also often use words such
as “will”, “forecast”, “potential”, “estimate”, “expect” and words of similar meaning.
By their nature, forward-looking statements involve risk and uncertainty because they
relate to future events and circumstances and should be considered in light of various
important factors, including those set forth in this disclaimer and in the Group’s
Annual Integrated Report and Annual Financial Report, published on 29 March 2019, and
the Group’s Annual Report on Form 20-F filed by Sibanye-Stillwater with the Securities
and Exchange Commission on 9 April 2019 (SEC File no. 001-35785) and the Form F-4 filed
by Sibanye Stillwater Limited with the Securities and Exchange Commission on 4 October
2019 (/SEC File No. 333-234096) and any amendments thereto. Readers are cautioned not
to place undue reliance on such statements.
The important factors that could cause Sibanye-Stillwater’s actual results, performance
or achievements to differ materially from those in the forward-looking statements include,
among others, our future business prospects; financial positions; debt position and our
ability to reduce debt leverage; business, political and social conditions in the United
States, the United Kingdom, South Africa, Zimbabwe and elsewhere; plans and objectives
of management for future operations; our ability to obtain the benefits of any streaming
arrangements or pipeline financing; our ability to service our bond Instruments (High
Yield Bonds and Convertible Bonds); changes in assumptions underlying Sibanye-
Stillwater’s estimation of its current mineral reserves and resources; the ability to
achieve anticipated efficiencies and other cost savings in connection with past, ongoing
and future acquisitions, as well as at existing operations; our ability to achieve steady
state production at the Blitz project; the success of Sibanye-Stillwater’s business
strategy; exploration and development activities; the ability of Sibanye-Stillwater to
comply with requirements that it operates in a sustainable manner; changes in the market
price of gold, PGMs and/or uranium; the occurrence of hazards associated with underground
and surface gold, PGMs and uranium mining; the occurrence of labour disruptions and
industrial action; the availability, terms and deployment of capital or credit; changes
in relevant government regulations, particularly environmental, tax, health and safety
regulations and new legislation affecting water, mining, mineral rights and business
ownership, including any interpretations thereof which may be subject to dispute; the
outcome and consequence of any potential or pending litigation or regulatory proceedings
or other environmental, health and safety issues; power disruptions, constraints and cost
increases; supply chain shortages and increases in the price of production inputs;
fluctuations in exchange rates, currency devaluations, inflation and other macro-economic
monetary policies; the occurrence of temporary stoppages of mines for safety incidents
and unplanned maintenance; the ability to hire and retain senior management or sufficient
technically skilled employees, as well as its ability to achieve sufficient representation
of historically disadvantaged South Africans’ in management positions; failure of
information technology and communications systems; the adequacy of insurance coverage;
any social unrest, sickness or natural or man-made disaster at informal settlements in
the vicinity of some of Sibanye-Stillwater’s operations; and the impact of HIV,
tuberculosis and other contagious diseases. These forward-looking statements speak only
as of the date of this announcement. Sibanye-Stillwater expressly disclaims any obligation
or undertaking to update or revise any forward-looking statement (except to the extent
legally required).
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Date: 19-02-2020 08:00:00
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