Our opinion on the current state of SIBANYE-S(SSW)

Sibanye is a prominent mining house that has been aggressively expanding its portfolio, acquiring platinum and gold mines in South Africa and the United States, and is now diversifying into base metals and minerals, particularly those essential for green technologies. The company, under the leadership of Neal Froneman, known for his robust expertise and experience in the mining industry, is on a mission to double its size before his planned retirement around 2024/5.

Sibanye has shown interest in crucial minerals for electric vehicle batteries, such as vanadium, copper, nickel, and lithium, aligning its operations with future market demands. Notably, on 1st June 2021, Sibanye announced a share buy-back program to repurchase up to 5% of its issued shares. Further solidifying its position in the lithium market, it increased its stake in Keliber, a Finnish lithium producer, to 80% on 30th June 2022, for about R7.7 billion. Additionally, the acquisition of Reldan, a US-based metals recycler, for $211.5 million on 9th November 2023, underscores its strategic expansion into recycling essential metals.

Despite these strategic moves, Sibanye has faced challenges, including a significant share price drop, which has been viewed by the company’s leadership as a buying opportunity. Froneman has expressed that the shares are undervalued, a sentiment supported by their aggressive expansion and diversification strategy. However, the volatile prices of the metals they extract remain a pivotal factor in the company's financial health.

In the latter part of 2023, Sibanye initiated Section 189 consultations to retrench 4095 employees, reflecting ongoing restructuring efforts within the company. Moreover, it secured a five-year deal with AMCU at its Kroondal PGM operation on 6th November 2023, ensuring a minimum 6% annual wage increase. In a move to bolster its finances, Sibanye announced on 21st November 2023 the issuance of a $500 million convertible bond, although this led to a 20% drop in the share price as some investors exited their positions.

For the year ending 31st December 2023, Sibanye reported an 18% decrease in revenue and a significant loss of R37.4 billion. Despite these figures, Froneman remains optimistic about the non-structural nature of the PGM price weakness and anticipates a recovery based on favorable demand indicators.

As of 11th April 2024, further restructuring was announced with Section 189 inquiries for the retrenchment of 3107 employees and around 900 contractors in its gold mines, indicating continued challenges in maintaining operational efficiency.

Technically, Sibanye’s shares have been in a downward trend since March 2022, primarily due to falling commodity prices. However, an upward trend break on 2nd April 2024 at 2230c suggested a potential turnaround, with the share price subsequently rising to 2495c. Despite this recent uplift, the stock remains a volatile investment tied closely to the fluctuations of commodity markets.