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  • Last updated

    6:59pm on Sep 18, 2019

Interim results for the six months ended 30 June 2013

WESTONARIA 13 August 2013: Sibanye Gold Limited (JSE: SGL & NYSE: SBGL) is pleased to provide its operating results and reviewed condensed consolidated interim financial statements for the six months ended 30 June 2013.

Salient features for the six months to 30 June 2013:

  • A 63% increase in operating profit to R3.3 billion (US$363 million) compared with the six months ended
    31 December 2012.
  • A seven fold increase in available cash to R2.1 billion (US$206 million) from 31 December 2012, reducing net debt to R1.9 billion (US$188 million).
  • A 23% increase in gold produced to 20,413kg (656,300oz) compared with the six months ended
    31 December 2012.
  • Total cash cost of R289,031/kg (US$983/oz) is 12% lower compared with the six months ended
    31 December 2012, with NCE of R359,114/kg (US$1,221/oz), 16% lower.
  • Positive safety trends from 2012 continue.
  • Bridge loan facility restructured on 8 July 2013 to provide greater flexibility.

Statement by Neal Froneman, Chief Executive Officer of Sibanye Gold:

“The operating and financial results for the period under review are pleasing and support my belief that these
assets, despite having been in operation for many decades, are still some of the best gold mines in the world
and, will continue to be so for many years to come.

The implementation of Sibanye Gold’s new operating strategy is proceeding well and is starting to reflect
in improved production and lower costs. Gold production for the six months ended 30 June 2013 was
23% higher at 20,413kg (656,300oz), than in the six months ended 31 December 2012, with total cash cost of
R289,031/kg (US$983/oz) and Notional cash expenditure (“NCE”) of R359,114/kg (US$1,221/oz), 12% and
16% lower respectively.

Despite a sharp fall in the gold price since mid-April 2013, Sibanye Gold generated an operating profit of
R3.3 billion (US$363 million) for the six months ended 30 June 2013, which is 63% higher than in the previous
six months ended 31 December 2012. Net cash generated for the period was R1.8 billion (US$197 million).

The six months ended 31 December 2012 was materially impacted by the fire at Driefontein’s Ya Rona shaft
and the illegal industrial action during September and October 2012, which distorts the comparison. It is more
prudent and realistic to compare the six months ended 30 June 2013, with the comparable period in 2012.

Gold production and NCE costs for the six months ended 30 June 2013 were 5% lower and 13% higher
respectively, than the comparable period in 2012. The first quarter of 2013 contained a number of material
operational disruptions (the fire at Beatrix West Section and the Driefontein power outage) so that the six month,
year-on-year comparison does not reflect what was a significantly better second quarter in 2013. It is pleasing
to note that operational trends improved into the second quarter of 2013 and we are beginning to arrest the
historical declining production and increasing cost profile. Management remains committed to continuing the
process of reversing the declining production and increasing costs trends that have historically plagued these assets.

Production of 11,101kg (356,900oz) in the second quarter of 2013 was 19% higher than in the first quarter and
comfortably beat our forecast of 10,600kg (340,000oz). Costs similarly were significantly better, with NCE declining
by 11% to R340,465/kg (US$1,125/oz), against a forecast of R360,000/kg (US$1,220/oz). These improving trends
have continued into July and further operational improvements are expected.

A detailed review of every aspect of the business continues, with specific focus on increasing output, reducing
costs and improving productivity.

Organizational effectiveness has been improved by:

  • Separating the Kloof/Driefontein complex (“KDC”) into the Kloof and Driefontein Operations in order to
    improve the operational focus and reduce the span of control;
  • Creating a focused minerals processing business unit to ensure that the metallurgical throughput is maximised
    and that the large surface gold resources are brought to account;
  • Simplifying management structures and removing unnecessary layers; reducing costs and improving
    communication and response time, as well as positioning the collective experience of senior management
    closer to the work face;
  • Appointing multi-disciplinary and empowered mining and metallurgical management teams; and
  • Consolidating all supporting and service functions to ensure cost effective and efficient support for the
    operating units.
    Longer term, there remains significant potential for further improvements, by way of:
  • A detailed analysis of access and travel times in order to increase time at the face;
  • Alternate shift cycles, stoping crew optimisation and a bonus review to improve effectiveness;
  • Assessing the potential to safely mine high-grade remnant and support pillars, which have been excluded
    from the reserves since 2008; and
  • Assessing the potential of secondary reefs.

With the good and visible progress that has been made on restoring operational credibility, it is now appropriate
to focus on securing the future of our fourth mine, the West Rand Tailings Project, and extending the life of Beatrix
through the very significant gold and uranium resources contained within the current mining lease area.

On 8 July 2013, Sibanye Gold restructured its debt, giving it greater flexibility and removing the constraint on
paying an interim dividend. Also, as a result of the restructuring, the final dividend covenant was amended so
that the Company may consider increasing the final total dividend from 25% to 35% of normalised earnings.

This is a strong vote of confidence by the lenders in Sibanye Gold’s cash generative ability.

The improving operational performance and the debt restructuring has ensured that the Company is well
placed to declare a maiden dividend, once there is sufficient financial and operational stability. Management
remains committed to being a benchmark dividend payer.

Wage negotiations between the South African Gold Mining Industry and Organised Labour began in July 2013.
The unions have tabled varying demands, which appear to bear no reference to the cost and revenue pressures
facing the industry. The Gold mining Industry, through the Chamber of Mines, has tabled an offer which takes
cognisance of these pressures. It is difficult to forecast what the outcome of the negotiations might be but
Sibanye Gold remains firm in its view and is well positioned.

We are well prepared for extended strikes and have made plans to limit losses should production disruptions
occur. We are aware of the critical need to control costs in order to stabilize production and extend the lives of
the operations and will not be coerced into unsustainable outcomes.

The benefits from the business review and restructuring are expected to result in greater operational effectiveness
and lower costs in the six months ending 31 December 2013. While the likelihood of costly operational disruptions
remains high given the uncertainty around the wage negotiation period, under normal circumstances, group
production is forecast to increase by 8% to approximately 22,000kg (700,000oz), and NCE is forecast to be
approximately R360,000/kg. All-in cost for the six months ending 31 December 2013 is forecast at R375,000/kg
mainly due to an increase in capital expenditure.

For the year ending December 2013, gold production is estimated at 42,000kg (1.35 million oz). Total cash cost
is estimated at R290,000/kg and NCE at R360,000/kg which is around a 5% improvement compared with the
guidance provided in the Trading statement published on 8 May 2013. The All-in cost for the year is estimated
at R375,000/kg.

I remain bullish on the future and sustainability of Sibanye Gold. There is no doubt that the Company is made up
of world-class assets both in terms of the people and the ore-body.”

13 August 2013

N. Froneman

Chief Executive Officer

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