Sibanye-Stillwater’s South African gold operations printed money in the third quarter ended September as bullion hit record levels due to increasing geopolitical tensions, a record number of elections and wars.
Neal Froneman, CEO at JSE- and NYSE-listed mining company, said last week their South African gold operations had generated a 292% increase in adjusted earnings before interest taxation depreciation and amortisation (Ebidta) to R1.35bn ($75m) — thanks to a 24% higher gold price.
“The financial leverage of the South African gold operations to higher gold prices is evident in the nearly threefold increase in adjusted Ebidta from R344m ($19m) for the third quarter of 2023, to R1.347bn ($75m) for the third quarter of 2024, driven by a 24% increase in the average gold price to R1.426m a kilogram ($2,470 an ounce).”
Froneman said the gold price had continued to increase during the fourth quarter of 2024, and at the current spot of around R1.5m/kg ($2,745 an ounce) the Driefontein and Beatrix operations were expected to generate substantial cashflow, with the benefits compounding as unit costs decline with increasing production from these operations.
The financial leverage of the South African gold operations to higher gold prices is evident in the nearly threefold increase in adjusted Ebidta from R344m ($19m) for the third quarter of 2023, to R1.347bn ($75m) for the third quarter of 2024, driven by a 24% increase in the average gold price to R1.426m a kilogram ($2,470 an ounce).
The bullion price contributed to Sibanye's overall 9% improved adjusted Ebidta to R3.3bn ($184m) in the third quarter compared with the same period in 2023.
The gold price rally has underscored gold’s safe haven status, with total demand exceeding S$100bn for the first time on record, supported by strong investment in a record-high price environment, the World Gold Council said last week.
Sibanye operates the Driefontein, Kloof, Cooke and Beatrix gold operations in South Africa. It also owns DRDGOLD, which focuses on gold tailings retreatment and is one of South Africa’s oldest companies.
The group’s South African gold output, excluding DRDGOLD, was 12% lower in the third quarter of 2024, primarily due to a 43% decrease in production from the Kloof operation, partially driven by the closure of Kloof 4 Shaft.
In 2023, Sibanye reported lower gold mineral resources were mainly due to the closure of Kloof 4 Shaft.
South Africa’s gold production is dropping. In 2023 the country produced 104.3 tons of gold, accounting for about 2.5% of the world’s annual production.
Despite the record gold price, Sibanye has proposed and settled with unions on a one-year wage agreement for employees, including underground and surface workers, in its local gold mines.
Unions held a mass meeting at Driefontein on Tuesday last week, where they gave bosses a mandate to accept a one-year wage deal that will see the lowest-paid employees receiving a R900 wage increase. Miners, artisans and other employees will receive a 5.5% increase.
The wage deal was signed on Friday,
The R900 was an improvement from the previous offer to increase the pay of the lowest-paid worker by R880, which the unions rejected. The increase was reached after intervention from the Commission for Conciliation, Mediation and Arbitration.
Livhuwani Mammburu, National Union of Mineworkers spokesperson said workers gave them an overwhelming mandate to accept the offer, which comes without an increase in the living-out and housing allowance. “You could see that though the workers were not happy, they’re not interested in a strike. They overwhelmingly supported it.”
Gideon du Plessis, secretary-general of Solidarity, said the company pleaded poverty while boasting about generating super profits. “The whole time during the negotiations we heard the opposite. It leaves a bad taste and shows they were negotiating in bad faith,” he said.
Sibanye has previously said the one-year offer was prudent considering the impact of the lower platinum group metals price environment on the group.
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