Our opinion on the current state of SIBANYE-S(SSW)Sibanye (SSW) is a dynamic mining house on an aggressive acquisition spree, accumulating assets in the platinum and gold sectors both in South Africa and the United States, and now expanding into base metals and so-called "green" metals crucial for modern technologies like electric vehicle batteries. Led by Neal Froneman, a respected figure in the mining industry known for his tenacity and deep expertise, the company is under guidance to potentially double in size before his projected retirement around 2024/5. Sibanye has expressed interest in expanding into crucial battery metals such as vanadium, copper, nickel, and lithium.
On 1st June 2021, Sibanye announced a share buy-back program to repurchase up to 5% of its issued shares. The company furthered its investment in green technology by increasing its stake in Keliber, a Finnish lithium producer, to 80% for about R7.7 billion on 30th June 2022. On 9th November 2023, Sibanye also ventured into metal recycling by acquiring Reldan, a U.S.-based company, for $211.5 million.
Despite recent fluctuations in share price, which some investors see as a buying opportunity, the company's strategic maneuvers are generally viewed positively, bolstered by Froneman's belief that the shares are undervalued—a sentiment echoed by some market analysts. However, its financial performance has shown vulnerabilities linked to volatile metal prices. On 25th October 2023, the company initiated section 189 consultations for retrenching 4,095 employees, and on 6th November 2023, it secured a five-year deal with AMCU at its Kroondal PGM operation that includes a minimum 6% per annum wage hike.
Further financial maneuvers included a $500 million convertible bond issued on 21st November 2023, intended to pay 4% to 4.5% interest until 2028, which unfortunately led to a 20% drop in the share price due to shareholder turnover. For the year ending 31st December 2023, Sibanye reported an 18% decline in revenue and a significant loss of R37.4 billion, with Froneman commenting on the temporary nature of the PGM price weakness and an optimistic view on future demand.
As of 11th April 2024, the company announced another section 189 process, planning to retrench 3,107 employees and about 900 contractors from its gold mines. Despite these challenges, the first quarter of 2024 showed a 3% increase in 4E PGM production, significant gains in Sandouville nickel production, and steady progress in the Keliber lithium project.
Technically, Sibanye's shares have been in a downward trend since March 2022, largely due to falling commodity prices. However, a significant turnaround occurred on 2nd April 2024 when the shares broke through the downward trendline at a price of 2230c, subsequently rising to 2290c. This movement suggests a potentially volatile yet opportunistic future for investors, contingent on continued strategic management and market conditions.
