Sibanye Stillwater provides operating update on US PGM operations
The US PGM operations continued to deliver improved operating results at the upper end of expectations from the restructuring concluded in Q4 2023. Mined 2E PGM production of 111,976 2Eoz was 6% higher than for Q3 2023, due to a 7% increase in the underground (UG) mined yield to 11.12 g/t from 10.44 g/t for Q3 2023.
The Stillwater mine (Stillwater West and Stillwater East) produced 64,820 2Eoz or 6% less than for Q3 2023 but the East Boulder mine produced 47,156 2Eoz, 28% higher than for Q3 2023, resulting in an improved overall performance.
All-in sustaining cost (AISC) of US$1,274/2Eoz for Q3 2024, was below the lower level of average annual AISC guidance for 2024, declining by 34% from US$1,922/2Eoz for Q3 2023. This is a notable performance given the circumstances and confirms the relevance of the restructuring which was undertaken during Q4 2023.
Mined PGMs sold for Q3 2024 of 99,948 2Eoz were 20% lower than for Q3 2023 and 11% lower than mined production for Q3 2024. This was primarily due to the cyber-attack in early July 2024 which resulted in processing downtime at the Columbus metallurgical complex. While the cyber-attack had a limited impact on the mining operations, which continued to operate as planned, there was a build-up of a stockpile of mine concentrate containing approximately 20,000 2Eoz above normal inventory levels during Q3 2024. This stockpile is expected to be processed before year end.
Capital expenditure for Q3 2024 was US$36 million (R651 million), with ore reserve development capital (ORD) decreasing by 59% to US$23 million (R418 million) and sustaining capital (SIB) of US$6 million (R102 million) for Q3 2024, US$27 million (R500 million) less than for Q3 2023, in line with the repositioning plan to reduce cash outflow. Project capital of US$7 million (R131 million) was primarily for the East Boulder tailings facility expansion.
Despite the significant reduction in AISC and increased production, the 2E PGM basket price has remained below US$1000/2Eoz for most of 2024, between US$300 to 400/2Eoz below the average AISC for 2024 YTD. Despite the improved performance for Q3 2024, the US PGM operations reported an adjusted EBITDA loss of US$6 million (R108 million) for Q3 2024, down from a positive adjusted EBITDA of US$21 million (R397 million). This decline is due to a 17% decrease in the average 2E PGM basket price for Q3 2024 to US$983/2Eoz.
Without increasing production from the US PGM operations, which requires capital investment in ORD and infrastructure to improve the efficiency and flexibility of the mines, in particular Stillwater West which was developed in the late 1980s, opportunities to reduce unit costs further are limited. The capital investment required is not feasible at current PGM prices.
Further restructuring to address the absolute losses being incurred by the US PGM operations while ensuring the sustainability of the Columbus autocatalyst recycling operation is therefore being implemented.
As announced on 12 September 2024, the restructuring will result in 2E PGM production from the US PGM operations decreasing by approximately 200,000 2Eoz for 2025 (from 2024 guidance levels), with the Stillwater West mine being placed on care and maintenance and reduced production from the East Boulder mine, with the focus on lower volume, higher margin production from the East Boulder and Stillwater East mines.
The restructuring strategy emphasises operational efficiency, cost reduction, and maintaining flexibility in long-life orebodies, while upholding exemplary ESG standards. Over the longer term the emphasis will be on continuous cost optimisation and modernisation of the mining practices, technology and infrastructure in order to support higher production necessary to reduce AISC to approximately US$1,000/2Eoz.
