Sibanye shares fall after smaller loss as US mines struggle

Sibanye Stillwater Ltd. shares fell after the company reported a narrower full-year loss as higher gold prices offset weak palladium rates that weighed on the firm’s US mining operations.

The South African producer made a loss of $398 million in 2024 after taking an additional impairment of 8.8 billion rand ($477 million) on platinum-group metals mines in Montana, it said on Friday. That brought total writedowns on the US assets — including a larger one announced a year ago — to about $2.6 billion.

Shares declined as much as 9.3% — the biggest drop in three months – and were 6.4% lower at 4:28 p.m. in Johannesburg. The company’s earnings last year missed estimates, while some cost projections for 2025 overshot expectations, according to analysts at Citigroup and RMB Morgan Stanley.

While Sibanye improved on a $2 billion loss in 2023, the recent performance is a sharp reversal for a miner whose core PGM business drove bumper profits in the early part of this decade.

Under soon-to-retire boss Neal Froneman, the company has diversified away from aging South African gold mines, initially acquiring PGM assets both in its home country and the US before investing in metals key to the green-energy transition.

Sibanye – like peers Anglo American Platinum Ltd. and Impala Platinum Holdings Ltd. – has cut costs as it battles persistently weak PGM prices. In September, the company announced further restructuring at its loss-making Stillwater mines in the US that could curb palladium and platinum output from the assets by as much as 45%.

Still, the cost of running the US mines this year will remain “well above” the level “required for sustainable operations” and additional savings are being pursued, Sibanye said. The company estimates that its American assets are entitled to tax credits of about $210 million for the past two years under the Inflation Reduction Act, even though the recent change of government in the US has introduced “some uncertainty” about the legislation’s future, it said.

The price of palladium – the main metal Sibanye produces in Montana – is trading at less than a third of its 2022 peak. South African PGM mines – richer in platinum, whose price has been steadier over the same period – turned a profit, as did gold assets in the country. 2024 was a year of “austerity measures,” Froneman said on a call presenting the firm’s results.

PGMs are used in devices that lower emissions from gasoline and diesel vehicles. Sibanye and its rivals are focused on finding alternative sources of consumption for the metals to compensate for demand that’s forecast to fall from the auto sector as electric vehicles gain market share. Froneman’s firm is also developing a lithium mining and processing project in Finland and owns a nickel refinery in France as it expands in materials used in EV batteries.

While Sibanye was founded on high-cost gold mines spun off by Gold Fields Ltd. in 2013, the company’s production of the precious metal has reduced by more than half over the years. However, with the price of bullion soaring more than 40% in the last 14 months and notching multiple records, income from the assets increased by two-thirds last year to 5.8 billion rand.

“These mature mines, buoyed by the tailwind of a strong gold price, delivered materially better financial results for 2024, during a challenging period for most of our other metals, which are more aligned with industrial economic cycles,” Sibanye said.

Froneman said the company is “open to engaging in settlement talks” with Appian Capital Advisory after a UK court ruled in October that Sibanye unlawfully terminated the purchase of two Brazilian mines from the private equity firm. The two parties are preparing for a hearing due to take place in November at which Appian said on Friday its total claim is expected to exceed $600 million. Sibanye has said the company should receive “either no or significantly reduced damages.”

Sibanye bolstered its balance sheet last year concluding multiple financing, streaming and prepay deals totaling $1.9 billion. The company’s profit before some one-time items – known as headline earnings – was similar to 2023 at $99 million.

(By William Clowes)

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