Sibanye-Stillwater, the South African mining company, has revealed its Q3 results, indicating a mixed performance across its global operations. The company's South African platinum group metals (PGM) operations, a significant contributor to its financial performance, are facing restructuring that may affect over 4,000 jobs. This follows the closure of two shafts and comes as the adjusted Ebitda for Q3 declined to R2.53bn from R8.3bn year-on-year.
The company's US operation, Stillwater Mine, also faces challenges with its adjusted Ebitda falling to R397m ($21m) from R895m ($52m) year-on-year. This decline in revenue is attributed to increasing all-in sustaining costs, staff departures, declining palladium prices, and reliance on costly contractors. CEO Neal Froneman suggested further repositioning might be necessary for this operation.
The South African gold business saw a brighter performance with a R1.2bn year-on-year turnaround and an adjusted Ebitda of R344m ($19m). However, losses were reported at Sandouville, a French nickel refinery deemed “unsustainable” under current nickel prices.
In Australia, Sibanye-Stillwater's Q3 results showed an upward trend for New Century Resources. Despite this positive outcome, the company hinted at further restructuring for Stillwater Mine in the US.
The company's shares dropped 2.42% on the JSE following the announcement of these results and warnings of potential job losses due to restructuring efforts. Gold production also fell 3% due to various incidents and rising costs.
Despite these challenges, Sibanye-Stillwater continues to diversify its portfolio and maintain its financial strength. The recent acquisitions of the Tasmania copper mine and Finland's Keliber project and Syväjärvi open pit mine development are testament to this strategy. The company is also investing in projects like Platinum Mile and has managed to offset lower output from Kroondal due to Simunye shaft closure with improved production from Rustenburg and Marikana operations.
InvestingPro Insights
In light of Sibanye-Stillwater's recent performance and future prospects, InvestingPro offers valuable insights. Firstly, the company yields a high return on invested capital, which is indicative of its efficient use of resources to generate profits (InvestingPro Tip 0). However, the declining trend in earnings per share is a concern (InvestingPro Tip 1). This trend aligns with the company's recent Q3 results which showed a decline in Ebitda for both its South African PGM operations and US operations.
Furthermore, the stock is currently in oversold territory according to the Relative Strength Index (RSI) (InvestingPro Tip 2), which might signal an opportunity for investors believing in the company's long term strategy. Additionally, Sibanye-Stillwater is trading at a low EBITDA valuation multiple (InvestingPro Tip 3), which could represent an attractive entry point for value investors.
Lastly, InvestingPro data reveals that Sibanye-Stillwater pays a significant dividend to its shareholders (InvestingPro Tip 5), which may be a positive factor for income-focused investors.
For more insights, InvestingPro offers 11 additional tips related to Sibanye-Stillwater's performance and future prospects. These tips provide a comprehensive analysis of the company's financial health, market position, and potential risks and opportunities.
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