Release Date: September 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Sibanye Stillwater Ltd (SBSW, Financial) has significantly strengthened its balance sheet and liquidity by more than ZAR25 billion or USD1.4 billion, with further initiatives in the pipeline.
- The company has implemented a comprehensive restructuring plan, resulting in estimated annual savings of ZAR3.5 billion in South Africa and a reduction of 15% in the workforce.
- The South African PGM operations delivered a solid performance, with production increasing by 4% year-on-year.
- The company is advancing its green metal strategy, with 407 megawatts of renewable energy projects under construction.
- Sibanye Stillwater Ltd (SBSW) has secured EUR500 million in green financing for the Keliber Lithium project, highlighting its strategic importance to the European Union.
Negative Points
- The company reported a basic loss of ZAR7.5 billion, primarily due to a significant decline in PGM basket prices and a ZAR7.5 billion impairment of the US PGM operations.
- The US PGM operations remain loss-making due to low palladium prices, necessitating further restructuring and a reduction in production.
- The gold operations experienced a disappointing performance, with a 17% decline in production due to seismicity and restructuring disruptions.
- The Sandouville operations continue to incur losses, leading to a decision to stop production with the current feed and products.
- The company faces challenges in the recycling market due to macroeconomic pressures and increased competition, impacting margins and volumes.
Q & A Highlights
Q: What is Sibanye Stillwater's outlook on increasing the allocation of gold assets, specifically through investment in additional mines?
A: Neal Froneman, CEO, stated that while they like gold and see upside potential, the current focus is on strategic essentials, such as strengthening the balance sheet and delivering good operational results. External growth in gold assets is not a priority at the moment.
Q: How long can Sibanye Stillwater operate at current metal prices before further action is needed?
A: Neal Froneman, CEO, mentioned that with the restructuring and balance sheet strengthening, the company can sustain operations for a long time, potentially three to ten years, without consuming the balance sheet or debt. Charl Keyter, CFO, added that they have proactively managed a three-year financial hump, ensuring stability beyond 2027.
Q: Is there a risk of paying too much of the future upside with alternative funding structures like streams?
A: Neal Froneman, CEO, acknowledged the long-term impact of stream arrangements but assured that they do not stream primary products. The focus is on streaming secondary products at high price cycles, which is considered a smart decision given the cost of capital related to equity.
Q: How quickly could Sibanye Stillwater reopen Stillwater West if prices recover, and what prices would drive that decision?
A: Neal Froneman, CEO, indicated that reopening a mine is a six to nine-month process. Charles Carter, Chief Regional Officer, Americas, added that they are not in a rush due to necessary infrastructure improvements. The decision would depend on achieving improved efficiencies and mining cost reductions.
Q: What is the company's view on PGM loadings in China and their impact on current deficits and prices?
A: Richard Stewart, Chief Regional Officer, Southern Africa, acknowledged that Chinese PGM loadings have been lower but stated that this is already factored into current deficit forecasts. The concern is more about future global market share shifts, but current deficits are well-modeled.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
