Sibanye-Stillwater withheld its final dividend for the first time as it posted a deep plunge into an annual loss and ballooning debt, and instead opted to issue shares to its investors as it bedded down a number of costly acquisitions.
Sibanye, which had boasted of setting itself apart from its peers by paying industry-leading dividends, reported an attributable loss of R4.4bn for the year to end-December compared with attributable earnings of R3.5bn a year earlier.
"In the near term, cash preservation is prudent and as a result no final dividend is being declared," it said.
Sibanye will issue four shares for every 100 shares held by investors in lieu of a dividend. At the half way mark of 2017, it withheld its interim dividend and gave investors two shares per 100 held.
Sibanye’s cash holdings at the end of the year fell by nearly two-thirds to R2.2bn from R6.5bn the year before, primarily because of a R2.2bn loan repayment.
Sibanye has embarked on an aggressive growth strategy in platinum group metals, snapping up the Rustenburg mines from Anglo American Platinum, the whole of Aquarius Platinum and a $2.2bn cash purchase of all of US-based Stillwater Mining. It has launched an all-share bid for Lonmin in SA, making it one of the world’s largest platinum producers.
Looking at headline earnings, which strip out one-off items and give a like-for-like comparison of annual results, Sibanye recorded a headline loss of R224m compared with headline earnings of R1.4bn the year before.
Net debt for the year was R23.2bn. Sibanye said it had "sufficient liquidity" with unutilised debt facilities of R3.7bn.
"Sibanye-Stillwater maintains its prudent approach to capital management, with balance sheet deleveraging and preservation of long-term financial flexibility remaining key priorities," it said.
It said it would refinance and "upsize" by March this year a $350m revolving credit facility falling due in August 2018 to "maintain adequate liquidity" and give it an extra $250m of available facilities.
"The development and growth of the company has been rapid and as such, the strategic imperative for 2018 is one of consolidation," Sibanye said, pointing out its priorities were to reduce debt as quickly as possible and to ensure its operations were firing on all cylinders to do so.
Sibanye lauded the political changes in SA, its home base, with Cyril Ramaphosa replacing the corruption-tainted Jacob Zuma as president of the country.
Ramaphosa almost immediately on taking up office called a meeting with the Chamber of Mines, resulting in the postponement of a court case to review and set aside a damaging third version of the Mining Charter that steers transformation of the industry.
"While structural changes are yet to be seen, general sentiment around the country’s prospects for economic stability and growth is more positive," said CEO Neal Froneman, noting the strengthening of the rand against the dollar, which eroded mining profit margins.
"While the political and regulatory outlook appears more positive, and suggests upside for the beleaguered mining industry, we continue to adopt a cautious and measured approach," he said.
For Sibanye, the closure of its three unprofitable Cooke shafts meant gold production from SA would fall to between 1.24-million and 1.29-million ounces for 2018. It expects to spend R3.5bn on its gold mines this year.
Its platinum mines in SA are forecast to deliver up to 1.15-million ounces of the four platinum group metals, namely platinum, palladium, rhodium and gold, with an all-in sustaining cost of up to R11,250/oz. Capital expenditure in the division was pegged at R1.5bn.
In the US, at the Stillwater mines, output of palladium and platinum was forecast at up to 610,000oz at an all-in sustaining cost of up to $690/oz. Capital expenditure was set at $222m.
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