Sibanye-Stillwater: Lower commodity prices drive declines in revenue

JOHANNESBURG – Sibanye-Stillwater has reported operating and financial results for the six months ended 30 June 2024. Neal Froneman, Chief Executive of Sibanye-Stillwater said considerable progress was made during the six-month period ended 30 June 2024 (H1 2024) to secure the sustainability of Sibanye-Stillwater operations through the current low-price environment, and to optimise operational cashflow to protect the integrity of its balance sheet while retaining leverage to a recovery in the commodity price cycle.

Salient features for the six months ended 30 June 2024

• Lower commodity prices drive 9% decline in revenue to R55.2bn (US$2.9bn)1
• Loss for the period of R7.1bn (US$0.4bn) includes non-cash impairments of R7.5bn (US$0.4bn)
• Strong financial position maintained with 1.43x net debt: adjusted EBITDA14 well below covenant limits
• Balance sheet strengthened through non-debt financing initiatives, with further financing in advanced stages
• Decisive steps taken to optimise operations in the short and medium term
• Low PGM prices lead to additional restructuring of US PGM operations, reducing 2E production by 200,000 2Eoz to cut costs
• Benefits of restructuring of SA gold operations and central services expected from H2 2024
• SA PGM operations deliver solid operational performance and positive free cash flow
• Keliber lithium project fully funded through €500m green financing

“The Group maintained a sound financial position with undemanding balance sheet leverage of 1.43x net debt: adjusted EBITDA at 30 June 2024 well below our covenant levels,” said Neal Froneman, Chief Executive of Sibanye-Stillwater.”

“We have proactively reinforced the Group balance sheet through a series of financial transactions since June 2024, which have resulted in additional debt headroom (before approaching our leverage covenants) of approximately R25 billion, and significantly enhanced balance sheet liquidity and flexibility.”

“The actions we have taken have been decisive and are evidenced by reduced costs and improved profitability at most of our operations during H1 2024 compared with H1 2023, with the full cost benefits from recent restructuring in the SA region expected to materialise in coming periods.”

“Further restructuring of the US operations for the lower PGM price environment will be undertaken, and with the GalliCam project assessing thepotential for repurposing the Sandouville refinery for sustainability through the production of precursor active material (pCAM).”

The extended period of low commodity prices (with the notable exception of gold) and persistent cost inflation, has continued to squeeze margins and reduce earnings and cash flows for the global mining industry.

The Group’s financial results for H1 2024 reflect the low prevailing commodity price environment, with Group profitability lower year on year, primarily due to the material decline in PGM prices.

Group adjusted EBITDA declined by 53% to R6.6 billion (US$355 million), with the SA PGM operations, which experienced a R7.0 billion or 60% decline in adjusted EBITDA to R4.8 billion, accounting for 94% of this decline. Other than the US PGM operations and US PGM recycling operations, which were also impacted by lower PGM basket prices year-on-year, the financial performance of the other Group operations improved year-on-

year, with an improved operational performance from the Sandouville refinery reducing adjusted EBITDA losses and the SA gold and Century zinc operations benefiting from higher prices. The restructuring actions taken at the US PGM operations and SA region operations, resulted in Group free cash flow improving by R797 million relative to H2 2023.

The Group reported a loss of R7.1 billion (US$379 million) (after tax) for H1 2024 compared with a profit of R7.8 billion (US$427 million) for H1 2023, including a R7.6 billion (US$407 million) impairment of the US PGM operations made due to 5-8% lower consensus palladium prices utilised for fair value calculation purposes. As a result, a basic loss per share (EPS) of 264c with headline earnings per share (HEPS) of 5c is reported for H1 2024 compared with EPS of 264c and HEPS of 208c for H1 2023.

Despite negative free cash flow of R7.3 billion (US$391 million) for the period, the Group financial position remained solid, with the net debt: adjusted EBITDA ratio of 1.43x being well within comfort levels. Although net debt increased by R6.8 billion (US$367 million) (borrowings of R34.2 billion (US$1.9 billion) and cash and cash equivalents of R15.5 billion (US$844 million)) the primary reason for the increase in leverage from 0.58x at the end of H2 2023 was the decline in the 12 month trailing adjusted EBITDA to R13.1 billion (US$0.7 billion).