Final dividend of R0.90 per share demonstrates further commitment to being an industry leading dividend payer
Salient features for the six months ended 31 December 2015.
- Final dividend of 90cps declared – full year dividend of 100cps: R916 million returned to shareholders
- Operating profit of R4.0 billion (US$298 million) consistent with the six months ended 31 December 2014
- Net debt reduced from R1.7 billion (US$137 million) to R1.4 billion (US$88 million) resulting in a Net debt: EBITDA of 0.21x.
- Gold production of 25,571kg (822,100oz)
- All-in sustaining cost (“AISC”) margin of 16%
- All-time low fatal injury frequency rate of 0.06 per million man hours for the year
- Gold Mineral Reserves increased by 9% to 31.0Moz as at 31 December 2015
Westonaria, 25 February 2016: Sibanye Gold Limited (JSE: SGL & NYSE: SBGL) reported significantly higher production and operating profit for the second half of 2015, with production increasing by 15% to 25,571kg (822,100oz) and operating profit increasing by 68% to R4 billion (US$298 million). As a result, production for the year ended 31 December 2015 was only 3% lower than in 2014, despite the impact of the weak March 2015 quarter, with operating profit for the year of R6.3 billion.
The operational startup in January and February 2016 have been considerably better than in 2015 and Sibanye management forecast a 5% increase in production to 50,000kg (1.6 million oz) in 2016, with All-in sustaining costs remaining flat in rand terms, but declining significantly in dollar terms to US$880/oz (at an average assumed exchange rate of R15:US$), which is a globally competitive level.
The Board approved a 90 cent per share dividend, taking the full year dividend to 100 cents per share, maintaining an industry leading dividend yield at 4.6% (applying the average 2015 share price of 2247 cents per share). Approximately R916 million will be returned to shareholders.
Neal Froneman Chief Executive Officer of Sibanye commenting on the dividend said: “The approval of a meaningful dividend such as this, confirms Sibanye’s commitment to be an industry leading dividend payer. With the gold price having risen over R110,000/kg on average this year, Sibanye will generate between R5 billion and R6 billion in additional revenue in 2016”.
“The benefits that this increase in profitability will bring to all our stakeholders is significant. We intend engaging with our employees and unions in due course to progress the implementation of a social and economic compact that was initially tabled at last years gold sector wage negotiations,” said Froneman. “We have already implemented a profit share at our operations in H2 2015 separate to the wage agreements, which resulted in over R40 million being shared with employees in the latter half of 2015”.
The Sibanye Board also approved the capital investment of R3.7 billion in gold projects, significantly extending the operating life of the Gold Division. R931 million of the approved capital is budgeted for 2016, the bulk of it being spent at the Burnstone Project in Mpumalanga.
The inclusion of these projects, and other organic replacement of Mineral Reserves resulted in group gold Mineral Reserves increasing by 9% (the third consecutive year they have increased) and uranium Mineral Reserves increasing by 11%.
Regarding the significance of these investments, Froneman said: “Sibanye is committed to a sustainable future in South Africa and this is again reflected in the significant investments we are making, which will result in extended and possibly increased employment in the regions in which we operate. In addition to these capital investments in projects, and in order to secure additional value and sustainability for stakeholders, we announced a series of transactions in the platinum sector, which we believe will complement our strategy and realize significant value in the future”.
A number of conditions precedent to the conclusion of the transactions were fulfilled in 2015 or, in early 2016, when Sibanye and Aquarius shareholders overwhelmingly approved the respective transactions. Outstanding conditions include inter alia, the approval of both transactions by the South African Competition authorities and, for the Rustenburg transaction, the granting of Section 11 approval for the transfer of the Rustenburg operations mining right by the Department of Minerals Resources.
“Following the conclusion of the platinum transactions, Sibanye will be the largest gold producer and third largest platinum producer in South Africa. It is evident that Sibanye has a meaningful role to play in the South African mining industry and economy as a whole. We see significant potential to unlock value for all stakeholders in the broader mining industry, not only in precious metals, which we believe will benefit all South Africans as well as our direct stakeholders” Said Froneman.
“The current socio-economic and political challenges which are clearly evident in the country exacerbated by a fragile and hostile industrial relations climate are a significant deterrent to investment and add operating risk to the industry which could lead to its premature demise. The only way this can be prevented is if all stakeholders are aligned and work towards a common outcome. While dialogue is beginning to take place, it is up to all stakeholders to engage with utmost urgency in order to develop solutions to the problems threatening the industry and the economy. We are encouraged by the recent indications from government of its commitment to establish a climate that is more conducive to confident investment by business in economic growth” Froneman concluded.
James Wellsted Sibanye Gold Limited +27 83 453 4014 firstname.lastname@example.org