Sibanye Stillwater Limited Q4 FY2023 earnings call

Management Statement and Operational Highlights

• Safety: 2023 saw a record low serious injury frequency rate but increased fatalities, including a multiple fatality at Burnstone Conveyor. Implemented fate elimination strategy, with trends showing progress in reducing high-risk incidents.
• ESG: Renewable energy projects with 267 MW in construction, storage facilities conformed to GISTM. Established Sibanye Stillwater Foundation, with first allocations to social upliftment.
• Restructuring: South African PGM operations restructured in February 2024, U.S. operations right-sized, Kloof 4 shaft closed for safety. Restructuring of U.S. operations aimed at cost reduction.
• Resource Stewardship: 55% increase in attributable lithium mineral resources, significant PGM and gold reserves. Uranium resources assessed for monetization, with potential for smart monetization strategies.
• Byproducts: Chrome production increased, contributing ~10% of total revenue basket, with upside potential for further growth.

Segment Performance

• South African PGM operations: Generated significant revenue from byproducts, particularly Chrome. Produced ~1.8 million ounces, with all-in sustaining costs around R22,000 per 40 ounce. Adjusted EBITDA for PGMs was impacted by lower PGM basket prices but remained profitable. Chrome production increased over 25%, contributing to revenue and cost credits.
• South African gold operations: Turned around from a R3.5 billion adjusted EBITDA loss in 2022 to a R3.5 billion profit in 2023. Produced over 600,000 ounces, managed load curtailment well. Impacted by closure of Kloof 4 shaft and Driefontein fire.
• U.S. operations: Stillwater West faced a shaft accident in 2023. Restructured in Q4 2023 to right-size for lower palladium prices. Produced ~427,000 ounces in 2023, with average basket price down 33%.
• European region: Caliber Lithium Refinery on schedule and budget. Sandouville nickel refinery undergoing strategic review for conversion to PCAM plant. Keliber lithium project impacted by court ruling on environmental permits, with timeline assessment ongoing.
• Australian region: Completed acquisition of New Century Resources, with adjusted EBITDA turning positive in Q4 2023. Acquired Mount Lyell copper project, with attributable zinc mineral reserve and copper mineral resource declared.

Guidance

• U.S. region: Primary mining expected at ~440,000 2E ounces/year, recycling to generate ~300,000 3E ounces.
• South African PGM: Production of ~1.8 million ounces, all-in sustaining costs around R22,000/40 ounce.
• South African gold: Production of over 600,000 ounces, profitable.
• Sandouville: Still loss making but working to reduce losses, with feasibility study ongoing for conversion to PCAM plant.
• Keliber: Impacted by court ruling on environmental permits, timing of project and funding assessment ongoing.

Risks

• Geopolitical: Disruptions affecting supply chains and palladium pricing from Russia via China.
• Climate Change: Accelerating climate action needs due to increasing temperatures.
• Operational: Shaft incidents, safety setbacks, and regulatory challenges (e.g., Keliber environmental permit issues).
• Commodity Price Volatility: PGM price volatility affecting financial performance.

Question and Answer

• Q: At what level of palladium price will Stillwater operations cease production? A: Neal and Charles discussed cost structures, capital shifts, and efforts to reduce costs to breakeven, emphasizing no immediate closure but focus on cost reduction.
• Q: Free cash flow burn guidance of R8 billion to R10 billion? A: Charl Keyter discussed cash burn estimates, levers to pull (capital allocation, deferral), and potential financing sources like streams and prepays.
• Q: Impact of Keliber court ruling on timeline and funding? A: Neal, Mika, and Robert discussed ongoing assessment of permit impact, continued construction progress, and careful consideration of funding based on project economics.