This was an increase of 46 per cent over its previous estimate.
The company’s share price extended a gain on the news to be around 4 percent higher, outperforming South Africa’s Gold Mining index which was flat.
[DATA SGL:Sibanye Gold Ltd.]’s lifting of its estimate means the timeline for its operations, or “life of mine”, will be prolonged beyond the group’s latest forecast of 2027, though a new date has yet to be given.
The “increase in mineral reserves will significantly enhance and extend Sibanye Gold’s life of mine production profile,” the company said ahead of its interim results on Thursday.
“This is based on assessments of previously unmined areas, and because of our reduced cost base, more of the reserves can be economically extracted,” said Sibanye spokesman James Wellsted.
The company’s cost base has been slashed in the year since it was spun off from Gold Fields, as it cut its workforce to 35,000 from around 42,000. Those cuts have made it commercially viable to mine deposits that are harder to reach.
Wellsted said Sibanye could not yet say exactly how long its life-of-mine profile would be extended, but it “would be able to produce 1.2 to 1.4 million ounces” a year well beyond 2027.
Sibanye is based exclusively in South Africa and any extension to its operations would be taken as a rare piece of good news for an industry that has produced a third of the bullion ever mined but has long been in a state of decline.
According to the World Gold Council, South Africa accounted for almost 80 perc ent of global bullion output in 1970 but now only churns out around 6 to 7 per cent.
South Africa has the world’s deepest mines and costs, notably power and wages, have been rising in an industry that for the most part remains labour intensive.
The recent decline of the gold price, which shed 28 per cent last year in its biggest annual fall in three decades, has raised further questions about the viability of an industry which has also been rocked by bouts of labour unrest.
Sibanye’s extension is also of interest because it has positioned itself as a company with mature assets that can generate solid dividends.