JOHANNESBURG (miningweekly.com) – Leverage to the higher gold price drove a 216% increase in earnings before interest, taxes, depreciation and amortisation (Ebitda) to R3.6-billion for Sibanye-Stillwater in the last six months of last year, outgoing CEO Neal Froneman reported on Friday, February 21.

Group Ebitda of R6.4-billion for the second half (H2) of 2024 was in line with the R6.4-billion Ebitda for H2 2023.

Froneman, who in September hands over to incoming CEO and current chief regional officer South Africa Richard Stewart, reported during the presentation of second-half (H2) results covered by Mining Weekly that Ebitda from South African gold operations increased by R2.5-billion, accounting for 56% of group adjusted Ebitda for the period. (Also watch attached Creamer Media video.)

This was the first six-month period since 2017 that adjusted Ebitda from the Johannesburg- and New York-listed company’s South African gold operations exceeded the contribution from its South Africa platinum group metals (SA PGM) operations.

This marks a notable turnaround from previous years when the SA PGM and US PGM operations comprised 80% to 90% of group earnings.

The significant increase in the profit from the South African gold operations and restructuring of the group operations have, on balance, stabilised group profitability.

CHROME VALUE OPPORTUNITY

The improved economics of Sibanye-Stillwater's chrome production are expected to assist with the development and extension projects at the SA PGM operations, which are currently being assessed.

This follows the signing on February 19 of a strategic enhancement to the historical Marikana chrome contract and a new chrome management agreement with the Glencore Merafe Venture.

Most of the chrome recovery plants at Sibanye-Stillwater's SA PGM operations are now poised to be operated by the Glencore Merafe Chrome Venture, which intends to leverage its processing expertise to optimise chrome production yields and reduce operational costs across all relevant chrome recovery plants.

The enhanced Marikana contract is expected to accelerate completion of delivery of contracted chrome volumes agreed between Lonmin and the venture in 2011, by about 20 years, through increasing feed and improving recoveries from the Marikana chrome recovery plants.

Upon expiry of the Marikana contract, the Marikana chrome recovery plants will become subject to the terms of the chrome management agreement, increasing Sibanye-Stillwater's share of free cash flow from chrome production from the Marikana chrome recovery plants.

Together, these agreements are expected to allow greater exposure to chrome prices and incentivise future chrome production growth, realising value for Sibanye-Stillwater and enhancing value creation opportunities for the Marikana operation.

URANIUM STRATEGY

On 9 December 2024, Sibanye-Stillwater agreed to sell its Beatrix 4 shaft, and Beatrix operations in South Africa’s Free State, which includes the Beisa uranium project, to Neo Energy Metals, a uranium exploration and development company listed on the main board of the London Stock Exchange and dual-listed in South Africa on the A2X market.

This transaction has advanced the group uranium strategy by presenting Neo Energy with an opportunity to develop the Beisa uranium project to be developed by Neo Energy, while allowing Sibanye-Stillwater to maintain exposure to future uranium production without sole reliance on group capital funding. Various alternatives to release value from surface uranium resources at the Cooke mine in Gauteng province are also being considered.

RHYOLITE RIDGE

In 2021, Sibanye-Stillwater agreed with emerging lithium-boron producer ioneer to establish a joint venture company with respect to Rhyolite Ridge. Last year, an updated project and technical information report was received from ioneer and the Sibanye-Stillwater board is currently assessing the relevant information to inform an investment decision.

“Our focus remains on the strategic essentials of optimising operations for profitability and sustainability and protecting the group balance sheet to secure our financial health,” said Froneman.

“The operational restructurings undertaken over the last 18 months have secured greater operational stability and have, on balance, improved the profitability of the Group, with the SA PGM operations profitable for 2024, the SA gold operations benefiting from the increasing gold price, and the Century operations in Australia and recycling operations in the US region all contributing positively.

“The restructuring of the US PGM operations and ongoing restructuring at Sandouville, are expected to reduce losses from those operations for 2025, further underpinning a firmer earnings outlook,” Froneman added.

ESG STILL KEY

Environmental, social and governance (ESG) will remain an important part of the way Sibanye-Stillwater does business, Froneman reiterated.

“Our strategic positioning and the refocus on the strategic essentials has been validated if you start looking at the trends and the results.

“I believe that it's appropriate and important to continue focusing on the strategic essentials of ensuring safety and well-being, and prospering in every region in which we operate.

“It's achieving what we call operational excellence, maintaining a profitable business and optimising capital allocation and as I mentioned at last year's results, ESG will remain an important part of the way we do business.”