Sibanye-Stillwater (SBGL, Financial) fell 2.52% to $4.65 on the heels of a report that the South African gold mining company had a 10% decline in its reserves.
The cause of the decline was attributed to a depletion for mining activities, the end of underground operations at Cooke (Johannesburg), a revised mine plan at Beatrix (Free State Province, South Africa), an increase in pay limits and technical factors.
The 10% decline in South African gold reserves took place from Dec. 31, 2016 to Dec. 31, 2017. The company reported 25.737 million ounces in Dec. 31, 2017.Sibanye Gold estimates gold resources in 85.111 million ounces at the end of 2017.
Sibanye Gold is a South African gold mining company with gold and platinum mining operations in South Africa and Zimbabwe; after the purchase of the U.S.-based Stillwater Mining Company, it also holds operations in Montana for the production of palladium and platinum.
The company said that its South African reserves attributable to 4E PGM (platinum, palladium, rhodium and gold) decreased by 4% to 22.358 million ounces in 2017. This volume of 4E PGM ounces is as of Dec. 31, 2017. The decrease was a result of a depletion for mining activities, a revision in the methodology to determine geological losses, the UG2 expansion project’s postponement and the elimination of sub-economic ounces.
4E PGM Mineral Resources totaled 100.175 million ounces at Dec. 31, 2017.
In addition, thanks to the purchase of Stillwater in spring 2017, the company closed 2017 with an increase in the ounces of U.S. mineral reserves and resources attributable to the 2E Platinum Group Metals (palladium and platinum). As of Dec. 31, 2017, Sibanye Gold Limited has 2E PGM’s reserves totaling 21.903 million ounces. The average grade of 2E PGM’s reserves is 16.3 grams per ton of mineral while 2E PGM Mineral Resources totaled 80.463 million ounces on Dec. 31, 2017.
Investors are interested in the movement of mineral reserves and resources because changes can affect future production of precious and base metals, and therefore, and impact company’s financials.
It is also interesting to know that Sibanye has determined its reserves based on a gold price of $1,218 per ounce, a platinum price of $1,092 per ounce, a palladium price of $704 per ounce, a rhodium price of $901 per ounce, an iridium price of $575 per ounce and a ruthenium price of $46 per ounce.
The assumed price metal per ounce is the minimum level that is required for the company to post a profit.Ă‚
Sibanye has a market capitalization of $2.54 billion, a price-book (P/B) ratio of 1.21 (versus an industry median of 2.05 times) and an EV to Ebitda ratio of 16.84 (versus an industry median of 10.18 times). The Ebitda margin of Sibanye-Stillwater, which has been calculated using the trailing twelve months income statement’s issues, is 8.84% versus an industry median of 23.7%.
For the 52-weeks through Feb. 20, the South African miner lost 44% and is currently trading below its 200, 100 and 50-simple moving average lines.
Sibanye 52-week range is $3.95 to $10.60.
One analyst has assigned Sibanye a target price of $6.51 per share of the South African mining company, which is a 32.3% upside in the current market value. The recommendation rating is 3 out of 5.
(Disclosure: I have no positions in any stock mentioned in this article.)
