Release Date: March 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Sibanye Stillwater Ltd (JSE:SSW, Financial) achieved a record-low serious injury frequency rate, demonstrating significant progress in their ESG initiatives.
- The company is well advanced with its Noble Energy projects, with 267 megawatts in construction, contributing to renewable energy goals.
- Sibanye Stillwater Ltd (JSE:SSW) ended the year with a net debt to adjusted EBITDA ratio of 0.58 times, indicating a strong balance sheet.
- The South African gold operations saw a significant turnaround, moving from a ZAR3.5 billion adjusted EBITDA loss to a ZAR3.5 billion adjusted EBITDA profit.
- The company has established the Sibanye Stillwater Foundation, which is making its first allocations for social upliftment projects.
Negative Points
- Earnings and cash flow were significantly impacted by a steep decline in PGM prices.
- The company suffered a regression in fatalities year-on-year, with a notable incident at the Burnstone conveyor contractor site resulting in four deaths.
- No final dividend was declared due to losses in the second half of the year.
- The Sandouville nickel refinery in France was severely impacted by the collapse in nickel prices, leading to operational challenges.
- The US operations at Stillwater are still loss-making, with ongoing efforts required to ensure profitability in a lower palladium price environment.
Q & A Highlights
Q: At what level of palladium price will the Stillwater operations be forced to cease production?
A: Neal Froneman (CEO) emphasized that Stillwater has already paid for itself and has a high-quality ore body with 50 years of life. Charles Carter (Chief Regional Officer, Americas Region) added that the restructuring and cost-cutting measures are aimed at making the operations sustainable even at lower palladium prices. The goal is to get the cost structure down to $1,000 per 2E ounce.
Q: What are the plans for funding the equity injections for Rhyolite Ridge and Keliber?
A: Neal Froneman (CEO) stated that the funding for Keliber is well advanced and will be considered as needed. For Rhyolite Ridge, the decision will be based on the project's economics, which are expected to be sound. Mika Seitovirta (Chief Regional Officer, Europe Region) added that the permitting situation for Keliber is being assessed, and the project is on budget and on time.
Q: What steps have been taken to manage the operations at New Century around flooding events?
A: Robert van Niekerk (Chief Regional Officer, Australian Region) explained that additional pumping capacity and other measures have been put in place to protect the infrastructure and minimize the impact of excessive rainfall. The operations are now up and running again.
Q: How do you plan to address the high all-in sustaining costs in the South African PGM operations?
A: Richard Stewart (Chief Regional Officer, SA Region) mentioned that the cost increases are partly due to lower byproduct credits and higher development costs. The restructuring benefits will be realized over time, and there are plans to optimize central and support services to reduce costs further.
Q: What are the working capital needs and debt facilities for the entire business?
A: Charl Keyter (CFO) stated that the financial policy is to have liquidity for two months of operating expenditure plus CapEx, amounting to about ZAR20 billion. The company has a billion-dollar revolving credit facility that is fully undrawn and a ZAR5.5 billion facility with ZAR4 billion drawn. The covenants are being closely monitored, and various levers can be pulled to ensure compliance.
Q: What is the plan for monetizing the uranium assets?
A: Neal Froneman (CEO) and Richard Stewart (Chief Regional Officer, SA Region) explained that the Cooke Dump is a significant asset, and various options, including partnerships, are being explored to optimize value. The focus is on realizing value without using the company's balance sheet.
Q: How do you plan to manage the diverse asset base in the current environment?
A: Neal Froneman (CEO) emphasized that the strategy is to pivot into a producer of green metals, supported by a substantial base of PGMs. The regionalized structure implemented two years ago has worked well, and the company is focused on managing the pivot while cutting costs to suit the current environment.
Q: What are the plans for Sandouville given its operational challenges?
A: Mika Seitovirta (Chief Regional Officer, Europe Region) stated that a feasibility study is underway to transform Sandouville into a pCAM producer. The results of the study and the transition plan will be available later this year, providing more precise numbers on CapEx and profitability.
Q: How do you plan to address the high costs in the gold operations?
A: Richard Stewart (Chief Regional Officer, SA Region) mentioned that stable production is key to managing costs. Energy costs are being addressed through the introduction of renewable energy projects, and there are plans to optimize central and support services. The goal is to reduce costs to around $1,800 per ounce.
Q: What is the impact of the recent court ruling on the Keliber project timeline and CapEx?
A: Mika Seitovirta (Chief Regional Officer, Europe Region) explained that the court ruling did not impact the permits for the Syvajarvi mine or the refinery in Kokkola. The overall impact on the project timeline and CapEx is being assessed, and the market will be updated accordingly.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
