Sibanye Stillwater: US PGM operations successfully restructured
The restructuring undertaken by the US PGM operations during Q4 2024 for an extended low PGM price environment, was efficiently concluded during November 2024, resulting in the successful realisation of most of the planned benefits during Q1 2025. Mined 2E PGM production of 71,991 2Eoz for Q1 2025, was 41% lower year-on-year, primarily due to the Stillwater West mine being suspended and placed on care and maintenance.
2E PGMs sold of 57,750 2Eoz, were 20% less than production due to a smelter run-out at the Columbus metallurgical complex resulting in approximately 10 days downtime and a temporary US$10 million (R189 million) build-up in concentrate inventory and recycle material stockpiles at the end of Q1 2025. These inventory levels are expected to reduce to normal levels during Q2 2025, reducing working capital and enhancing cash flow.
Plant head grade increased by 7% for Q1 2025 to 13.91g/t, the highest level since Q2 2020, due to a greater proportion of production from the higher grade Stillwater East mine, with overall production from the Stillwater mine of 40,063 2Eoz for Q1 2025 49% lower than the comparable period. Production from the East Boulder mine of 31,928 2Eoz was 26% lower year-on-year in line with plan.
Absolute AISC (excluding S45X credits) declined by 44% from US$164 million (R3.1 billion) for Q1 2024 to US$92 million (R1.7 billion) for Q1 2025, in line with the restructuring plan to improve profitability. Unit AISC (excluding S45X credits) for Q1 2025 decreased by 4% year-on-year to US$1,284/2Eoz (R23,725/2Eoz), lower than annual guidance for 2025. Ore reserve development (ORD) expenditure declined by 46% to US$17 million (R320 million) primarily as a result of lower planned development and a decrease in contractor development and maintenance costs with sustaining capital declining by 78% to US$2 million (R46 million) as a result of Stillwater West being placed on care and maintenance which has resulted in greater availability of mechanised equipment.
This was a commendable performance following major restructuring and supports a more positive outlook for the US PGM operations, underpinned by the substantial financial benefits from the anticipated credits from Section 45X of the Inflation Reduction Act (IRA) (S45X) and further scope for operational efficiency and cost improvements expected from implementing more efficient mining practices and appropriate technologies, which are currently being assessed. Estimated S45X tax credits of US$6 million (R111 million) for Q1 2025 (approximately US$83/2Eoz (R1,540/2Eoz), imply a reduction in AISC (including S45X credits) for the US PGM mining operations to US$1,200/2Eoz (R22,185/2Eoz) for Q1 2025.
Total capital expenditure for Q1 2025 decreased by 57% year-on-year to US$20 million (R366 million) in line with the restructuring plan.
Project capital declined from US$3 million (R57 million) in Q1 2024 to zero in Q1 2025 due to suspension of construction on the East Boulder tailings storage facility over the winter months, with expenditure forecast to increase as construction resumes during Q2 2025.
Despite a marginally lower average 2E PGM basket price for Q1 2025 compared with Q1 2024, adjusted EBITDA for Q1 2025 (excluding S45X credits) improved by US$2 million (R31 million) year-on-year on a like-for-like basis (excluding the once off US$43 million (R812 million) insurance payment during Q1 2024 related to the flooding event during mid-2022), to a loss of US$9 million (R172 million). Adjusted EBITDA including the estimated S45X credit would improve to a US$3 million (R55 million) loss for Q1 2025.
