Impairments and weaker PGM prices take toll on Sibanye

Sibanye-Stillwater expects to report a sharp decline in headline earnings per share (HEPS) at the halfway stage due to a significant decline in commodity prices and lower production and higher unit costs at the SA gold operations.

The group expected to report HEPS for the six months to end-June of 4.6c-5c compared with 208c a year ago, it said in a statement on Monday.

It expects to report a loss per share of 250.8c-277.2c compared with earnings per share (EPS) of 262c a year ago. The impairment of property, plant and equipment from the US platinum group metal (PGM) operations had a significantly impact on EPS. The impairment, which amounted to R7.5bn, was primarily due to lower medium- to long-term forecast consensus palladium price assumptions that resulted in a decrease in expected future net cash flows. The HEPS exclude the impairment.

The decrease in EPS and HEPS is primarily due to a significant decline in commodity prices, specifically PGM prices, which resulted in a 28% lower average rand PGM basket price and a 30% lower average US dollar PGM basket price year on year, significantly reducing revenue. This revenue impact was partly offset by an 18% increase in the average rand gold price.

A 5%-8% reduction in medium- and long-term market consensus palladium price forecasts assumed for fair value calculation purposes led to a further impairment of the US PGM operations.

It reported lower production and higher unit costs from the SA gold operations after the cessation of production from the Kloof 4 shaft during the second half of 2023. In addition, seismicity restricted access to planned high-grade production areas at the Kloof and Driefontein operations. It also reported residual closure costs and restructuring at the SA gold operations and SA regional services during the first half.

Production from the SA PGM operations was affected by damage to surface infrastructure at the Siphumelele shaft, Rustenburg operation, which affected production from this shaft for two months.

The group said the operational performance from the SA PGM operations was solid, with 4E PGM production up 4% at 878,606oz. The acquisition of Anglo American Platinum’s 50% share of the Kroondal pool and share agreement resulted in an additional 67,834oz of attributable production for the first half.

The US PGM operations performance improved with production of 238,139oz, 16% higher than the previous period.

Production from the SA managed gold operations declined by 21% to 265,179oz, primarily due to the closure of the Kloof 4 shaft and increased seismic activity, which restricted access to high-grade panels at the Kloof and Driefontein operations.

The group will release its interim results on September 12.

mackenziej@arena.africa