Sibanye Stillwater Limited Q2 FY2020 earnings call

Management Statement and Operational Highlights

• Strategic Goals Progress: Building values-based culture (work in progress), safe production/excellence (strong during COVID), ESG embedding (work in progress), deleveraging (net debt-to-EBITDA 0.55x, well below target), addressing SA discount (ongoing, progress made), and value-accretive growth (still work in progress).
• COVID-19 Initiatives: Contributed R23M to relief funds, R1.5B to employees, R2M in employee donations matched, provided counselling, support to small businesses, PPE, etc.
• ESG Recognition: Admitted as ICMM member, CDP A rating, Bloomberg Gender Equality Index inclusion, FTSE Russell ESG index inclusion, etc.
• Safety Performance: Zero fatalities in Q2 2020, South African gold operations 710 days fatality-free, U.S. PGM operations 3,194 days fatality-free, serious injury frequency rate decreasing.
• COVID-19 Impact on Operations: South African operations affected by lockdown, Q2 production lower, but H1 recovery seen with improved productivity in some sections.

Segment Performance

• South African PGM operations: Contributed 54% of group adjusted EBITDA. Production was 5% higher than the previous year (due to inclusion of Marikana), Q2 production was 47% of planned output, and adjusted EBITDA margin is 42%.
• U.S. PGM operations: Contributed 36% of group adjusted EBITDA. Year-on-year production increased 5%, with high margin underground operations and a 60% adjusted EBITDA margin.
• South African gold operations: Contributed 10% of group adjusted EBITDA. 17% year-on-year increase in production, Q2 production was 54% of planned output, and adjusted EBITDA margin is 16%.

Guidance

• Production: Q2 impacted by COVID, but H2 expected to be significantly better in terms of profitability.
• Costs: Unit costs increased due to lower volumes, but profitability expected to improve in H2 as volumes recover.
• Dividend: Declared interim dividend of $0.50 per share, with potential for a higher final dividend once net debt-to-EBITDA is further optimized.

Risks

• COVID-19 Disruptions: Impact on production levels and cost structures.
• South African Discount: Ongoing challenge with investor perception of business in South Africa.
• Geological/Operational Challenges: At the Blitz project, including delays and geological issues affecting progress.

Q: Likely life of Marikana asset?

A: Marikana is a large, long-life high grade Merensky and UG2 proposition, with potential for development if investor climate improves.

Q: Guidance for SA PGM all-in sustaining costs?

A: Costs increased due to volume reductions, but expected to improve in H2 with better volumes.

Q: Plans to deal with Eskom electricity issues?

A: Considering renewable energy generation, but challenges include scale and recovery of investment, working with energy departments to explore options.

Q: Would consider disposals if share price doesn't re-rate?

A: Re-rating is expected, and focus is on returning cash to shareholders via dividends, with potential for disposals if not value-accretive.