Sibanye-Stillwater (SBGL, Financial) jumped 0.87% to $2.32 on the New York Stock Exchange on Thursday after reporting its operating and financial results for the first half of fiscal 2018.
The South African miner recorded a 26% year-over-year growth in adjusted earnings before interest, taxes, depreciation and amortization to $316.4 million and a 24% increase in revenue to $1.9 million.
The company's performance was attributed to strong production of platinum group metals in South Africa and the U.S., which offset the decrease in gold production. The production of gold in South Africa was impacted by operational interruptions at the Driefontein mine and the cessation of activities at the Cooke mine.
South African operations produced 569,166 ounces of 4E platinum group metals, which were platinum, palladium, rhodium and gold, and 598,517 ounces of gold. U.S. operations produced 293,959 ounces of 2E PGM, which consisted of platinum and palladium, and about 360,246 ounces of PGM recycling. The PGM recycling consisted of palladium, platinum and rhodium, which were delivered to the furnace.
A higher adjusted EBITDA wasn’t the only factor that led to the improvement in the net debt to adjusted EBITDA ratio, which is a leverage measure.
The ratio was lowered to 1.7 to 1.8 times from a previous ratio of 2.4 times following a stream contract inked with Wheaton Precious Metals Corp. (WPM, Financial). Sibanye-Stillwater received a $500 million upfront cash payment from Wheaton in exchange for the delivery of a certain percentage of gold and palladium.
Sibanye-Stillwater posted a positive turnaround in the bottom line of the income statement to a net profit of $7 million in the first half of the year. It recorded a loss of $364 million a year ago.
The adjusted loss was $42 million, compared to an adjusted loss of $76 million in the prior-year period.
For full fiscal 2018, Sibanye-Stillwater is projecting a 4E PGM production of 1.15 million ounces at an all-in sustaining cost of $825 to $860 per ounce of metal sold. The gold production guidance from South African operations is between 1.17 million and 1.21 million ounces at an AISC of $1,227 to $1,263 per ounce of metal.
In the U.S.,Sibanye-Stillwater is projecting a 2E PGM production of 580,000 ounces to 610,000 ounces at an AISC of $640 to $680 per ounce of metal.
Sibanye-Stillwater forecasts its capital expenditures will be about $544 million.
The company has a market capitalization of $1.494 billion. The share price has fallen 60% over the 52 weeks through Aug. 23 and is now below the 200-, 100- and 50-day simple moving average lines.
The 52-week range is $2.02 to $6.76.
The recommendation rating is 1 out of 5 and the average target price is $5.57 per share.
Disclosure: I have no positions in any securities mentioned in this article.
