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Sibanye flags swing to H1'19 loss on South African gold strike

Sibanye Gold Ltd. expects to swing to a first half attributable loss of 265 million South African rand, or a loss of 11 cents per share, from a year-ago profit of 77 million rand, or 3 cents per share, due to the impact of a five-month strike at its South African gold operations.

In an Aug. 27 trading update, Sibanye also flagged a headline loss per share of 54 cents from headline EPS of 4 cents in the same period of 2018. Full results will be released Aug. 29.

The strike, which began in November 2018 and ended in April 2019, led to an estimated 1.6 billion rand in revenue losses and other costs, as well as 110,000 ounces of lost gold production, CEO Neal Froneman said earlier. In the latest update, the company pegged other strike-related costs at 374 million rand.

The deferral of revenue from the Rustenburg platinum group metals operations following the transition to a toll processing arrangement and the recognition of a fair value loss on U.S. dollar convertible bonds of 553 million rand following a significant increase in Sibanye's share price also contributed to the expected swing. Year-ago results included an 810 million rand gain on fair value of its convertible debt.

Restructuring costs worth 387 million rand and a 502 million rand increase in mining tax due to the increased profitability of the company's PGM operations also weighed on Sibanye's earnings.

Higher PGM basket prices, a gain on bargain purchase related to the Lonmin PLC acquisition, and a US$110 million deferred tax credit recognized by company's U.S. PGM operations partially offset the results.