Interim earnings in Sibanye-Stillwater are expected to dive by about 100%, with the company’s gold production for the half year to June down by 21% and platinum group metals (PGM) prices, especially palladium, still depressed while it was affected by a R7.4 billion write-down to its US platinum business.
Although its South African PGM operations – largely affected by lower prices – raised output for the 2024 first half by 4% to 878 606 ounces of 4E metal, Sibanye-Stillwater’s managed gold operations in the same country, excluding DRDGOLD, declined by 21% to 265 179 ounces.
The South African gold operations had a lower output for the period, mainly as a result of the closure of the Kloof 4 shaft and increased seismic activity which restricted access to high-grade panels at the Kloof and Driefontein operations.
Headline earnings per share in Sibanye-Stillwater for the June interim period, excluding the impact of impairments, are expected to fall by between 97% and 98% to to between between 4.6 cents and 5 cents.
Shares in the company traded 3.9% weaker at R16.56 in afternoon trade on the JSE yesterday, while it is down 9.51% and 11.46% in the past seven and 30 days respectively.
Sibanye-Stillwater has to account for a R7.4bn property, plant and equipment impairment for its US PGM operations. The impairment was primarily due to lower price assumptions for palladium that resulted in a decrease in expected future net cash flows from the operation.
The impairment is expected to plunge Sibanye-Stillwater’s interim loss by more than 100% to a range between 250.8 cents and 277.2 cents. This compares to the previous year’s same period’s earnings per share (EPS) of 262 cents.
The decrease in the company’s earnings for the half year has been attributed to significantly lower commodity prices, especially PGM, that had resulted in a 28% lower average rand PGM basket price which knocked down revenues.
However, the lower revenues arising from the depressed PGM prices were partly offset by an 18% increase in the average rand gold price.
Lower production and higher unit costs for Sibanye-Stillwater’s SA gold operations following the cessation of production from the Kloof 4 shaft also impacted profitability, with additional effects from seismicity which restricted access to planned high-grade production areas at the Kloof and Driefontein operations.
“The above-mentioned impacts were partially offset by an increase in the net fair value gain on financial instruments compared to H1 2023, mainly attributable to a fair value gain on the derivative financial instrument portion of the convertible bond (CB) following shareholder approval for the issuance of new shares on 28 May 2024 (and) a decrease in royalties and mining and income taxes due to lower revenue and profitability, respectively,” the company stated in a trading update.
Nickel production for the period amounted to 4 270 tons, comprised of 3 671 tons of nickel metal and 599 tons of nickel salts, rising by 22% compared to the previous contrasting period.
Sibanye-Stillwater said due to low prevailing nickel prices, achievement of profitability remains a challenge.
The company’s acquisition of Anglo American Platinum Limited’s 50% stake in the Kroondal Pool and Share Agreement in November last year had resulted in an additional 67 834 ounces of 4E PGM for the first half.
This had helped offset the impact of the restructuring and closure of loss-making PGM shafts during the period as well as failure of the Siphumelele shaft bin which impacted production for two months.
“Despite the operational improvement, further actions to address the cost structures at the US PGM operations are being assessed, as depressed PGM prices remain a significant challenge.”
BUSINESS REPORT