Sibanye-Stillwater: gold operations disrupted by strike

Sibanye-Stillwater’s managed SA gold operations were impacted by various operational disruptions during Q1 2022. Production from the Beatrix underground operations only commenced in February 2022, following the suspension of all operating activities from 3 December 2021 to address safety concerns. Moreover, during the reinforcement of the tailings storage facility (TSF) at the Beatrix operation, processing operations at Beatrix were suspended from 28 December 2021 with no ore processed or gold sold during Q1 2022 aside from minor amounts from the processing pipeline.

Subsequent to the notification of strike action and lockout of members of AMCU and the NUM, following extended wage negotiations which began in June 2021, operating activities across the SA gold operations ceased from 9 March 2022. As such, operating results from the SA gold operations for Q1 2022 are not comparable to previous periods.

During the lockout period management is actively managing costs at the SA gold operations. In addition to reduced wage payments to striking AMCU and NUM members due to the observance of the “no work no pay” principle, power costs have been significantly reduced, with electricity consumption more than halving from normal levels.

Beatrix Tailings Storage facility (TSF)

As announced on 20 January 2022, processing operations at Beatrix were temporarily suspended from 28 December 2021 whilst precautionary reinforcement and buttressing work was undertaken on a limited portion of the Beatrix TSF. During the rehabilitation, processing of ore at Beatrix was also suspended resulting in no ore being milled or gold sales for the quarter.

The project is forecast for completion by the end of May 2022. Should the AMCU and NUM strike be resolved before the completion of the project, ore will be stockpiled and processed over the remainder of 2022.

DRDGOLD

DRDGOLD being independent and unaffected by the SA gold strike, increased its gold produced in Q1 2022 by 1% to 1,391kg (44,722oz) compared to Q1 2021 due to a 10% increase in the yield to 0.21g/t, offset by 8% less tonnes milled in Q1 2022.

The decrease in the amount of tonnes milled for the quarter was a result of multiple factors including: temporary equipment failure (crane, thickener and mill), load shedding and power grid failures (planning for alternative energy sources are underway) and downtime due to higher than seasonal rainstorms when employees were unable to operate on surface.

AISC in Q1 2022 increased by 10% to R712,418/kg (US$1,456/oz) due to a 25% increase in R/tonne milled cost as a result of lower throughput and higher consumption of cyanide (the latter due to lower densities in slurry due to excessive rain), as well as a 3% increase in sustaining capital. DRDGOLD also incurred R23 million (US$2 million) on project capital expenditure for Q1 2022 (no project capital expenditure in Q1 2021) due to the upgrade of tailings storage facilities, increase in plant throughput capacity and ongoing development of two new recovery sites – this investment will continue in the short and medium term.

SA gold Burnstone project The Burnstone project continued to progress, achieving 23% completion prior to the lockout, with only essential work subsequently being performed. Capital expenditure of R300 million (US$20 million) had been incurred by the end of Q1 2022 (project-to-date). Expenditure by year-end is forecasted at R1,779 million (US$119 million) against a cumulative plan of R1,881 million (US$125 million), which is likely to be adjusted downwards should the strike and lockout continue. The final assessment of the plant, to determine earliest start-up, is expected to be completed in June 202

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