Soaring precious metal prices allowed Sibanye-Stillwater to report a near five-fold increase in adjusted earnings (ebitda) in Q1.
The mining giant, with its prominent gold and platinum group metal (PGM) operations in SA and the US, has been one of the biggest beneficiaries of the geopolitical uncertainty that has roiled commodity markets in recent months.
In the three months ended March, Sibanye recorded a PGM basket price about 88% higher than in the same period last year, while its average gold price was up by nearly half.
All of this bodes well for CEO Richard Stewart’s goal of cutting the company’s debt in half by the end of next year.
In an investor presentation earlier this year he laid out ambitious plans to cut costs and focus on organic growth opportunities to boost production at the existing assets.
The next step sees the group spend about $750m to buy back outstanding bonds.
The group’s cost-cutting strategy has already won an outlook upgrade from ratings agency Moody’s, which foresees a 40% jump in earnings this year amid a continued PGM rally.
The biggest performance gains came from its SA PGM mines, where adjusted ebitda rose 393% to R12.4bn, contributing more than two-thirds of the headline increase, as production rose 2% year on year and costs were unchanged.
Adjusted ebitda at the local gold operations soared 160% to R4.7bn, contributing about a quarter of the overall growth.
In the US, Sibanye’s recycling operations delivered an outsize boost to the balance sheet as its three assets (in North Carolina, Montana and Pennsylvania) came online.
The group recycled 1.34-million ounces of precious metals in the quarter, 138% higher than the same time last year, resulting in a more than nine-fold increase in ebitda to $98m (R1.6bn). - Business Day