Sibanye Gold returns R1.3bn to shareholders as platinum swells profit
Sibanye Gold, which has become a major platinum producer, reported a steep increase in annual profit and paid a handsome dividend as higher gold prices and the inclusion of platinum profits buoyed the company’s results.
Sibanye, which during 2016 added the whole of Aquarius Platinum and Anglo American Platinum’s Rustenburg mines to its portfolio, declared a total dividend of R1.45 per share for the year, returning R1.3bn to shareholders.
It declared a second-half dividend of 60c per share, equating to R560m, compared with a 90c final dividend the year before.
Sibanye reported a profit for the year to end-December of R3.3bn compared with R538m a year earlier.
Net debt in the group grew to R6.3bn from R1.3bn a year earlier as its gross debt shot up to R8bn from R1.8bn a year earlier, as a result of its aggressive growth in platinum.
The two standout weak performances in the year were the Cooke gold mines, which recorded a loss of R2bn, and the Rustenburg mines, which had a R649m loss for the two months — November and December — that Sibanye owned them.
The operating cost at the Rustenburg mines averaged R11,485/oz of the four platinum group metals the mine produced during the two months and was "unsustainable and highlights the necessity and importance of realising the operating and cost synergies" that Sibanye wants to extract from combining the assets with those of Rustenburg.
Sibanye is undergoing a job-cutting process and restructuring of the assets.
Overall, the group had a record operating profit of R10.5bn, and headline earnings grew 269% to R2.5bn.
"The gold division benefited from a relatively high rand gold price for most of the year. Unfortunately margins towards the end of the year have shrunk considerably due to a substantially lower rand gold price," Sibanye CEO Neal Froneman said.
Sibanye realised R586,319/kg for its gold sales during the year compared with R475,508/kg the year before.
All-in sustaining costs grew to R450,152/kg from R422,472/kg the year before.
Gold production dipped slightly to 1.51-million ounces from 1.54-million ounces.
Sibanye closed its underperforming Cooke 4 mine during the year.
The average rand gold price fell by 9% in the second half of last year compared with the first half, but operating profit in the company’s gold division was still 60% higher at R10.16bn compared with the previous year, Froneman said.
Sibanye has in recent weeks warned that it is reviewing a number of its growth projects because of shrinking profit margins in the gold division, and that it could defer some of those projects.
The platinum division generated 238,662oz of platinum during the year and made an operating profit of R376m.