Sibanye Sees Profit on Metals Rally With Dividends in Sight

LAGOS (Capital Markets in Africa) – Sibanye Gold Ltd. said it swung to an annual profit last year, bringing the company another step closer to resuming dividend payouts.

Sibanye is among South African producers benefiting from a rally in platinum, palladium and rhodium prices and a weaker South African rand that lowers costs for producers. Chief Executive Officer Neal Froneman said last month Sibanye may declare its first dividend in three years in August.

The world’s largest platinum miner expects to report a profit of 433 million rand ($29 million) for the year through December, it said in a statement on Friday. That compares with a 2.52 billion-rand loss a year earlier, it said. The company will publish its full earnings report on Feb. 19.

While platinum prices have risen too, the biggest benefit has come from a surge in palladium, which jumped 72% over the past 12 months, and lesser-known rhodium, which is up fourfold.

Other figures from Sibanye’s statement:

• Platinum-group metals output in South Africa, including production from the Marikana mines that it acquired last year, rose 37% to 1.61 million ounces in the year through December.
• Palladium and platinum output in the U.S. was in line with guidance.
• Net debt to earnings before interest, taxes, depreciation and amortization fell to 1.2 times by year end, well below a target of 1.8 times, Sibanye said.

Sibanye shares fluctuated after the announcement before extending gains to trade 7.2% higher at 2:25 p.m. in Johannesburg. The stock has risen 179% in the past 12 months.

The figures reported Friday show the strength of the company’s ability to generate cash, RMB Morgan Stanley analysts including Christopher Nicholson said in a note.

Source: Bloomberg Business News