Sibanye’s total shareholder returns have outperformed that of its former parent Gold Fields by 44% since the two were separated in February.
Sibanye Gold, the South African miner spun off by Gold Fields this year, said third-quarter earnings increased 10% as production rose and costs fell.
Operating profit was R2-billion in the three months to September 30, compared with R1.8-billion in the previous quarter, the Westonaria-based company said in a statement. Production rose 8.6% to 387.800 ounces while all-in costs declined 9.6% to $1.059 an ounce.
Sibanye’s total shareholder returns have outperformed former parent Gold Fields by 44% since the two separated in February. The company announced its first dividend last month after profit and output increased in the first half. The company was formed as a collection of cash-generating South African gold-mining assets, while Gold Fields retained growth mines in Australia, Peru and Ghana.
"We have arrested the negative trends that have characterised these operations over the last decade," Chief Executive Officer Neal Froneman said in the statement.
Sibanye shares rose as much as 4.6% and traded 3.1% higher at R13.95 in morning trade on the JSE.
Sibanye will probably produce about 378 000 ounces of gold at an all-in cost of $1.125 an ounce in the fourth quarter, it said today. That will increase annual production by 5.2% to 1.42-million ounces and cut all-in costs by 4% to R360 000 a kilogram.
The company aims to further boost production and lower costs by mining rock that was previously preserved as support pillars in older mines if it’s viable and safe to do so. It will also review shift cycles, cut the time miners spend traveling to the rock face, and explore secondary reefs that were not mined in the past due to their low grade ore and complexity, according to the statement.
Sibanye generated R811-million in cash during the quarter, meaning it now has R2.1-billion on its balance sheet. It made two R750-million payments to reduce debt in August and October. Gross debt is 40% lower at R2.5-billion compared with the beginning of the year.
The current debt levels mean Sibanye can pay a dividend of as much as 35% of 2013 normalised earnings, it said. – Bloomberg