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Johannesburg - Sibanye Gold [JSE:SGL] said first-half earnings climbed more than sixfold and raised its dividend as a rising bullion price and a weak rand boosted profit margins.
Headline earnings were R1.1bn in the six months to June 30, compared with R170m in the same period a year ago, the Westonaria, South Africa-based company said in a statement on Thursday. Sibanye increased its first-half dividend to R0.85 a share, or 36% of normalised earnings, compared with R0.10 a year ago.
The stock has almost tripled this year as the company received the twin benefits of a gold price that climbed 13% in the year to June 30 while the rand weakened 17%.
Sibanye, helped by commodity and currency-price moves, has revived its three ageing gold mines inherited in its spinoff from Gold Fields [JSE:GFI] in 2013, bought nearby assets and is expanding into platinum with purchases from Anglo American Platinum [JSE:AMS].
“The highly leveraged nature of the gold operations was clearly evident during the period,” chief executive officer Neal Froneman said in the statement.
Output rises
Production increased 5% to 746 800 ounces in the first half, the company said. All-in sustaining costs increased 3% in local-currency terms to R448 922 an ounce. In dollars, they dropped 20% to $908/oz.
Sibanye maintained its forecast for full-year gold production at 1.6 million ounces even as it reviews the future of its Cooke 4 shaft. It expects all-in sustaining costs of about $910 an ounce, and kept its capital-expenditure prediction at R3.9bn.
Its platinum mines, which produced a record 92 773 ounces of platinum group metals in the second quarter, are seen producing 260 000 ounces in the nine months to December 31.
Froneman has stated he’s keen to use the company’s rising cash reserves and share price to make acquisitions that would help underpin the dividend in the long term. However, the rebound in precious metals is making it more difficult to buy assets cheaply, he said.
“Value acquisition opportunities which were more prevalent at the beginning of the year are less obvious currently,” Froneman said. “Sibanye will continue to evaluate opportunities where value creation can be derived through the realization of cost and operational synergies.”
