Low platinum group metals (PGM) prices have resulted in the need for further restructuring of Sibanye-Stillwater’s US PGM operations and a 200 000 oz/y reduction in platinum and palladium (2E) production to cut costs, CEO Neal Froneman announced on September 12.

The workforce at the group’s US operations would also be reduced, he noted in a report on the company’s financial results for the six months ended June 30.

Despite the positive production and cost outcomes from previous restructuring at the US operations, the 2E PGM basket price has remained at levels that are $300/oz to $400/oz below the average all-in sustaining costs (AISC) for the first half of this year.

Reducing unit costs to achieve profitability at current prices is also not possible without increased capital investment in production growth, the group pointed out.

The capital investment required is not feasible at current PGM prices and as a result, further restructuring of the US PGM operations is necessary to reduce cash outflows, while ensuring the sustainability of the Columbus autocatalyst recycling operation.

A fundamental review of the mine operations to reduce AISC to about $1 000/oz of 2E will follow.

Sibanye reported a loss for the period of R7.1-billion, compared with a profit of R7.79-billion in the first half of the 2023 financial year.

In dollar terms, the group’s loss amounted to $379-million, compared with a profit of $427-million in the prior comparable period.

The lower commodity prices drove a 9% decline in the group’s revenue for the period to R55.2-billion.

Nevertheless, Froneman highlighted that thegroup had increased its balance sheet strength and liquidity by R25-billion or $1.4-billion.

Also, currency-geared collar was implemented at the South African PGM operations to protect the margin in a strengthening rand environment.

Also, a post-shareholder approval convertible bond derivative was reclassified to equity; there was a R6-billion revolving credit facility refinancing and upsizing; a R1.8-billion minimum gold prepay was implemented; and €500-million Keliber lithium project green financing was signed.

There was improved adjusted free cash flow compared to the second half of 2023, following operational restructuring.

Froneman said a strong financial position was maintained with 1.43x net debt: adjusted earnings before interest, taxes, depreciation and amortisation below covenant limits.

The benefits of restructuring the South African gold operations and central services is expected from the second half of this year.

The South African PGM operations delivered solid performance, increasing production and generating positive free cash flow for the period.

The average platinum, palladium, rhodium and gold PGM basket price resulted in a 4% production (excluding purchase of concentrate) increase to 828 460 oz, while free cash flow was R849-million.

Gold production from the South African gold operations of 10 703 kg (344 109 oz) for the period was 17% lower than for half one 2023. Free cash flow improved by R1.2-billion compared with half two 2023.

Sibanye is looking to monetise its South African region uranium assets through commercial arrangements without recourse to its balance sheet while retaining optionality to positive uranium market fundamentals.

Opportunities are likely to be realised through partnerships following appropriate studies.

Froneman also emphasised the group’s commitment to continue to push sustainability and transformation, noting that this also makes sound business sense.