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in October 2018, is expected to positively impact revenue at the US PGM operations. 2E PGM mined
production for 2018 is expected to be approximately 590,000oz, in line with guidance for the year.
Robust performance from the SA PGM operations sustained
The SA PGM operations continue to perform well, with 4E PGM production for 2018 expected to be
approximately 1.17Moz, ahead of published annual guidance and costs at the bottom end of guidance.
The robust palladium and rhodium prices (up more than 40% in US$ terms in 2018), together with the
weaker rand:dollar exchange rate (depreciating by 16% during 2018), boosted the rand 4E PGM basket
price by 19% during the course of the 2018 year to more than R15,700/oz, significantly enhancing revenue.
Approximately 74% of the Group’s adjusted EBITDA* in the first six months of the year was derived from
the PGM operations, increasing to 85% in Q3 2018. In Q3 2017, PGMs contributed 49% of Group adjusted
EBITDA. The strategic benefits of the Group’s commodity and geographic diversification are clearly
evident, with operational disruptions in the gold division offset by rising PGM prices and the solid
operational performance of the PGM operations.
Strike action at the SA gold operations
Strike plans at the SA gold operations have been implemented in order to limit losses during the
Association of Mineworkers and Construction Union (AMCU) strike action, which has been ongoing since
21 November 2018. This has been achieved by optimising production through the active deployment of
employees reporting for work to specific production areas and minimising overhead costs by shutting
down services (ventilation, refrigeration, etc.) to areas which are not operational. As per convention,
employees who do not report for work are not paid, with wages generally accounting for around 50% of
operating costs at the deep level gold mines.
Due in part to the successful implementation of these strike plans, gold production (excluding DRDGOLD
production) for 2018 is expected to be approximately 34,600kg (1.1Moz), which is marginally below
previous guidance of between 35,000kg and 36,000kg (1.13Moz and 1.16Moz) for the year.
We are saddened that there have been four employee fatalities, and several other employees have
sustained injuries as a result of violent behaviour related to the strike. Sibanye-Stillwater condemns this
intimidation and violence, and has engaged the unions directly and ultimately through the Labour court
(the Court) and the Commission for Conciliation, Mediation and Arbitration (CCMA) in order to try and
restore peace and stability to the operations.
Despite an apparent moderation in incidents of violence and intimidation following an interdict on
violence from the Labour Court and the establishment of picketing rules by the CCMA at the end of
November 2018, violent episodes, including burning of houses occupied by non-AMCU members in
Blybank near Carletonville, have resumed in 2019.
During the course of the strike, the collective membership of the National Union of Mineworkers (NUM),
UASA and Solidarity has increased to over 50% of the employees at the South African gold operations
and on 13 December 2018, an amended wage agreement was signed with NUM, UASA and Solidarity,
which allowed the agreement which was reached on 14 November 2018, to be extended to all
employees at its South African gold operations, in terms of Section 23(1)(d) of the Labour Relations Act,
No 66 of 1995 (S23(1)(d)).
On 22 December 2018, the Court ordered the CCMA to complete an independent verification exercise
and report back to the Court on 7 January 2019. Management and AMCU have not been able to agree
on the terms of reference for the verification exercise and the CCMA adjourned the proceedings. The
CCMA has subsequently received guidance from the Court on the way forward with regards to the
verification exercise, which will now proceed. We continue to pursue a peaceful end to this strike and
are confident about the veracity of the employee union affiliations presented to the Court.