Superior Value Creation

Transcription

1 Superior Value Creation Denver Gold Forum 2016 Neal Froneman Chief Executive Officer 19 September 2016

2 Disclaimer The information in this presentation may include forward-looking statements, which are based on current expectations and projections about future events. These statements may include, without limitation, any statements preceded by, followed by or including words such as target, expect, may, anticipate, estimate, will, and other words and terms of similar meaning or the negative thereof. These forward-looking statements, as well as those included in any other material discussed at the meeting, are subject to risks, uncertainties and assumptions, including, among other things, the development of Sibanye s business, general economic conditions and actions of regulators. In light of these risks, uncertainties and assumptions, the events in the forward-looking statements may not occur. No representation or warranty is made that any forward-looking statement will come to pass and no reliance should be placed on any forward-looking statement. No one undertakes to publicly update or revise any such forward-looking statement. 2

3 What differentiates Sibanye Significant free cash generation Industry leading returns to shareholders South African focussed Focused on delivering superior value to all stakeholders Uniquely positioned in industry 3

4 Corporate overview Shares in issue Shares in ADR form Market cap Listings Debt R53.5bn (US$3.8bn) JSE Limited share code: SGL New York Stock Exchange ADR programme share code: SBGL R5.3bn (US$478m) of R10.1bn term and revolving facility Major Sibanye Gold shareholders* Gold One Limited 20.07% Public Investment Corporation 8,99% Old Mutual Plc 4.91% Van Eck Associates Corporation 4.73% 1 At 30 June 2016, except market cap at 5 September 2016 Shareholder geographic distribution* Contact details 2% 3% 5% 13% 20% China South Africa USA Luxembourg United Kingdom Libanon Business Park 1 Hospital Road (off Cedar Avenue) Libanon, Westonaria, 1779 South Africa Neal Froneman CEO Tel: neal.froneman@sibanyegold.co.za 24% Ireland Others James Wellsted Investor Relations Tel: james.wellsted@sibanyegold.co.za 33% * Source: J.P.Morgan Cazenove, July 2016 A FTSE/JSE Top 40 precious metals company 4

5 Location of Sibanye Operations (excl. Rustenburg) ZIMBABWE Mimosa Platinum Mile Kroondal JOHANNESBURG South Rand operations West Wits operations Free State operations Key Bushveld Complex Great Dyke Witwatersrand Basin Platinum operations Gold operations SOUTH AFRICA A sizable and consolidated regional presence 5

6 Global gold and PGM rankings 2015 Production (Moz) E Production 1,2 (Moz) Barrick 6,1 AMPLATS- ex Rustenburg Mines 3,6 Newmont 5,0 Norilsk Nickel 3,3 AngloGold 4,0 Gold Corp 3,5 Implats 2,2 Kinross 2,6 Lonmin 1,2 Newcrest 2,4 Gold Fields 2,1 (Rustenburg + Aquarius) Sibanye 1,1 (of which 0.7Moz is platinum) Agnico-Eagle 1,7 Northam 0,4 Sibanye 1,5 Yamana 1,3 RBPlats 0,3 Source: Bloomberg, Companies disclosures, Broker reports Notes: 1. Platinum, palladium, rhodium and gold (together referred to as 3E+Au or 4E). Sibanye related data includes Rustenburg Operations and Aquarius 2. Based on broker consensus 3. Reserves and resources are latest reported by the companies and are on an attributable basis; resources include reserves 4. Prior to conclusion of the latest PSA agreement with Aquarius 5. Aquarius reserves and resources include 50% of the Kroondal PSA extension; Total Resources also include managed resources from projects and Blue Ridge A top ten gold and PGM producer 6

7 R million % H results highlights* Gold production 5% higher to 23,229kg (746,800oz) AISC of R448,922/kg increased by 3% - below SA inflation (US$908/oz, 20% lower) Record attributable PGM (4E) production of 92,773oz for the June quarter Operating profit 128% higher at R5.4bn (US$350m) H interim dividend of R785m (US$53m) vs R919m(US$72m) total dividend in Sibanye operating profit and margin 32% 36% 40% 35% 30% % 25% 20% 0 H H H Gold operating profit (Rm) Platinum operating profit (Rm) Group operating margin (%) 15% *for the six months ended 30 June 2016 relative to six months ended 30 June 2015 Solid operational performance

8 US$ million Industry leading dividends Cumulative dividend of US$298m (R3.5 bn) paid to shareholders since listing Industry leading dividend yield maintained average yield of 5.2% since listing 120 Sibanye annual dividend R million Interim dividend (Rm) Final dividend (Rm) Interim dividend (US$m) Final dividend (US$m) 1 Converted at the average R/US$ rate over the period Dividend declared reflects a positive outlook

9 Superior value for shareholders Share price appreciation since listing: US$10.20/share Dividends paid since listing: US$0.34/share Total return* = US$10.54/share 169% return on investment * From listing on 11 February 2013 until 6 September % CAGR delivered for Total Shareholder Return 9

10 Share price performance % % 72% 63% 63% 59% 56% Sibanye ADR Barrick Newmont Gold Fields ADR AngloGold ADR Harmony ADR DRDGOLD ADR Gold BUGS Index Source: Bloomberg/iNet 7 September 2016 Convincing share price appreciation 10

11 % x x x Peer group benchmarking EV/EBITDA (2016) P/E (2016) Dividend yield (2016) 2,5 P/NAV 4,0 3,0 2,0 1,5 2,0 1,0 1,0 0,5 0,0 0,0 Source: Bloomberg consensus forecasts 13 September 2016, Factset, brokers reports Potential to rerate further 11

12 Value focus Continue to drive operational excellence on existing asset base a proven operating model robust cash flow strong balance sheet Investing in organic growth R3.6bn approved in mid 2015 (gold price R450,000/kg) for organic growth projects Significant leverage at a R600,000/kg gold price: NPV of approximately R7bn IRRs between 20% and 30% Well-positioned to realise further value 12

13 Gold organic growth projects Low risk, leveraged organic growth Project metrics (at R /kg) Unit Kloof 4 Below Infrastructure Driefontein 5 Below Infrastructure Burnstone Project life Year 2015 to to 2042 to 2038 (23 years at the 3km radius) Project capital cost* Rm 691 1,016 1,852 Gold ounces produced** Moz IRR (at R /kg) % >15% >15% >15% IRR (at R /kg) % 21% 27% 34% NPV (at R /kg)*** Rbn * Costs in 2015 money terms as at time of the feasibility study ** Reserves estimated at R /kg *** Using an 8% real discount rate 13

14 kg LoM reserve production profiles Pre-feasibilities studies undertaken De Bron Beisa Pending capital approval WRTRP Projects in development Burnstone Below infrastructure projects Kloof Driefontein Surface reserves in LoM ,000kg (1Moz) Kloof Driefontein Cooke Beatrix Underground reserves in LoM Gold Fields plan Kloof Driefontein Cooke Beatrix 0 Note: Project profile is based on pre-feasibility and feasibility studies as at December 2015 Based on Reserves declared as at 31 December 2015 Assumptions: Gold price: R430,000/kg, Uranium R1,455/lb (real 2015 terms) Extending the operating life 14

15 Precious metals strategy - Platinum a logical first step Many operational similarities with gold mining Long-term PGM supply and demand fundamentals remain robust Low PGM prices and escalating costs (labour, utilities) have put balance sheets under strain Opportunity to leverage Sibanye s successful operating model and hard rock, tabular, labour intensive mining competency to realise further value Innovative approach to structuring transactions and projects The SA PGM sector offers a number of consolidation opportunities 15

16 Consolidation benefits Planning and ore body extraction optimised by breaking down farm boundaries Improved capacity utilisation and rationalisation of infrastructure Remove duplicated/unnecessary overhead structures and costs Rationalise replicated support services Optimise capital allocation Flexibility to close loss making production Enhance financial capacity Access to capital markets improved Cost of capital reduced Consolidation is logical and necessary 16

17 Rustenburg and Aquarius acquisitions Rustenburg transaction structured to minimise risk: Relatively low capital outlay upfront Downside protected for first 3 years Future payments ring-fenced to assets results in upside and downside risk sharing Aquarius transaction more commercial, but at favourable point in cycle Realisation of operational and cost synergies to unlock future value Source: HSBC research Low acquisition costs result in significant flexibility 17

18 Operating and separate synergies targeted Operating synergies Removal of mine boundaries results in optimised mine plans and underground infrastructure Optimising plant utilisation and surface ore flow Direct cost savings at operations Best practice operational benchmarking Economies of scale benefits Shared services and central cost savings Bathopele/Kroondal shared services optimised Rustenburg and Kroondal training Regional, central and shared services Corporate overheads reduced Turk # (undeveloped) Aquarius Rustenburg Operations Care and maintenance School of Mines Driving value creation through realisation of regional and operating synergies 18

19 Combined savings of R800m anticipated annually Category Shortlist of key initiatives Combined value (Rm) Employee cost Senior employee and management configured to reflect the Sibanye operating model 200 Sourcing and stores management Deploying Sibanye s procurement power across all suppliers and operations (Kroondal and Rustenburg) 26 Closure of corporate offices Rosebank, Centurion and Perth offices 69 Property/Housing Training Central services synergies Other Review of low and high density accommodation contracts for employees Consolidate training footprint between Kroondal and Rustenburg Consolidation of production support functions currently duplicated across Kroondal and Rustenburg Yet to be specifically quantified infrastructure consolidation, mining flexibility benefits and plant optimisation Total 800 Kroondal: Baseline was 2016 Budget (July 2015 to June 2016) Rustenburg: Baseline was the PFS re-based as a standalone company Extracting synergies is key to sustainability 19

20 F2016 outlook* Gold Division Gold production : kg (1.6Moz) Total cash cost: R /kg (US$760/oz) All-in sustaining cost: R /kg (US$910/oz) Capital expenditure: R3.9bn (US$270m) Platinum Division (excl. Rustenburg) PGM production: oz (4E) Average cash operating cost: R10 600/oz (US$735/oz) Capital expenditure: R225m (US$15m) Rustenburg acquisition on track for completion in Dec 2016 quarter * Assuming average exchange rate of R14:50/US$ for F2016 A secure and prosperous future A very solid outlook 20

21 Conclusion Sibanye is committed to creating superior value for ALL stakeholders Gold division is generating substantial cash flows Platinum acquisitions will realise significant value in the medium term Robust financial position and strong balance sheet at an opportune point in the commodity cycle Industry-leading dividend yield investment thesis remains the cornerstone building block A secure and prosperous future 21

22 Questions