Our opinion on the current state of SIBANYE-S(SSW)Sibanye (SSW) has established itself as a prominent mining house through an aggressive acquisition strategy, expanding its portfolio to include platinum and gold assets in both South Africa and the United States. Under the leadership of Neal Froneman, who is well-regarded in the industry, the company has broadened its scope to include “green” metals and base minerals critical for electric vehicle batteries, such as vanadium, copper, nickel, and lithium. Froneman has expressed his ambition to double the size of Sibanye before his expected retirement around 2024-2025.
The company also launched a share buy-back program in June 2021, aiming to repurchase up to 5% of its issued shares. However, despite its growth and diversification, Sibanye has faced challenges, including retrenching 11,000 workers over an 18-month period.
In its financial results for the six months ending June 30, 2024, Sibanye reported a significant decline in headline earnings to R137 million, down from R5,891 million in the previous period, largely due to lower commodity prices. This drop led to a 9% decrease in revenue. Nevertheless, Sibanye maintained a solid financial standing with a leverage ratio of 1.43x net debt to adjusted EBITDA, comfortably below its covenant levels.
In a quarterly update for the period ending September 30, 2024, the company reported a 9% increase in EBITDA, with South African gold operations performing particularly well, showing a 292% increase in EBITDA. The favorable 24% increase in the rand gold price supported these gains.
Technically, the share had been in a downward trend since March 2022 due to declining commodity prices. However, on September 23, 2024, it broke through this downward trendline at a price of 1842c, indicating a potential shift in momentum. The share has since risen to 2236c, reflecting renewed investor interest and optimism.