Sibanye-Stillwater suffers big drops in Q1 EBITDA, South Africa gold output

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Sibanye-Stillwater (NYSE:SBSW) -9.3% pre-market Thursday after reporting Q1 adjusted EBITDA plunged from a year earlier and its South African gold production declined due to the labor dispute at its operations.

In its latest operations update, the miner said Q1 EBITDA of 13.66B South African rand ($886M) fell 31% from record EBITDA of 19.83B rand ($1.32B) reported for the year-ago quarter.

Sibanye (SBSW) said Q1 capital spending rose 62% Y/Y to 974M rand, primarily due to the 204M rand investment at the Marikana K4 project.

The company said South African gold production fell 45% Y/Y to 137.1K oz; U.S. palladium and platinum output slid 20% to 122.4K oz.

On wage negotiations, Sibanye (SBSW) said it will "continue to engage with organized labor in order to secure a fair and sustainable agreement, but will not be coerced into above inflation wage demands which may impact on the sustainability of our operations and negatively impact other stakeholders."

The company suspended its annual gold production guidance due to the lockout.

Sibanye-Stillwater's (SBSW) price return shows a 12% YTD gain but a 23% decline during the past year.

Comments

[Andy D.]

At today's PGM pricing going forward and Qtr1 in the bag at approx. $.70 EPS full year earnings look like approx. $2.50 per ADR.
This assumes planned volumes and planned AISC are met.

[6228371]

@Andy D.

"At today's PGM pricing going forward and Qtr1 in the bag at approx. $.70 EPS full year earnings look like approx. $2.50 per ADR."

The consensus is for $3.15.

www.marketwatch.com/...

[Andy D.]

@6228371
Absent any significant good news, I will stick with my guesstimate.
Remember, I was the one who cautioned on Qtr1, and my ASP estimates for 4E and 2E were pretty darn close.

Also note that their estimate dropped 45 cents in a month. ($3.60 - $3.15).
I read the other day that GS had a BUY signal with a price target of $19.90.
A GS BUY rating is a kiss of death and means they are trying to offload their inventory. (JMHO).

[6228371]

@Andy D.

The lowest of the analyst earnings estimates listed is $2.46, so earnings of $2.50 is a possibility. Even so, the stock should still be worth over $15 and probably closer to $17.50 or so. The low analyst price target is $15.82. I guess that is probably from the analyst with a $2.46 EPS estimate for this year. The stock has declined with stocks in general recently.

www.marketwatch.com/...

[Andy D.]

As expected, China's auto sales for April were dramatically lower coming at minus 47.6% YOY.
YTD April down 12% versus April 2021.
Shanghai's 5 major auto manufacturers reported production down 75% for March.
To me, these numbers do not support recent Pall & Rhod prices and suggest some inventory build by the Chinese, or maybe WW Auto manufacturers dont want to be caught short like they did with semis!
No need to buy PGM miners till the WW auto sales/production data picks up.

[6228371]

@Andy D.

Auto sales are not like hotel room rentals. If a hotel room is empty for a night, that potential revenue is permanently lost. Auto demand is persistent, and will just be delayed by the Chinese lockdowns.

[Andy D.]

@6228371
What is the latest status on your NILSY holdings?
Ruble at 5 year high!, does that help you?

[6228371]

@Andy D.

"What is the latest status on your NILSY holdings?
Ruble at 5 year high!, does that help you?"

Help me? How can I sell my NILSY shares? I paid an average of under $11 and selling at $33+ would be sweet. How can I sell?

[6228371]

Let's see if palladium can get to $4000+ and SBSW to $26+.

[Andy D.]

For some perspective for those who didn't get beyond the first page.
Earnings for the Qtr1 were approx. $0.70 vs last year Qtr1 of approx. $1.20 per ADR.
And this includes approx. 2 months of Gold production through February of this year. Minimal production from March onwards.
Once again SA PGMs helped cover continued weakness in NA PGM Operations both Mining and Recycling.
The future does not look too bright either with the continuation of the Gold miners strike, weakening *PGM prices and potential strife with the PGM miners.
Too many headwinds for me.
*Rhodium at around $17000 versus recent high of $19500.

[happydew]

@Andy D. Market cap is only $8.4B now, Ebitda is at $3.5B on annual basis. Stock was at this price (around $12) last year when Palladium was $1700 to $1800, Rhodium was $11000 to $12000, gold was $1750 to 1800.

[Andy D.]

@happydew
Consider also, during last years 2nd Qtr EBITDA was approx. $6.8bn annualized and the Market Cap maxed at around $14.5bn.
Good times bad times "No Respect" and certainly no valuation close to a US or LSE listed stock.
For me SBSW is no longer an investment stock (5 years) but it will be a trading stock once this market settles.
Cheers

[6228371]

@Andy D.

Trading is good. I told you to sell when it was $19+. I sold many shares then. No, I didn't get my trading in SBSW perfect, as I did sell some shares around $15 at basically break even, but did buy many shares at $12.60 or less before the run up. Yes, the shares I bought at $12.60 or less and sold at $19+ will result in a significant tax bill. Replacing them at an average of around $14 wasn't so bad. No it wasn't perfect.

Overall I made plenty on SBSW trading, even though I made plenty of mistakes, including starting to repurchase SBSW shares recently too early, so the average cost of SBSW shares I'm holding now is a slightly over $14. I did buy some IMPUY shares recently at an average of around $12.

[Frank30]

Since the dividend is semi-annual ( March and Sept), will they announce a dividend (hopefully they won't lower it) in the next earnings release? Thanks

[charliezap]

@Frank30
Earnings for H1 are scheduled to be announced on 8/25/2022 and the dividend, paid sometime in October, will be announced at the same time. Since PGM prices for H1 2022 are likely to be above prices for H2 2021, earnings for H1 2022 should be higher than the previous half year, and so should the dividend. The dividend policy is 25% to 35% of earnings.

[Frank30]

@charliezap Thanks. But will revenue be higher given the strikes?

[6228371]

@Frank30

The strike is for the gold mines, which normally are just a small percentage of company profitability. It does get headlines though, which might influence the sentiment.

[MS51]

Labor issues in SA is always an issue for otherwise an excellent co. will continue to hold my large position and add as prices drop.

[RWilliam]

Staying long as long the Russians are warring.

[Andy D.]

@RWilliam
Russia is still exporting, and countries are buying (in Rubles if necessary) everything that the World needs. (Oil, Gas, PGMs, Military equipment).
Hypocrites!
Agriculture and chemicals are where there are shortages.
US and Canadian companies have an advantage due to their lower cost of LNG. UAN and NTR are my only long positions.

[happydew]

$866M EBITDA in Q1 is not bad. Times four, $3.5B on annual basis. Market cap is only $10B now.

[BeaBaggage]

@happydew they did get an S&P credit rating upgrade...will be bumpy going forward I think

[User 51490435]

@happydew agree. Even there is a risk in SA, I think the current price has reflected such risk. Not a bad risk vs reward play

[Will5789]

Buying in at this price. Starting a small position though, as the price will drop further if there is a liquidity event.

[Bashar_S]

Gold production does hardly matter when AISC are as high as the actual gold price.

What’s worse imo is the drop of -20 in platinum and palladium production.

Time to cut losses imo.

[BeaBaggage]

@I_know_nothing yeah why were Pt and Pl productions down?apparently it was in Stillwater, maybe just a quarterly anomaly..I guess conference call will be more telling assuming anal-ysts ask the right questions which is a big 'if'.. or is it because there is no demand? (autos) wonder what AngloPlat and Implats are seeing. long Implats. Bea

[Andy D.]

@I_know_nothing
It does matter because you still have sustaining costs with no or minimal production. I estimate this to be $150m - $170m per quarter.

[BeaBaggage]

@Andy D. if the plat miners strike $IMPUY is in good shape to weather it but they will all hurt I suppose. always something in mining!

[Wantingtotravelagain]

Time to buy is when there is blood in the streets. Will wait and cost average down...

[Iron Eagle]

@Wantingtotravelagain - indeed, and these are temporary problems which reinforces the BUY THE DROP

[Aricool]

@Iron Eagle they won't be "temporary problems" if they have to pay highly inflated wages while China crashes all commodity prices for years to come.

[Vikdan]

Difficult to know when to add/make an entry. Seems like the platinum/palladium miners are gonna strike too. Might go to $10-11.

[Invetrts]

@Vikdan Seems so. No guidance, strike (best case scenario o big increase in employment costs), low to almost no gold production

[Cptarg63]

@Invetrts

No guidance is most worrisome!

[JackCr]

@Invetrts Gold is a minimal factor......