Despite a sharp fall in the gold price since mid-April 2013, Sibanye Gold generated an operating profit of 3.3 billion rand (363 million US dollars) for the six months ending 30 June 2013 which is 63 per cent higher than in the previous period.
Net cash generated for the period was 1.8 billion rand (197 million US dollars).
“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,” Neal Froneman, CEO of Sibanye Gold said in a statement.
Gold production for the six months was 23 per cent higher at 20,413kg than in the six months ended 31 December 2012, with total cash cost of 289, 031 rand per kg and a National Cash Expenditure (NCE), which includes capital expenditure, of 359, 114 rand per kg, 12 and 16 per cent lower respectively.
Sibanye attributed this to a greater focus and control at the operational level, and the initial benefits from the implementation of Sibanye Gold’s new operating strategy.
Froneman said the first quarter of 2013 was affected by a number of material operational disruptions - the fire at Beatrix West Section and the Driefontein power outage - but the second quarter, which began to benefit from the new Sibanye Gold operating strategy, was significantly better.
“Sibanye Gold planned its reserves at 380, 000 rand per kg and its production for 2013 at 400,000 rand per kg and, at this stage, has not had to review those plans. We began implementing cost reduction initiatives in February, well before the gold price began to decline and have not had to take remedial action or gold price related impairments,” said Froneman.
Production of 11,101kg in the second quarter of 2013 was 19 per cent higher than in the first quarter and comfortably beat Sibanye’s forecast of 10,600kg. Costs similarly were significantly better, with NCE declining by 11 per cent to 340, 465 rand per kg, against a forecast of 360, 000 rand per kg.
Further improvements are expected, barring any unforeseen disruptions, in the second half of 2013 and into 2014, as the next phases of the new strategy are implemented.
On wage negotiations, Froneman said that all efforts would be made to avoid strike action, which negatively affected all stakeholders, including and in particular labour, but indicated that Sibanye Gold had prepared for extended strikes and would strive to limit losses should production disruptions occur.
“It is pleasing to note that the improving operational trends evident in the second quarter of 2013 have continued into the third quarter. We are beginning to arrest the historical declining production and increasing cost trends that have historically plagued these assets,” noted Froneman