Goldfield's Sibanye Gold decision pays off as profit soars

Sibanye Gold is one of the largest gold producers in South Africa and among the top 10 largest gold producers in the country. (Reuters)

Sibanye Gold is one of the largest gold producers in South Africa and among the top 10 largest gold producers in the country. (Reuters)

The company reported a 63% increase in operating profit to R3.3-billion for its interim results to June 2013 despite a sharp drop in the gold price. 

Sibanye Gold has brought its net debt down 51% to R1.9-billion and has pushed up gold production 23% to 20 413kg. 

In a statement, management attributed the strong results to "a greater focus and control at operational level, and the initial benefits from the implementation of Sibanye Gold's new operating strategy". 

The company said the first quarter of 2013 was affected by a number operational disruptions like the fire at Beautrix West and a Driefontein power outage, but the second quarter was "significantly" better. 

Neal Froneman, chief executive of Sibanye Gold, said he was pleased that improved operational trends continued to improve in the third quarter. 

With regard to the possible impact of the lower gold price, Froneman said: "Sibanye Gold planned its reserves at R380 000 per kilogram and its production for 2013 at R400 000 per kilogram, and at this stage has not had to review those plans. We began implementing cost reduction initiatives in February, well before the gold price began to decline and have not had to take remedial action or gold price related impairments."

Greater flexibility
Sibanye Gold restructured debt on July 8 this year. The company said it would give it "greater financial flexibility and remove the constraint on paying an interim dividend". 

One of the results of the restructuring was to allow the company flexibility to fo consider increasing the final dividend from 25% to 35%. 

On the issue of wage negotiations between the South African gold mining industry and trade unions, Froneman said that they would make every effort to avoid a strike, but said it has made provision for an extended strike should one occur.

Froneman said Sibanye Gold's performance supports his believe that the company's assets "despite having been in operation for many decades, are still some of the best gold mines in the world and, will continue to be so for many years to come".

Sibanye Gold has three principal operations, namely Kloof and Driefontein in the West Wits area and Beatrix in the Free State.
Sibanye Gold is one of the largest gold producers in South Africa and among the top 10 largest gold producers in the country.

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