Sibanye Gold delivers increased operating profit

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“Despite receiving a 7 per cent lower average Rand gold price of R420 423/kg in the six months ended 31 December 2013, Sibanye Gold generated an operating profit of R4.0 billion (US$399 million) during the period, which is 19 per cent higher than in the previous six months. Net cash generated for the period, before net loan repayments and dividends, was R1.7 billion,” said Neal Froneman, Chief Executive Officer of Sibanye Gold.

The gold company reported an 18 per cent increase in gold produced to 24 061kg (773 600oz), restoring the quarterly production rate to 2010 levels.

“Sibanye Gold’s operating performance for the second half of the year ended 31 December 2013 was significantly better than that of the first half, with production increasing by 18 per cent and All-in cost 10 per cent lower. Importantly, production for the December 2013 quarter was maintained at 12 000kg (385 800oz), which is similar to that reported for the September 2013 quarter and 2 per cent above our forecast of 11 750kg (378 000oz),” said Froneman

Froneman said the recent production levels represent the highest combined production from their Beatrix, Driefontein and Kloof operations since the December 2010 quarter and, despite flat production quarter-on quarter, costs continued to decline.

Operating cost of R842/ton and All-in cost of R333 833/kg were both 2 per cent lower than in the September 2013 quarter.

Froneman said that as a result of implementing their operating model, gold production for the six months ended 31 December 2013 increased to 24 061kg (773 600oz), which is 3 648kg (117 300oz) above production during the six months ended 30 June 2013. Total cash cost of R259 919/kg (US$804/oz) and All-in cost of R336 848/kg (US$1 043/oz) were both 10 per cent lower than during the first six months, largely as a result of the increase in gold production.

Underground cost per ton milled declined by 12 per cent to R1 527/ton (US$152/ton) from R1 737/ton (US$190/ton) in the first half of the year, driven by a 19 per cent increase in underground volumes milled, and strict controls on underground operating costs, which increased by only 5 per cent to R5 639 million (US$560 million).

This was despite the increase in milled throughput, annual wage increases and elevated winter electricity tariffs in the second half of the year.

The CEO said operating and financial comparisons with the year ended 31 December 2012 were complicated by the significant operational disruptions experienced in 2012 and various accounting adjustments applied in both years.

Gold production for 2013 was 17 per cent higher than that achieved in 2012 and the All-in cost was 7 per cent lower, both as a result of the severe strikes in 2012 and the re-focus on mining and cost saving initiatives after unbundling early in 2013. 

Operating profit increased to R7.4 billion (US$767 million) from R5.7 billion (US$700 million) due to the increased revenue, partly offset by production and inflation related cost increases. The gold price was unchanged year-on-year and averaged R434 663/kg during 2013.

Sibanye approved a maiden final dividend of 75 cents per share (ZAR) for the six months ended 31 December 2013, resulting in a total dividend of 112 cents per share (ZAR) in 2013. This, the company said was equivalent to a dividend yield of 5.5 per cent at Sibanye Gold’s closing share price of R20.40 on 18 February 2014 and 9.1 per cent at the closing share price on 31 December 2013.