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Sibanye Operating and Financial Results | Six months and financial year ended 31 December 2016
STATEMENT BY NEAL FRONEMAN, CHIEF EXECUTIVE OFFICER OF SIBANYE
“The new safety structures and interventions announced in August 2016, have thus far been effective, with the Group
safety performance much improved in the second half of the year. The safety performance for the Gold Division for the
six months ended 31 December 2016, compared with the previous period included:
· 50% improvement in the FIFR to 0.07 per million man hours;
· 27% improvement SIFR to 3.72 per million man hours; and
· 19% improvement in the LDIFR to 6.25 per million man hours.
The Sibanye Group delivered a solid operating result. The Gold Division benefited from a relatively high rand gold price
for most of the year. Unfortunately margins towards the end of the year have shrunk considerably due to a substantially
lower rand gold price.
Operating profit for the Gold Division for the six months ended 31 December 2016, was R4,835 million (US$346 million),
22% higher than for the comparable period in 2015, driven primarily by a 17% increase in the average rand gold price
received to R569,535/kg (US$1,268/oz) compared with the same period in 2015. While the average rand gold price
during the last six months of 2016 was 9% lower than for the six months ended 30 June 2016. Operating profit from the
Gold Division, for the year ended 31 December 2016 of R10,155 million (US$692 million), 60% higher than for the previous
year.
Operating profit for the Platinum Division for the six months ended 31 December 2016, of R304 million (US$21 million)
reflects a positive contribution from the Rustenburg Operations from 1 November 2016 and another good performance
at the Kroondal and Mimosa Operations. The operating margin for the Platinum Division increased to 10%.
Normalised earnings of R1,505 million (US$109 million) for the six months ended 31 December 2016, was R528 million
(US$34 million) higher than the R977 million (US$75 million) reported for the comparative period in 2015. Normalised
earnings of R3,657 million (US$249 million) for the year, were also significantly higher than in 2015 (R1,220 million and
US$96 million).
Consistent with Sibanye’s dividend policy, the Board has declared a final dividend of 60 cents per share (R560 million)
equivalent to 37% of normalised earnings. The comparative final dividend declared in 2015 was 90 cents per share
(R916 million). The total dividend of 145 cents per share (R1,345 million) for the year ended 31 December 2016 represents
a dividend yield of 5%.
GOLD DIVISION
For the six months ended 31 December 2016, total gold production from Sibanye’s Gold Division was 23,805/kg (765,400oz).
While this is similar to that produced during the six months ended 30 June 2016, it is 7% lower than the comparative period in
2015, primarily due to the cessation of underground mining operations at Cooke 4 mine during the period, ongoing
engineering-related bottlenecks at Driefontein and the impact of severe storm activity in the December quarter, which
resulted in a number of power outages.
Gold sales were marginally lower than production at 23,676kg (761,200oz), which resulted in 129kg (4,100oz) remaining unsold
at year end. Accordingly, operating costs were credited R43 million (US$3 million).
A stronger US dollar gold price, together with a weaker rand/dollar exchange rate, resulted in a 17% year-on-year increase in
the average rand gold price from R487,736/kg to R569,535/kg, offsetting the lower production, with revenue increasing by 8%
to R13,484 million from R12,472 million.
Unit costs reflect the decline in production with total cash cost (TCC) and All-in sustaining cost (AISC), increasing by 10% to
R372,504/kg (US$829/oz) and R451,352/kg (US$1,005/oz) respectively year-on-year. An increase in project expenditure resulted
in All-in cost (AIC) increasing by 13% to R476,774/kg (US$1,062/oz). Margins of 35% (TCC), 21% (AISC) and 16% (AIC) were
approximately three percentage points higher than for the comparative period in 2015, driven by the higher gold price.
Underground production at Driefontein for the six months ended 31 December 2016, was 9% lower year-on-year at 7,208kg
(231,700oz) due to various engineering issues, power outages and a seismic event, which affected volumes from the
Masakhane, Ya Rona and Hlanganani
shafts. This was despite the yield increasing from 6.69g/t to 7.05g/t due to significantly
improved mining quality factors. As a result of the lower production, TCC and AISC increased by 17% and 14% to R350,875/kg
(US$781/oz) and R420,763/kg (US$937/oz), respectively.
Kloof underground production was 3% higher year-on-year at 7,062kg (227,000oz) for the second half of 2016, as a result of a
1% increase in throughput and a 2% improvement in the average yield to 6.59g/t, driven largely by a 13% improvement in the
Mine Call Factor (MCF). Costs continued to be well managed with TCC 2% lower at R331,818/kg (US$739/oz) and AISC
marginally higher at R426,233/kg (US$949/oz) mainly due to an increase in capital expenditure.
Beatrix’s production six months under review was 7% lower year-on-year at 4,975kg (159,900oz) due to a 7% decline in the
average yield to 3.45g/t. This decrease was primarily due to lower volumes mined and processed from the higher grade
Beatrix 4 shaft. Throughput was similar at 1.44 Mt.
Underground production from Cooke for the second half of 2016 was 30% lower year-on-year mainly due to the closure of
Cooke 4 shaft in September 2016. Tonnes milled decreased by 42%, while the average grade increased from 3.62g/t to
4.39g/t.
Gold production from the surface operations increased by 8% for the comparable six months in 2015, mainly due to an
increase in volume from Kloof surface sources. Following the cessation of underground operation at the Cooke 4 shaft, Kloof
utilised spare capacity at the Cooke 4 plant to mill additional volumes of lower grade Venterspost surface material, resulting
in an additional 14kg (450oz) of production or an increase of 23%. The other surface operations were similar year-on-year.