Sibanye holds back on capex as rand gold price weakens


Sibanye holds back on capex as rand gold price weakens

Published Date: 2018-05-04 | Source: Stephen Gunnion | Author: Stephen Gunnion

Sibanye holds back on capex as rand gold price weakens

The gold and platinum miner is cutting back R550 million in capex at its gold and platinum operations this year as it defers non-essential spending

Sibanye-Stillwater says its offshore expansion has helped cushion the impact of the stronger rand on its South African operations. Releasing a first-quarter update, Sibanye-Stillwater said a strong performance from the US, where it bought Stillwater Mining Company last year, meant it now earned 60% of adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) outside of South Africa.

While the company's SA and US platinum group metal (PGM) operations reported a solid operating performance, it was a challenging quarter for its SA gold operations, which were impacted by a lower average rand gold price and a number of safety-related stoppages and operational disruptions, including February's power failure at the Beatrix mine in the Free State which left 1 300 workers trapped underground.

Despite the impact of the stronger rand on revenue from its SA operations, Sibanye-Stillwater said it grew adjusted EBITDA by 30% to R1.58 billion in the three months to end March. Its PGM operations delivered 76% of adjusted EBITDA that to improved palladium and rhodium prices.

The group says the outlook for the rest of the year remains positive, with its gold operations expected to improve. The recent weakness in the rand will also boost its financial performance at home. It's kept production guidance for its SA gold operations unchanged at 1.24 million ounces to 1.29 million ounces, with production lost in the first quarter expected to be recovered during the course of the year. However, it's cutting back on all non-essential capital expenditure at its gold mines and will spend R250 million less than the R3.25 billion it previously forecast. Its deferring capex at its PGM operations by R300 million.

"Strategically the Sibanye-Stillwater Group remains well positioned to deliver significant sustainable value to all of its stakeholders, consistent with our vision," CEO Neal Froneman said in a statement."

Its shares closed 1.6% lower at R11.22.

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