Sibanye Stillwater Limited Q2 FY2025 earnings call

Management Statement and Operational Highlights

• Safety: Priority is reducing fatalities. Saw improvement in safety frequency rates but still had 3 fatalities in H1 2025. Leading indicator of high potential incidents decreased from ~50-60 per month to below 10.
• Strategic Positioning: Commodity diversification, multi-polarity strategy. Invested in lithium and PGMs. Sustainability initiatives include acquisition of Metallix and Castle Wind Farm commissioning.
• Operations: SA PGM operations stable. US PGM operations improving post-restructuring. SA Gold had challenges at Kloof but Driefontein and Beatrix stabilized. DRD Gold returned dividends. Australian operations recovered from climate impacts. Recycling business growing with acquisitions.

Segment Performance

• SA PGM Operations: First half 2025 total production was 840,000 4E ounces, 4% lower year-on-year. Operating costs excluding purchase of concentrate increased 4% to ZAR 19.3 billion. Adjusted EBITDA was ZAR 4.8 billion. Chrome ore sales decreased 17% in revenue. Marikana K4 project produced 44,000 4E ounces, positively contributing to reduced unit costs.
• SA Gold Operations: Group adjusted EBITDA increased 118% to ZAR 4.8 billion. Production including DRD Gold declined 13% to 9.3 tonnes of gold. Driefontein and Beatrix showed improvement, but Kloof faced challenges due to seismicity.
• US PGM Operations: Produced 141,000 ounces, adjusted EBITDA $151 million. All-in sustaining costs down 41% year-on-year. Section 45x credit provided $159 million benefit.
• Recycling Business: Columbus delivered adjusted EBITDA $129 million. Acquired Reldan and Metallix, expected to be cash-generative from day 1.
• Australian Operations: Produced 51,000 tonnes of payable zinc, unit costs 21% lower year-on-year.
• Keliber (Europe): Construction nearing completion, assessing responsible start-up due to challenging lithium market conditions.

Guidance

• Revised SA gold guidance: Production expected to be 15-16 tonnes at all-in sustaining costs between ZAR 1.45 million and ZAR 1.55 million per kilogram. Balance of guidance remains unchanged from earlier this year.

Risks

• Safety incidents remaining a key concern with potential for fatalities.
• Lithium market volatility impacting Keliber's start-up plans.
• Tariff uncertainties affecting PGM demand.
• Seismicity and infrastructure challenges at Kloof gold operations impacting production.

Question and Answer

Q: Richard, you had some challenges at the SA gold ops. Have we seen the brunt of the impact of these challenges, I assume, meaning end? And when do you expect the operational performance to stabilize? How should we think about the SA gold production and CapEx profile over the next 2 to 3 years?

A: Thanks very much for that question. So I think as we mentioned, I do think that both Beatrix and Driefontein have stabilized. I think always important to remember, and that's the point we were trying to highlight, assets of this size, when they get to this point in their lives, are very operationally geared. And of course, they don't have the levels of flexibility that they had 5 or 10 years ago. But certainly, those 2 operations seem to have stabilized well. I think our major challenge has, of course, been the Kloof operations. And on the back of the seismicity and some of the decisions we've made around what we will not consider mining predominantly from a safety perspective and the infrastructure that we've got there, we are undertaking that review to understand what Kloof's outlook looks like. So I'd be saying from our underground operations going forward, probably in the region of about 475,000, 480,000 ounces per annum. Of course, we've obviously got our surface operations in DRD on top of that. I think the CapEx question is a good one. If you go back and look at our capital profile over the years, it's been pretty consistent at about ZAR 3.5 billion per annum over the last few years, excluding project CapEx. And again, as I say, these are large operations with a lot of fixed infrastructure. Most of that goes into sustaining that fixed infrastructure. So we've sustained that throughout, and that won't change. I think sustaining capital in terms of that infrastructure is almost irrelevant in terms of the total volume you're outputting. So I would say you can expect the capital to remain roughly the same at about ZAR 3.5 billion per annum.

Q: René Hochreiter on, congrats -- and I'm not directing that at René, by the way. Congrats on the Section 45 benefits -- 45X benefits. Can you expand on how you can get costs down below $1,000 per ounce at Stillwater?

A: Thanks, James and Rich. And thanks, René, for the question. So I think the short answer is there are no immediate silver bullets. This is a shift over time. It's one that we've done a lot of work on and continue to work on. I think when you look at both Stillwater East and you look at East Boulder, there are 2 big shifts over time that you need to effect. One is to fully mechanize cut and fill, and the second is to increase sublevel extraction. Now we've done recently some really good internal work on mining cycles. And what that shows you is that time spent at the face is largely related to bolting, 36% on average, and secondly, mucking, 21% on average. And if you're looking to address that, we've done a number of things. One is we trial in a fully mechanized bolter. What this does is it increases your height and length of each round. So you get some dilution with that, but you potentially get a lot more ounces per blast cycle. Now if we get that right and the early trials on a Komatsu mechanized bolter at Stillwater East are good, then there's a knock-on effect you have to address because you now have higher tonnage and volumes. You've got to look very carefully at your ore handling. So we've got some debottlenecking to do there certainly at Stillwater. At East Boulder, you've got a different dip angle on the ore body. So you've got to go with a smaller bolter. So all of this work is daylighting the fact that there is a real opportunity set here to realize lower cost, improved productivity, enhanced mining cycles. But as you increase ounces, you've now got to look very carefully at your tailings capacities and so -- and your rock dump capacity. So what we've done at East Boulder through this year is we've deferred some capital spend on those expansions. So there's a kind of -- there's a confluence of factors that have to be worked quite carefully. Now we absolutely know we can get towards $1,000 an ounce over a couple of years if you work all of these different components, and you start to spend back the capital to enhance the tailings capacity particularly at East Boulder. So that trade-off work is underway. I think by year-end, we'll have that well in hand. We will be guiding the market early next year on what that looks like near term. I hope, René, that addresses the key aspects of your question. And then if you -- moving towards sublevel extraction on greater opportunity sets, then there's a lot of geotech work we're busy doing to understand how that can work most effectively. So it's work in hand. And then we've also done really good work at the back end on the mine planning, introducing a digital twin capability. So I think our sort of trade-off optimization work is a step change from where it was a year or 2 ago. When you put this all together, I'm quite comfortable when we start talking to this early next year, we'll have a good roadway. Again, it's not a 1-quarter wonder, so this is going to take 2 to 3 years to really get that right.