For some years now the mining industry has been giving a pretty decent rendition of some of the gloomier sections of the book of Jeremiah. There’s been wailing, gnashing of teeth, cutting off of hair and casting it away, and it’s not inconceivable that a few enthusiasts may have taken up a lamentation on high places. So it comes as a considerable relief to read a strategic update from Sibanye Gold, which appears to have cast itself as Tigger to the rest of the industry’s Eeyore.

Sibanye has built a solid base on the back of its core gold operations of Beatrix, Driefontein and Kloof, reducing costs and increasing production to the extent that the assets are now spitting cash.

Despite further acquisitions last year and R3.6bn of capital investment in organic growth projects, the company has been able to reduce its gross debt from R4.5bn in 2013 to R2bn by the end of 2015, which makes it one of the least geared of the top 10 global producers, while retaining plenty of firepower for potential acquisitions.

Next on the hit list is platinum, and Sibanye’s acquisition of assets at Rustenburg and Kroondal smacks it straight into fifth position on the league table of producers globally.

These are tough times for the PGM industry, which is of course exactly the time you want to be buying assets for the long term, and Sibanye forecasts some R800m of annual cost and operational synergies to be achieved by bringing these contiguous properties together. Sibanye has posted a compound annual growth rate of 55% since listing in 2013, and shareholders must be smiling.

Vital numbers on August 1 2016

Share price (R)65.29
Market cap (Rbn)60.32
P:e ratio88.23
Earnings yield (%)1.13
Dividend yield (%)1.53




Resident at the other end of the spectrum of facial expression will be the shareholders of Ellies, who could be used as a model by Norwegian Expressionist Edvard Munch. If you’d bought the share five years ago at a whisker south of R2, you would have been laughing 18 months later when it was nudging R10, but ever since that heady moment it has been doing the Felix Baumgartner routine down to its current 29c, and its recent results suggest that it may have further to fall.

Ellies intended to seek a separate listing for its infrastructure business, Megatron, but it pulled the plug once it became apparent that Megatron’s performance was so dire it would have been as popular with investors as a bite in the nether regions from a moray eel. Megatron suffered from the cancellation of projects in Nigeria and Côte d’Ivoire, and it is attempting to wind down the rest of its contracts without incurring further material costs. Ellies has written its investment in Megatron down to zero, and is attempting to minimise the risk of cross-contamination.

The company is urgently seeking ways to extricate itself from the Megatron debacle without threatening the rest of the business, but going concern remains a definite issue, and the company is dependent on the ongoing financial support of Standard Bank for its very survival. The Ellies Electronics business suffered from tough trading conditions as consumers cut back on spending, but it managed to turn a R60m loss into a R37m profit before interest and tax in the year, and we can only hope it doesn’t get dragged under by Megatron.

Vital numbers on August 1 2016

Share price (c)31
Market cap (Rm)192.25
P:e ratio
Earnings yield (%)
Dividend yield (%)

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