Our opinion on the current state of SSW

Sibanye (SSW) is a mining house which has been on a rapid acquisition trail accumulating platinum and gold mines in South Africa and America and is now broadening its scope to include base metals and minerals, especially so-called "green" metals. The company is run by Neal Froneman who is well-known in the mining industry for his toughness, expertise, and experience. The acquisition of the Stillwater palladium mine in America was a brilliant move, but it added $2,2bn of debt to SGL's balance sheet which left it very highly geared. That debt has now been substantially cleared. Sibanye also bought Lonmin for shares which gave it a very valuable extraction plant but resulted in more than 13 300 job losses. Sibanye is now the world's largest producer of platinum group metals (PGMs). Froneman has said that he intends to retire in about 2024/5 but intends to double the size of the company before he does. Sibanye is also considering moving into the base minerals used in motor vehicle batteries like vanadium, copper, nickel, and lithium. On 1st June 2021 the company announced a share buy-back program to repurchase up to 5% of its issued shares. On 30th June 2022 the company announced its intention to increase its stake in Keliber, a Finnish lithium producer to 80% at a cost of about R7,7bn. On 9th November 2023 the company announced that it is to acquire Reldan, a US-based metals recycler, for $211,5m. In its results for the six months to 30th June 2023 the company reported headline earnings of R5,89bn compared to R11,94bn in the previous period. The company said, "The impacts of the precipitous decline in PGM prices and operational disruptions at our US and European regions, were cushioned by a significantly improved financial contribution from the SA gold operations". In an update on the 3 months to 30th September 2023 the company reported, "SA gold operations generated R344m (US$19m) adjusted (Adj) EBITDA, a R1.2bn (US$67m) turnaround; ongoing S189 process at Kloof 4. US PGM operations resume planned mine production run rate in October 2023 driving improved outlook for production for Q4 2023". Technically, the upward trend which was in place since July 2018 came to an end in March 2021 reflecting weaker commodity prices, loadshedding and the flooding at Stillwater. A notable achievement was the 5-year wage deal which locks in wage increases of 6,3%. We believe that in time Sibanye will continue to make new all-time record highs in time in due to superb strategic management - so this drop in the share price is probably a buying opportunity. Froneman believes that Sibanye shares are undervalued and we agree with him, but everything will depend on the prices of the metals which he sells. On 14th September 2023 the company announced that it had commenced section 189 consultations for the retrenchment of 2389 employees at Kloof mine. On 6th November 2023 the company announced that it had made a five-year deal with AMCU at its Kroondal PGM operation for a minimum 6% per annum wage hike. On 21st November 2023 the company announced that it would raise $500m by issuing a convertible bond that will pay 4% to 4,5% until it can be converted in 2028. The news caused some shareholders to switch out of the shares resulting in a 20% drop in the share price.