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SIBANYE STILLWATER LIMITED - Sibanye-Stillwater Trading statement and Operating update for the six months ended 30 June 2020

Release Date: 14/08/2020 08:30
Code(s): SSW     PDF:  
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Sibanye-Stillwater Trading statement and Operating update for the six months ended 30 June 2020

Sibanye-Stillwater Limited
Incorporated in the Republic of South Africa
Registration number 2014/243852/06
Share code: SSW
ISIN – ZAE000259701
Issuer code: SSW
(“Sibanye-Stillwater” or “the Group” or “the Company”)

Sibanye-Stillwater Trading statement and Operating update for the six months ended
30 June 2020

Johannesburg, 14 August 2020: Sibanye-Stillwater (Tickers JSE: SSW and NYSE: SBSW) is
pleased to provide a trading statement and operating update for the six months ended
30 June 2020 (H1 2020 or the period).

The full financial and operating results for H1 2020 will be released on Thursday, 27
August 2020 at approximately 13:00 CAT (07:00 EST or 07h00 (MDT).), followed by a
conference call and webcast at 15:00 CAT (09:00 EST). Pre-registration is essential
for the conference call at https://www.diamondpass.net/5552512 while the webcast may
be accessed at https://78449.themediaframe.com/links/sibanye200827.html

In terms of paragraph 3.4(b) of the Listings Requirements of the JSE Limited (JSE),
a company listed on the JSE is required to publish a trading statement as soon as it
is satisfied that a reasonable degree of certainty exists that the financial results
for the period to be reported upon next will differ by at least 20% from the financial
results for the previous corresponding reporting period.

Trading statement for H1 2020

The Group advises that it expects an approximate 3,780% increase in basic earnings to
R9,385 million (US$563.1 million) or 351 cents (21 US cents) per share for H1 2020,
which compares with a basic loss of R255 million (US$18 million) or 11 cents (1 US
cents) per share reported for H1 2019. The Group expects headline earnings per share
(HEPS) of 350 cents (21 US cents) for the period, 404 cents (25 US cents) or 748%
higher than the headline loss per share of 54 cents (4 US cents) for H1 2019.

The expected increases in basic earnings and headline earnings for the period compared
to the comparative period in 2019 are mainly attributed to the following:
•   An improved operational performance from our managed SA gold operations, despite
    the adverse impact of the COVID-19 lockdown regulations on production volumes,
    with the AMCU strike significantly impacting earnings for H1 2019
•   The inclusion of the Marikana operations for the full six-month period, compared
    with one month for H1 2019
•   Significantly higher average precious metals prices for H1 2020
•   Depreciation of the rand relative to the US dollar, with the rand being on average
    17% weaker for the period at R16.67/US$

These increases were partially offset by foreign exchange losses, mainly on foreign
denominated debt resulting from the weaker exchange rate, the deferred tax credit,
which was recognised during H1 2019 at the US PGM operations due to a decrease in the
deferred tax rate, and the significant adverse impact of the COVID-19 lockdown
regulations on production volumes at our South African operations during the period.
This resulted in 54% of expected production volumes being delivered from the South
African gold operations over the quarter and 47% from the South African PGM operations,
partially compensated by pipeline depletion thereby reducing the shortfall in sold
ounces.
The translation of rand amounts into US dollar is based on average exchange rates of
R16.67/US$ for H1 2020 and R14.20/US$ for H1 2019. These exchange rates are provided
only as supplementary information.

The financial information on which this trading statement is based has not been
reviewed or reported on by Sibanye-Stillwater’s auditors.

All adjusted information disclosed above has been prepared for illustrative purposes
only and is treated as pro forma financial information by the JSE Limited. The
information is the responsibility of the Group's board of the directors and because
of its nature may not fairly present the Group's financial position, changes in
equity, results of operations or cash flows. The Group will detail the relevant
adjustments used to arrive at the pro forma information when its half year results
are published.

Operating update for H1 2020 compared to H1 2019

The Group delivered strong financial results and a solid operating performance for H1
2020, with improved production across all the operating segments and higher received
precious metal prices for the period, considerably boosting Group profitability. This
was achieved despite the challenges posed by the global COVID-19 pandemic, which, in
particular, severely disrupted the SA operations following the imposition of the
nationwide economic and social lockdown in South Africa in late March 2020.

Production from the SA gold operations for H1 2020 increased by 17% to 12,554kg
(403,621oz), largely reflecting the operational recovery post the AMCU strike in
H1 2019. 4E PGM production from the SA PGM operations of 657,828 4Eoz was 5% higher
year-on-year, with the inclusion of the Marikana operations for the full six-month
period offsetting lower production due to COVID-19 disruptions.

As announced on 23 March 2020, the US operations, after engaging local health
authorities in Montana, took proactive steps to reduce the number of people on site
and continued to operate largely uninterrupted throughout H1 2020. Mined 2E PGM
production of 297.740 2Eoz was 5% higher year-on-year with recycled production of
397,472 3Eoz 6% lower, due to the impact of COVID-19 on global auto catalyst
collections and deliveries.

Precious metals prices recovered strongly during Q2 2020 after an initial sharp
pullback in mid-March 2020, associated with the global imposition of COVID-19 related
economic and logistical restrictions. PGMs recovered most of their losses by the end
of H1 2020 and gold benefited from increased global uncertainty, rising steadily
throughout the period. As a result, average received metal prices for H1 2020, were
significantly higher than for the comparable period in 2019, with the average 2E PGM
basket price of US$1,837/2Eoz 43% higher year-on-year, the average 4E PGM basket price
received, 92% higher at R33,375/4Eoz (US$2,002/4Eoz) and the average gold price
received of R864,679/kg (US$1,613/oz), 45% higher than for H1 2019.

Due to the above factors the Group expects revenue of R55,019 million (US$3,301
million) for the period, which is an increase of R31,484 million (US$1,889 million),
or 134% higher than for the comparative period in 2019. Adjusted EBITDA is expected
to be R16,514 million (US$990 million), 718% higher than for H1 2019 (R2,018 million
(US$142 million)).

As a result of this strong financial performance, pro forma net debt:adjusted EBITDA1
has declined meaningfully to 0.55x at 30 June 2020, from 1.25x at the end of H2 2019
and 0.75x at the end of Q1 2020.

This is well below our internal leverage targets, illustrating the Groups robust
    financial position and the clear benefits of Sibanye-Stillwater’s unique geographic
    and commodity diversification and timeous strategic growth. The Group is consequently
    well positioned for continued strategic delivery and the ongoing return of significant
    value to shareholders, in the form of meaningful total returns.

1   As per the covenant definition which includes 12 months rolling earnings


    COVID-19 update

    At the US PGM operations, the measures adopted by the Montana state and county
    authorities to manage the threat of the COVID pandemic have been practical and after
    following early actions taken to reduce the number of employees and contractors on
    site, the production impact of COVID-19 on the US PGM operations has been relatively
    limited from a production perspective. An increase in infections in Montana as the US
    reduces COVID related restrictions is possible, however the imposition of further
    operating restrictions is considered unlikely.

    As previously noted, severe production interruptions were experienced in South Africa
    during the first two months of the South African national lockdown, with a progressive
    ramp up in capacity permitted from May 2020 subject to COVID-19 workplace restrictions
    being applied.    Revised work arrangements allowing for greater social distancing
    continued to be necessary however, especially in the more congested labour-intensive
    environments, and a gradual, phased approach to the production build-up has been
    adopted, with between 70-80% of employees recalled by the end of H1 2020 and the SA
    operations likely to achieve optimal production levels in Q4 2020.

    Despite COVID-19 infections increasing substantially in the inland provinces during
    June and July and a high number of confirmed cases across the South African mining
    industry, we have not experienced undue pressure to suspend operations during this
    phase. This is ascribed to a number of factors including the early development and
    implementation of comprehensive COVID-19 health and safety protocols at our operations
    and other factors such as; recognition of wide-spread community transmission, our
    adoption of a phased approach to the production ramp-up, the readiness of public and
    private health services to cope with the pandemic and the imperative of sustaining
    economic activity to avert further social distress in the country.

    The initial risk-based framework that informed the application of the initial
    stringent three-week social and economic lock down and the subsequent two week
    extension appears to have been abandoned, with the Government subsequently adopting
    a more adaptive adjustment of the regulations and indefinitely extending the lock
    down, adding uncertainty to an already fraught environment.

    Considering the uncertain global economic outlook and unclear regulatory environment
    in South Africa at the beginning of Q2 2020, balancing the need for prudent management
    in order to ensure the sustainability of the Group, while at the same time
    acknowledging the difficulties facing our employees and communities in South Africa
    and attempting to provide appropriate financial, mental and emotional support, posed
    a significant challenge. Notwithstanding the uncertain outlook and heightened risks,
    significant efforts continue to be made by the Group to assist stakeholders and
    contribute to the national efforts to manage the threat posed by the COVID-19 pandemic.

    Contributions made by      Sibanye-Stillwater     during   Q2   2020   to   support   various
    stakeholders include:
    •   Financial contributions including approximately R1,500 million in wages,
        Unemployment Insurance Fund payments (UIF) and cash advances extended to non-
        working employees, pending payment of some claims made but not paid by the UIF
    •   Salary sacrifices by the Board and Executive management which were donated to the
    national solidarity fund of just over R2 million
•   Donations of approximately R21 million to COVID-19 national relief funds
•   Financial assistance of over R8 million provided to service providers and suppliers
    from local communities
•   Approximately 9,400 food parcels distributed to destitute communities, 20 water
    tanks donated to communities around Marikana without access to clean water and
    blankets and mattresses to local homeless shelters
•   Critical support to Government health care efforts including the donation of scarce
    personal protection equipment to the value of R2 million, approximately R3 million
    to sanitise local health facilities, old age homes, schools and taxi ranks and a
    contribution of approximately R1.8 million to assist with community tracing and
    screening
•   Approximately R41 million spent on the preparation and conversion of existing
    Company accommodation and hospitals to quarantine and isolation facilities, in
    order to assist local government by alleviating pressure on public health care
    facilities
•   Over R1 million budgeted          for   extensive    and   ongoing community       awareness    and
    education programmes

South Africa’s strategy to mitigate the spread of COVID-19 now revolves around non-
pharmaceutical interventions, targeted social measures and restrictions on activities
that give rise to heightened levels of transmission in society while permitting
economic activity to the greatest extent that is prudent. The rate of new infections
has passed a peak in most provinces with a steadily declining trend now developing in
daily confirmed and active cases. This trend is mirrored at our operations, with
infection rates, particularly at our SA PGM operations declining substantially since
the peaks experienced in mid-July 2020. While it is envisaged that it will be necessary
to sustain current measures for a prolonged period to avoid a resurgence in COVID-19
cases, the likelihood of more stringent measures being re-imposed appears remote at
present.

At the end of July 2020, the SA PGM operations had achieved a production run rate of
between 70% and 75% of plan with the SA gold operations achieving a production run
rate of approximately 90% of plan. Supported by a better operational outlook than for
H1 2020 and with precious metals prices having recovered close to levels prior to the
global COVID-19 economic lockdown, the outlook for H2 2020 is positive.


Ends.


Contact:
Email: ir@sibanyestillwater.com
James Wellsted
Head of Investor Relations
+27 (0) 83 453 4014
Website: www.sibanyestillwater.com

Sponsor: J.P. Morgan Equities South Africa (Proprietary) Limited

FORWARD LOOKING STATEMENTS
The information in this document may contain forward-looking statements within the meaning of the “safe
harbour” provisions of the United States Private Securities Litigation Reform Act of 1995. These forward-
looking statements, including, among others, those relating to Sibanye Stillwater Limited’s (“Sibanye-
Stillwater” or the “Group”) financial positions, business strategies, plans and objectives of management
for future operations, are necessarily estimates reflecting the best judgment of the senior management
and directors of Sibanye-Stillwater and involve a number of risks and uncertainties that could cause
actual results to differ materially from those suggested by the forward-looking statements. As a
consequence, these forward-looking statements should be considered in light of various important factors,
including those set forth in this document.



All statements other than statements of historical facts included in this document may be forward-looking
statements. Forward-looking statements also often use words such as “will”, “forecast”, “potential”,
“estimate”, “expect”, “plan”, “anticipate” and words of similar meaning. By their nature, forward-looking
statements involve risk and uncertainty because they relate to future events and circumstances and should
be considered in light of various important factors, including those set forth in this disclaimer. Readers
are cautioned not to place undue reliance on such statements.



The important factors that could cause Sibanye-Stillwater’s actual results, performance or achievements
to differ materially from estimates or projections contained in the forward-looking statements include,
without limitation, Sibanye-Stillwater’s future financial position, plans, strategies, objectives,
capital expenditures, projected costs and anticipated cost savings, financing plans, debt position and
ability to reduce debt leverage; economic, business, political and social conditions in South Africa,
Zimbabwe, the United States and elsewhere; plans and objectives of management for future operations;
Sibanye-Stillwater’s ability to obtain the benefits of any streaming arrangements or pipeline financing;
the ability of Sibanye-Stillwater to comply with loan and other covenants and restrictions and difficulties
in obtaining additional financing or refinancing; Sibanye-Stillwater’s ability to service its bond
instruments (including high yield bonds and convertible bonds); changes in assumptions underlying Sibanye-
Stillwater’s estimation of its current mineral reserves; any failure of a tailings storage facility; the
ability to achieve anticipated efficiencies and other cost savings in connection with, and the ability
to successfully integrate, past, ongoing and future acquisitions, as well as at existing operations; the
ability of Sibanye-Stillwater to complete any ongoing or future acquisitions; the success of Sibanye-
Stillwater’s business strategy and exploration and development activities; the ability of Sibanye-
Stillwater to comply with requirements that it operate in ways that provide progressive benefits to
affected communities; changes in the market price of gold and PGMs; the occurrence of hazards associated
with underground and surface mining; any further downgrade of South Africa’s credit rating; a challenge
regarding the title to any of Sibanye-Stillwater’s properties by claimants to land under restitution and
other legislation; Sibanye-Stillwater’s ability to implement its strategy and any changes thereto; the
occurrence of labour disruptions and industrial actions; the availability, terms and deployment of capital
or credit; changes in the imposition of regulatory costs and relevant government regulations, particularly
environmental, tax, health and safety regulations and new legislation affecting water, mining, mineral
rights and business ownership, including any interpretation thereof which may be subject to dispute; the
outcome and consequence of any potential or pending litigation or regulatory proceedings or environmental,
health or safety issues; the concentration of all final refining activity and a large portion of Sibanye-
Stillwater’s PGM sales from mine production in the United States with one entity; the identification of
a material weakness in disclosure and internal controls over financial reporting; the effect of US tax
reform legislation on Sibanye-Stillwater and its subsidiaries; the effect of South African Exchange
Control Regulations on Sibanye-Stillwater’s financial flexibility; operating in new geographies and
regulatory environments where Sibanye-Stillwater has no previous experience; power disruptions,
constraints and cost increases; supply chain shortages and increases in the price of production inputs;
the regional concentration of Sibanye-Stillwater’s operations; fluctuations in exchange rates, currency
devaluations, inflation and other macro-economic monetary policies; the occurrence of temporary stoppages
of mines for safety incidents and unplanned maintenance; Sibanye-Stillwater’s ability to hire and retain
senior management or sufficient technically skilled employees, as well as its ability to achieve sufficient
representation of historically disadvantaged South Africans (HDSAs) in its management positions; failure
of Sibanye-Stillwater’s information technology and communications systems; the adequacy of Sibanye-
Stillwater’s insurance coverage; social unrest, sickness or natural or man-made disaster at informal
settlements in the vicinity of some of Sibanye-Stillwater’s South African-based operations; and the impact
of HIV, tuberculosis and the spread of other contagious diseases, such as the coronavirus disease (COVID-
19). Further details of potential risks and uncertainties affecting Sibanye-Stillwater are described in
Sibanye-Stillwater’s filings with the Johannesburg Stock Exchange and the United States Securities and
Exchange Commission, including the Integrated Annual Report 2019 and the Annual Report on Form 20-F for
the fiscal year ended 31 December 2019.

These forward-looking statements speak only as of the date of the content. Sibanye-Stillwater expressly
disclaims any obligation or undertaking to update or revise any forward-looking statement (except to the
extent legally required).

Date: 14-08-2020 08:30:00
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