Multinational mining and metals processing group Sibanye-Stillwater expects to report a loss a share of between 250.8c and 277.2c, or about $0.13 and $0.15, for the six months ended June 30, mainly as a result of a R7.5-billion, or about $401-million, impairment of property, plant and equipment at its US platinum group metals (PGM) mine on the back of lower medium- to long-term forecast consensus palladium price assumptions that resulted in a decrease in expected future net cash flows.

Sibanye also expects to report headline earnings per share (HEPS) which exclude the impairment, of between 4.6c and 5c, or about $0.002 and $0.003, for the six months under review, compared with HEPS of 208c, or about $0.11, for the six months ended June 30, 2023.

Lower revenue, on the back of a decline in PGM prices; lower production and higher costs from the South African gold operations; and lower production from the South African PGM operations all negatively impacted on earnings per share (EPS) and HEPS for the six months under review.

Sibanye points out that its average rand platinum, palladium, rhodium and gold (4E) PGM basket price was 28% lower year-on-year, while the average dollar platinum and palladium (2E) PGM basket price was 30% lower year-on-year, resulting in a significant decrease in revenue.

The revenue impact was, however, partly offset by an 18% year-on-year increase in the average rand gold price.

Gold production was, however, lower year-on-year as a result of the halting in production from the Kloof 4 shaft in the second half of 2023; seismicity, which restricted access to planned high-grade production areas at the Kloof and Driefontein operations; and residual closure costs and restructuring at the South African gold operations and South African regional services during the first half of this year.

Production from the South African PGM operations was also lower owing to the damage to surface infrastructure at the Siphumelele shaft at the Rustenburg operation, which affected production from this shaft for two months, with the subsequent production buildup ongoing.

The negative impact on EPS and HEPS was, however, offset by an increase in the net fair value gain on financial instruments, compared with the prior comparable period, mainly attributable to a fair value gain on the derivative financial instrument portion of the convertible bond following shareholder approval for the issuance of new shares on May 28 for future settlement of the convertible bond; and a decrease in royalties and mining and income taxes due to lower revenue and profitability, respectively.

Despite the challenges mentioned above, the South African PGM operations achieved a 4% year-on-year increase in production to 878 606 oz of 4E.

"The acquisition of Anglo American Platinum's 50% share of the Kroondal Pool and Share Agreement from November 1, 2023, resulted in an additional 67 834 4E oz of attributable production for the first half of this year, which offset the impact of the restructuring and the closure of lossmaking shafts during the period; the failure of the Siphumelele shaft bin, which impacted on production for two months; and the unprotected sit-in and industrial action at the Kroondal operation," Sibanye reports.

The US PGM operations performance improved, with the operations having achieved their best half-year production result since the second half of 2021. Sibanye says this confirms the effectiveness of the revised restructuring plan implemented in the fourth quarter of 2023.

Mined 2E production from the US PGM operations of 238 139 2E oz was 16% higher year-on-year.

"Despite the operational improvement, further actions to address the cost structures at the US PGM operations are being assessed, as depressed PGM prices remain a significant challenge.

"Challenging recycling market conditions for [the six months under review] continued to constrain the US recycling operations, resulting in recycling ounces fed decreasing by 5% year-on-year to 154 938 oz of platinum, palladium and rhodium," Sibanye notes.

Meanwhile, production from the South African managed gold operations, excluding DRDGOLD, declined by 21% to 8 248kg (265 179 oz) for the six months under review, 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.

Production rates from the Sandouville nickel refinery, in France, have consistently improved since mid-2023, owing to improved plant stability and reliability. Total nickel production for the six months under review of 4 270 t was 22% higher year-on-year.

However, low prevailing nickel prices have continued to make it challenging for the operation to achieve profitability.

In the Australia region, the production of 42 000 t of payable zinc metal from the Century zinc tailings treatment operation reflected the recovery and stabilisation of production following flooding in the first quarter of the year.

Sibanye will publish its interim results on September 12