Sibanye US PGM operations suffer from Covid-19 restrictions
Compliance with COVID-19 protocols continued to affect productivity at the US PGM operations. Logistical constraints (transport of employees) and the need to stagger shift arrangements and blast cycles to accommodate social distancing has resulted in productivity declines of approximately 8% versus pre-COVID-19 levels.
For 2020 this is equivalent to a loss of approximately 20,000 2Eoz of mined production. Mined 2E PGM production for Q3 2020 of 147,835 2Eoz was in line with the comparable period in 2019.
Production from the Stillwater mine (including Stillwater West and Stillwater East) of 91,940 2Eoz for Q3 2020, was 1% lower than for the comparable period in 2019. The East Boulder mine (EB) produced 55,895 2Eoz, 3% higher than for Q3 2019.
Mined tonnes milled for Q3 2020 increased to 370,201 tonnes, 7% higher than for Q3 2019. Plant head grade was 13.6 g/t in Q3 2020, 6% lower than for Q3 2019. Head-grade challenges were largely attributed to lower than expected availability of higher grade stopes.
Remedial action has been taken, and a recovery in grade is anticipated for Q4 2020. PGM sales for Q3 2020 of 143,716 2Eoz were 3% higher than for Q3 2019, largely due to the timing of production
deliveries in Q3 2020.
All-in sustaining cost (AISC) of US$875/2Eoz for Q3 2020 was 11% higher than for Q3 2019, due to lower than planned 2E PGM production from the Stillwater mine complex and higher royalties and insurance.
The average 2E PGM basket price for Q3 2020, was approximately 96% higher than the average basket price used for planning, with a consequential increase in royalties and insurance accounting for approximately US$51/2Eoz (6%) of the increase in AISC year-on-year.
RECYCLING OPERATIONS
The recycling operation fed an average of 25tpd of spent catalyst for Q3 2020. Recycling inventory normalised at approximately 200 tonnes following the accelerated processing of inventory in Q2 2020, although has increased subsequent to quarter end due to planned maintenance at the smelter early in Q4 2020.
Ongoing COVID-19 related logistical and liquidity constraints constraining the global recycling industry, continued to affect recycle receipts during Q3 2020 although recycle receipts have begun normalising and are trending back to pre-COVID-19 levels.
It should be noted that recycle receipts are region specific, with COVID-19 continuing to constrain global supply from some regions.
The 2E PGM basket price for Q3 2020 averaged US$1,898/2Eoz, 37% higher than for Q3 2019, driving the mined adjusted EBITDA margin to 62% from 57% in Q3 2019. Adjusted EBITDA for the US PGM operations increased by 55% year-on-year to US$191 million (R3,227 million), with the recycling operation contributing US$10 million (R170 million).
After accounting for recycling, the blended adjusted EBITDA margin for the US PGM operations increased from 27% in Q3 2019 to 34% in Q3 2020.
Total capital expenditure for Q3 2020 amounted to US$69 million and was mainly spent on the Blitz and Fill the mill (FTM) growth projects (54% or US$37 million).
The Blitz project has been reviewed following the suspension of growth capital activities due to COVID-19 during Q1 and Q2 2020, which, as signalled in our H1 2020 results, further delayed the project schedule.
The project review has indicated a delay of up to two years, with production from Blitz now expected to reach a steady state run rate of approximately 300,000 2Eoz per annum by 2024.
The FTM project is on schedule and on budget, building up to an annualised production run rate of approximately 40,000 2Eoz per annum from December 2020. This project yields an estimated net present value of over US$460m at spot 2E PGM prices.
