Sibanye-Stillwater exceeds PGM, gold production guidance

Stillwater operation in Montana. (Image courtesy of Sibanye-Stillwater).

Sibanye-Stillwater (JSE: SGL) (NYSE: SBGL) announced that South African PGM operations exceeded the upper limit of its revised 2020 annual guidance of 1.35 – 1.45 million 4Eoz by 9%. 

According to the company, the second half of 2020 had an outstanding performance despite the ongoing implementation and observance of covid-19 protocols. PGM production in South Africa reached 918,678 4Eoz for H2 2020, which was 40% higher than the output registered in H1 2020.

In the US, on the other hand, PGM operations produced 603,066 2Eoz in 2020, a figure that was marginally below the revised guidance of 620,000 – 650,000 2Eoz. H2 generated 305,326 2Eoz, which was 3% more than what was produced during the first half of the year.

BMO Capital Markets Research expects Sibanye-Stillwater’s strong performance to continue into 2021

In a press release, Sibanye-Stillwater said that the lower production in the United States was a direct consequence of the second wave of covid-19 in Montana. 

When it comes to gold, production from the company’s operations in South Africa, excluding DRDGOLD, reached 809,941oz, which means that the revised guidance of 756,000oz – 788,000oz was surpassed by 3%. Similar to what was witnessed at the PGM operations, the second half of the year performed better than the first half with 406,321oz produced, a 48% increase from the previous period.

“The manner in which the initial threat of covid-19 was handled at our operations in H1 2020 and the subsequent, safe return to normalised production levels by year-end was extremely pleasing,” Neal Froneman, Sibanye-Stillwater CEO, said in the media brief. “In the absence of unexpected disruptions, the Group is well-positioned to deliver a much more consistent and significantly improved operating result for 2021.”

In the view of BMO Capital Markets Research, the South African miner’s strong performance should continue into 2021 given the strength of PGM and gold prices. The firm estimates PGE prices will be 20% higher at $2,410/oz for 4E PGM basket and 14% higher at $1,835/oz for gold.

“We expect a near doubling of group adjusted EBITDA in H2/20 to $1,920M ($990M in H1/20). Positive momentum in PGM basket prices has continued into 2021 with spot rhodium prices now >$21,000/oz (compared with an average price of ~$11,140/oz in 2020) and spot palladium prices at >2,300/oz. Therefore, we are also forecasting the company to continue generating strong earnings in 2021, albeit this assumes limited further covid-19 related restrictions at their operations,” BMO said in an analysis of Sibanye’s results. 

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