Sibanye Gold seeks to buy coal mine for power

Johannesburg - Sibanye Gold [JSE:SGL] is looking to buy a coal mine to help provide power, it said on Thursday, as it strives to reduce its dependence on unreliable supplies from Eskom.

Chief executive Neal Froneman said the company needed more than the R3bn solar-powered plant it is building to cope with electricity shortages that force Eskom to impose rolling power cuts.

He said the solar project was "not the first prize in terms of becoming less dependent on Eskom. We really have to do something more material."

"It means we will have to look at becoming in control of coal resources because our analysis shows that if you want to protect your cost position from an energy perspective you need to be in control of the source of that energy," Froneman said at a presentation of the company's interim results.

He added Sibanye expected to announce "concrete steps" in that regard in the second half of the year.

Sibanye lost R125m in revenue due to power cuts in the first half of 2015, underlining the impact of electricity shortages.

The lost revenue is only 1.3% of the company's almost R9.8bn in turnover, but Sibanye said the rising cost of power and inconsistent supply from Eskom was forcing it to seek alternative, independent sources.

Sibanye's headline earnings per share (HEPS) for the period slumped to 19 cents, in the middle of the range it had flagged to the market, from 84c last year, because of operational problems in the first quarter that hit production and the issue of additional shares as part of an acquisition.

Gold producers are also battling depressed prices and rising costs, though Sibanye's high-grade ore deposits are helping to keep the company profitable for now.

The company declared a dividend of 10c a share and Froneman said Sibanye was sticking to a target of paying at least a billion rand in dividends to shareholders by the end of the year, but admitted it would be "tough".

"It's not something I'm saying we are going to do, it's a target," he said.

Sibanye's old mines are regarded as cash spinners and the company's dividend yield is 7.25% compared with 3% for Johannesburg's All-share index.

At 13:15, Sibanye shares were up 1.2%, against an all-share index down 0.4%.