Shares of miner Sibanye-Stillwater (SBGL, Financial) tumbled 9.22% to $2.56 on the New York Stock Exchange on Thursday after reporting operating results for the third quarter.
The South African miner produced 308,922 ounces of gold at an all-sustaining cost of $1,290 per ounce and produced 305,227 ounces of 4E platinum group metals at an all-in sustaining cost of $771 per ounce. The production consisted of platinum, palladium, rhodium and gold.
Production of 4E platinum group metals increased 7.9% from the previous quarter and decreased 0.3% year over year. Gold production increased 0.6% from the previous quarter and decreased 17% year over year.
U.S. operations produced 139,178 ounces of 2E platinum group metals at an all-in sustaining cost of $769 per ounce. The production consisted of platinum and palladium. In the U.S., Sibanye-Stillwater also produced approximately 144,585 ounces of recycled platinum group metals, consisting of palladium, platinum, and rhodium, which were delivered to the furnace.
The production of 2E platinum group metals decreased 4.3% from the previous quarter and increased 2.6% from the prior-year quarter.Ă‚
From a safety standpoint, the company's operations continue to improve thanks to safety interventions it is undertaking in South Africa.
Lower production rates at the Driefontein mine in the West Witwatersrand Basin mining field in South Africa, along with a deferral of September’s sales from U.S. platinum group metals operations to early October, impinged on the adjusted earnings before interest, taxes, depreciation and amortization of $115.9 million. The adjusted EBITDA decreased 32.5% from the previous quarter and 43.4% from the year-ago quarter.
Further, the average price environment didn’t help the miner deliver the adjusted EBITDA because precious metal prices stayed below quarterly averages for two-thirds of the third quarter. All-in sustaining costs were also below average.
The platinum group metals contributed 85% of the company's total adjusted EBITDA, while South African gold mining operations contributed 15%.
The successful closing of a $500 million gold and palladium streaming transaction with Wheaton Precious Metals International Ltd., a subsidiary of Wheat Precious Metals Corp. (WPM, Financial), on July 16 allowed Sibanye-Stillwater to trim total nominal value of outstanding bonds by 28% and improve overall financial conditions. The repurchase of its own previously issued corporate loan will cause Sibanye-Stillwater to benefit from a reduction of approximately $25 million in annual coupon costs.
The company said the repayment profile of the entire group is well structured because about 67% of gross debt will mature after the end of 2021. The company will update its shareholders with balance sheet figures in 2019 sometime between the third and the fourth week of February since financial results are provided every six months. As of June 30, the company has total long-term borrowings of about $2.065 billion. Cash and cash equivalents stood at about $153 million.
For the year, the company guided South African platinum metals group production between 1.1 million and 1.15 million ounces at an all-in sustaining cost of about $825 per ounce. The South African production of gold is anticipated to be 1.13 million ounces to 1.16 million ounces at an AISC of $1,311 to $1,347 per ounce.
Capital expenditure in South Africa is forecasted to be $245 million to $307 million.
The U.S. production of 2E platinum group metals is projected to be 580,000 ounces to 610,000 ounces at an AISC of $640 to $680 per ounce.
Capital expenditures in the U.S. will be about $222 million.
The company has a market capitalization of $1.45 billion as of Nov. 1. The share price has fallen 52% over the 52 weeks through Nov. 2 and is now below the 200- and 50-day simple moving average lines, but on par with the 100-day SMA line.
The 52-week range is $2.02 to $5.66.
The recommendation rating is 1 out of 5 and the average target price is $5.57 per share.
Disclosure: I have no positions in any securities mentioned in this article.
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