Sibanye gold operating update for the September 2013 quarter – positive production and cost trends continue
Westonaria, 31 October 2013: Sibanye Gold Limited (JSE: SGL & NYSE: SBGL) reported another solid and improved operating performance for the September 2013 quarter. Operating profit increased by 10% to R1,995 million (US$201 million) compared with R1,806 million (US$169 million) in the June 2013 quarter. These improvements were achieved despite an 8% decline in the average dollar gold price received quarter-on-quarter and the impact of above inflation wage and electricity cost increases, and other seasonal cost pressures. The operating margin increased from 37% in the June 2013 quarter to 39% in the September 2013 quarter, with the All-in cost margin increasing from 19% to 20%.
September 2013 quarter salient features:
- Operating profit of R1,995 million (US$201 million), 10% higher quarter-on-quarter).
- Cash of R811 million (US$80 million) generated during the quarter, before loan repayments.
- Loans repaid of R750 million (US$75 million
- Gold production increased by 9% to 12,061kg (387,800oz).
- All-in cost of R339,847/kg (US$1,059/oz), 4% lower quarter-on-quarter.
- Two year wage agreement reached with organised labour - limited production disruption.
- Excellent safety performance with all indices showing positive trends.
- Agreement to acquire Cooke underground and surface assets from Gold One announced on 21 August 2013.
- Maiden dividend of 37 cents (ZAR) per share declared on 12 September 2013.
The performance was driven by continued operational improvements, which are beginning to reflect the benefits of the new operating strategy and the initial cost benefits of the restructuring and reorganization that has taken place this year.
Total gold produced increased by 9% quarter-on-quarter and by 23% year-on-year to 12,061kg (387,800oz), the highest collective production from these operations since the December 2010 quarter and believe that these performance levels are sustainable as we implement further productivity initiatives. Costs were also meaningfully lower, with both Total cash cost and All-in cost declining 4% from the June 2013 quarter to R262,142/kg (US$817/oz) and R339,847/kg (US$1,059/oz) respectively.
Neal Froneman CEO of Sibanye Gold commenting on the quarter said: “The positive production and cost trends that were evident during the quarter and six-months ended 30 June 2013 have continued during the September 2013 quarter underpinning our view that we have arrested the negative trends that have characterised these operations over the last decade believe that these performance levels are sustainable as we implement further productivity initiatives.”
The Group generated R811 million (US$80 million) cash during the quarter bolstering the R2,091 million (US$206 million) balance at 30 June 2013. Following the conclusion of the two year wage agreement with organised labour on 10 September 2013, the Board declared a R272 million (US$27 million) interim dividend to shareholders. The 7% dividend yield (annualised) on declaration date, firmly positioned Sibanye Gold as the highest dividend yield company in the sector globally, despite the dividend being limited to 25% of normalised earnings by debt covenants. At current debt levels, the Group will be able to pay a dividend of up to 35% of 2013 normalised earnings.
The robust cash position at the end of the June quarter allowed a further R750 million (US$75 million) reduction in the Bridge Loan Facility in August 2013. Another R750 million (US$76 million) repayment has subsequently been made in October 2013, reducing gross debt to R2,500 million (US$257 million) and net debt to R800 million (US$82 million). Gross debt has now been reduced by 40% from R4,200 million (US$493 million) at the beginning of the year.
Commenting on the debt, Froneman said: “While the current level of debt is not demanding, we believe it prudent, given the uncertain global economic environment and volatile gold price, to reduce risks.“
Sibanye Gold, announced the proposed acquisition of the Cooke Operations from Gold One for a consideration equivalent to 17% of its issued share capital on 21 August 2013. In addition to adding approximately 260,000oz of gold and 570,000lbs of uranium per annum to Sibanye Gold’s production, the acquisition will result in the consolidation of significant surface tailings resources in the West Rand (the West Rand Tailings Retreatment Project or WRTRP) under the control of Sibanye Gold. The transaction in subject to the fulfillment of various conditions precedent and is likely to be concluded in early 2014. A pre-feasibility study on the WRTRP was completed in July 2013 and is currently being reviewed.
Management will host conference calls at:
- Morning call: 10:00 CAT (09:00 GMT) (04:00 EST)
- Afternoon call: 15:00 CAT (14:00 GMT) (09:00 EST)
Dial-in details are available on this website.
James Wellsted Head of Corporate Affairs Sibanye Gold Limited +27 83 453 4014 firstname.lastname@example.org
Sponsor: J.P. Morgan Equities South Africa Proprietary Limited