A unique, exciting, precious metals company. CEO, Neal Froneman

Transcription

1 A unique, exciting, precious metals company CEO, Neal Froneman European Gold Forum, 17 April 2018

2 Disclaimer NOT FOR RELEASE, PRESENTATION, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION. This presentation is for informational purposes only and does not constitute or form a part of any offer or solicitation to purchase or subscribe for securities in the United States or any other jurisdiction nor a solicitation of any vote of approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. The shares to be issued in connection with the offer for Lonmin plc ( Lonmin and the New Sibanye Shares, respectively) have not been and will not be registered under the US Securities Act of 1933 (the Securities Act ) and, accordingly, may not be offered or sold or otherwise transferred in or into the United States except pursuant to an exemption from the registration requirements of the Securities Act. The New Sibanye Shares are expected to be issued in reliance upon the exemption from the registration requirements of the Securities Act provided by Section 3(a)(10) thereof. This presentation is not a prospectus for purposes of Directive 2003/71/EC (and amendments thereto, including Directive 2010/73/EU, to the extent implemented in any relevant Member State) (the Prospectus Directive ). In any EEA Member State that has implemented the Prospectus Directive, this presentation is only addressed to and is only directed at qualified investors in that Member State within the meaning of the Prospectus Directive. This presentation is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would require any registration or licensing within such jurisdiction. No statement in this presentation should be construed as a profit forecast. Forward looking statements This presentation contains forward-looking statements within the meaning of the safe harbour provisions of the United States Private Securities Litigation Reform Act of These forward-looking statements, including, among others, those relating to Sibanye Gold Limited trading as Sibanye-Stillwater ( Sibanye-Stillwater ) s financial positions, business strategies, plans and objectives of management for future operations, are necessarily estimates reflecting the best judgment of the senior management and directors of Sibanye-Stillwater and Lonmin. All statements other than statements of historical facts included in this Presentation may be forward-looking statements. Forward-looking statements also often use words such as will, forecast, potential, estimate, expect and words of similar meaning. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances and should be considered in light of various important factors, including those set forth in this disclaimer. Readers are cautioned not to place undue reliance on such statements. The important factors that could cause Sibanye-Stillwater s and Lonmin s actual results, performance or achievements to differ materially from those in the forwardlooking statements include, among others, economic, business, political and social conditions in the United Kingdom, South Africa, Zimbabwe and elsewhere; changes in assumptions underlying Sibanye-Stillwater s and Lonmin s estimation of their current mineral reserves and resources; the ability to achieve anticipated efficiencies and other cost savings in connection with past, ongoing and future acquisitions, as well as at existing operations; the success of Sibanye-Stillwater s and Lonmin s business strategy, exploration and development activities; the ability of Sibanye-Stillwater and Lonmin to comply with requirements that they operate in a sustainable manner; changes in the market price of gold, PGMs and/or uranium; the occurrence of hazards associated with underground and surface gold, PGMs and uranium mining; the occurrence of labour disruptions and industrial action; the availability, terms and deployment of capital or credit; changes in relevant government regulations, particularly environmental, tax, health and safety regulations and new legislation affecting water, mining, mineral rights and business ownership, including any interpretations thereof which may be subject to dispute; the outcome and consequence of any potential or pending litigation or regulatory proceedings or other environmental, health and safety issues; power disruptions, constraints and cost increases; supply chain shortages and increases in the price of production inputs; fluctuations in exchange rates, currency devaluations, inflation and other macro-economic monetary policies; the occurrence of temporary stoppages of mines for safety incidents and unplanned maintenance; their ability to hire and retain senior management or sufficient technically skilled employees, as well as their ability to achieve sufficient representation of historically disadvantaged South Africans in management positions; failure of information technology and communications systems; the adequacy of insurance coverage; any social unrest, sickness or natural or man-made disaster at informal settlements in the vicinity of some of Sibanye-Stillwater s operations; and the impact of HIV, tuberculosis and other contagious diseases. These forward-looking statements speak only as of the date of this Presentation. Sibanye-Stillwater and Lonmin expressly disclaim any obligation or undertaking to update or revise any forward-looking statement (except to the extent legally required). 2

3 Agenda Corporate overview and vision statement Track record of smart transactions Significant value created post unbundling & acquisitions More value unlock to come: DRDGOLD and Lonmin transactions Outlook and the way forward 3

4 Corporate overview Shares in issue Shares in ADR form Market cap ¹ Listings Net Debt at 31 December 2017 Reserves 2 at 31 December 2017 Contact details A leading global precious metal company 2,265,793,015* 656,793,152*(ADR ratio 1:4 ordinary share) c.r25 billion (US$2.1billion) JSE Limited share ticker: SGL NYSE ADR programme share ticker: SBGL R23 billion (US$1.88billion) 3 Net debt : adjusted EBITDA 4 = 2.6x R4.1 billion (US$334 million) available facilities Gold Reserves of 25.7moz 4E SA PGM 5 Reserves of 22.4moz 2E US PGM 5 Reserves of 21.9moz Uranium Reserves of 96.1mlb James Wellsted SVP: Investor Relations Tel: +27 (0) /+27(0) ir@sibanyestillwater.com Registered office: Constantia Office Park, Bridgeview House, Building number 11, Ground Floor, Corner 14th Avenue & Potgieter Road, South Africa *Shares in issue as at 11 April 2018 (post capitalisation issue), ADRs as at 13 April 2018 (before cap issue) ¹ Market cap as at 5 April 2018, sources: JSE, Factset 2 Refer to the Integrated Report or Mineral Resources and Reserves statement, issued on 29 March 2018 at 3 Converted using exchange rate on 31 December 2017 of US$/R Adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) based on the formula included in the facility agreements for compliance with the debt covenant formula 5 The Platinum Group Metals (PGM) production in the SA Region is principally platinum, palladium, rhodium and gold, referred to as 4E (3PGM+Au), and in the US Region is principally platinum and palladium, referred to as 2E (2PGM) Major shareholders* Gold One Limited 19.43% Van Eck Associates Corporation 11.07% # Public Investment Corporation 9.61% Investec Asset Management 5.75% Black Rock Inc 4.34% Shareholder geographic distribution* 29% 19% 1% 5% 8% 38% *Shareholder information as at end February 2018 # As per Van Eck s declaration on 23 March 2018 China/ Gold One South Africa USA United Kingdom Europe excl UK Others 4

5 Our vision and purpose dictates our actions PURPOSE: Our mining improves lives VISION: SUPERIOR VALUE CREATION FOR ALL OUR STAKEHOLDERS T h r o u g h t h e re r e s p o n s i ble m i n i n g a n d b e n e f i c i ation o f our m i n e r a l r e s o u r c e s Underpinned by our C.A.R.E.S. VALUES Commitment Accountability Respect Enabling Safety Sibanye-Stillwater cares 5

6 Track record of smart transactions 6

7 Implementing a value accretive PGM strategy Aquarius First entry into the SA PGM sector April 2016 Lean, well run company Operational performance has increased further to record levels since acquisition Rustenburg Stillwater Lonmin Effective from November 2016 Smart transaction structure aligned with expectations of platinum market outlook Significant synergies with Aquarius and the gold central services Realised synergies of ~R1bn pa in 14 months, well ahead of previous target of R800m over a 3-4 year period Tier one US PGM producer acquired in May 2017 High grade, low cost assets with Blitz, a world class growth project Provides geographic, commodity and currency diversification 78% palladium content provides upside to robust palladium market Attractive acquisition price at low point in platinum price cycle Combination with Sibanye-Stillwater SA PGM assets results in significant potential synergies Aligns with Sibanye-Stillwater s mine-to-market strategy in SA and adds commercially attractive smelting and refining Sizeable resources provide long-term optionality A unique, leading precious metals mining company offering scale and sustainability 7

8 Days of excess inventory Koz US$/oz Based on our Palladium market outlook We are structurally bullish with palladium set for sustained record deficits Palladium excess inventories already closing in on normalised levels Gasoline expected to maintain a >70% market share through to 2025, Long term producer supply CAGR* of -1.2% lags a net-demand CAGR of 2.0% Long-term substitution is anticipated to provide more balance to the overall PGM basket excess Palladium inventories reduce to nil by 2022E Palladium supply vs demand fundamentals A 2012A 2017E 2022E Surplus / Deficit (koz) Ex-ETF market balance Pall Price (US $ / oz) (rhs) Excess PGM above ground stock drawdown profile A 1995A 1998A 2001A 2004A 2007A 2010A 2013A 2016A 2019E 2022E 2025E Platinum Palladium Rhodium *CAGR: Compound annual growth rate Source: Internal demand and supply model based on WPIC information, broker consensus and other sources Palladium outperformance set to continue 8

9 grams per vehicle Koz US$/oz..and our outlook for Platinum Despite ongoing diesel and electric vehicle (EV) concerns, we believe platinum s fundamentals remain robust Limited primary and secondary supply growth anticipated globally Significant producer capital underinvestment since the global financial crisis to result in long term South Africa primary producer supply instability Demand remains well supported, even in diesel markets Platinum likely to be mostly balanced for the remainder of this decade, thereafter reverting to material deficits as primary production from SA contracts Platinum supply vs demand fundamentals A 2012A 2017E 2022E Surplus / (Deficit) Ex-ETF market balance Pt Price (US $ / oz) (rhs) Global average PGM loadings profile A 2013A 2016A 2019E 2022E 2025E Pt Pall Rhod Source: Internal demand and supply model based on WPIC information, broker consensus and other sources Despite declining diesel market share and EV concerns, we remain fundamentally bullish 9

10 Millions Millions There is more to Platinum than anti-diesel Diesel remains critical to the global automakers reaching CO 2 emission targets Decline in diesel penetration rates and growth in EVs and hybrids already factored in Diesel s global market share to decline to 14% by 2025, from 19% in 2017 Light passenger diesel units expected to remain relatively constant at c.18m units EV s and hybrids to grow at a CAGR* of 25% through to 2025 (c.20m units) Increased PGM loadings are inevitably required to reach more stringent global emission thresholds Likely move towards real world driving testing Light passenger vehicles by engine type % % % 60 10% 40 5% % 2010A 2013A 2016A 2019E 2022E 2025E Diesel Gasoline Hybrids BEVs Diesel market share (%, rhs) 25 Hybrid vs Battery electric vehicles (BEV) growth Heavy duty diesel (HDD), hybrid vehicle growth and the potential substitution of platinum in gasoline autocats provide bottom line platinum demand growth Contrary to bearish platinum market sentiment Heavy duty diesel demand expected to double by 2025E (to c.850koz), offsetting passenger vehicle losses Hybrid vehicles expected to account for 50% of total EVs by 2025E A 2013A 2016A 2019E 2022E 2025E *CAGR: Compound annual growth rate Source: Internal demand and supply model based on WPIC information, broker consensus and other sources Hybrids BEVs Despite declining diesel market share and EV concerns, we remain fundamentally bullish 10

11 Becoming a leading precious metals company Sibanye-Stillwater global PGM ranking Sibanye-Stillwater global gold ranking 2017A platinum production (moz) 2017A palladium production (moz) 2017A gold and gold equivalents production (moz) Amplats 2.4 Norilsk Barrick 5.3 Sibanye-Stillwater (post-transaction) Impala Amplats Sibanye-Stillwater (post-transaction) Newmont AngloGold 2, 3, 4 Sibanye-Stillwater (post-transaction) Kinross Lonmin 0.7 Impala 0.9 Gold Corp 2.6 Norilsk Lonmin 0.3 Newcrest Gold Fields Northam 0.3 Northam 0.1 Polyus 2.2 Agnico-Eagle 1.7 RBPlats 0.2 RBPlats 0.1 Sibanye-Stillwater 1.4 Source: Company filings Lonmin s contribution to Sibanye-Stillwater Note: 1. Includes PGM by-products only 2. Rustenburg + Aquarius + Stillwater + Lonmin. Blitz at full ramp up. 3. Sibanye Stillwater gold equivalents included 4. Gold equivalent ounces calculated as PGM basket price in the period / average gold price in the period multiplied by PGM production Positioned globally as a leading precious metals producer 11

12 Significant value created post unbundling & acquisitions 12

13 Our value-creation journey 1 Enterprise value, or EV, is a measure of a company s total value, often used as a more comprehensive alternative to equity market capitalisation. Enterprise value is calculated as the market capitalisation plus debt and minority interests and preferred shares, minus total cash and cash equivalents. It is calculated as at 31 December of each year Delivering growth and value while diversifying risk at the bottom of the cycle 13

14 US$/oz R/tonne Proven operating model yields results SA gold industry UG operating unit costs (SA only) Anglogold Gold Fields (South Deep) Harmony 2017 SA gold industry all-in sustaining costs (SA only) Sibanye-Stillwater Gold Fields (South Deep) Anglogold Harmony Sibanye-Stillwater Source: Company reports for 12 months ended 31 December 2017 Sibanye-Stillwater is the lowest cost major gold producer in South Africa 14

15 Large, low cost SA PGM acquisitions Source: Various companies disclosures Note: Bubble size represents PGM Resources A sizeable resource base at a compelling price 15

16 Aquarius and Rustenburg realised synergies Category Resource optimisation Sourcing and stores management Summary of key initiatives Initial benefits identified (Rm) Realised benefits At 30 June 2017 (Rm) Employees and management configured to reflect the Sibanye-Stillwater operating model 200 Consolidation of duplicated production and support functions Improved procurement and supply chain management Owner Maintenance 98 Realised benefits since acquisition at 31 Dec 2017 (Rm) Closure of corporate offices Rosebank, Centurion and Perth offices Optimisation Property Consolidation of training footprint Engineering Other Total Operating cost synergies R800m (over 3 years) R542m (over 8 months) Additional savings Real capital savings realised (not deferred) R918m (over 14 months) Realised integration synergies R800m (over 3 years) ~ R640m (over 8 months) ~ R1,034m (over 14 months) *Source: Company data Kroondal baseline was 2016 actual (July 2015 to June 2016),Rustenburg: Baseline was the PFS re-based as a standalone company Savings identified include those related to decrease in labour numbers Integration of Aquarius and the Rustenburg operations has exceeded expectations 16

17 US$/2Eoz 2Eoz Stillwater CPR confirms value CPR released in November 2017 NPV of US$2.7 billion vs acquisition price of US$2.2 billion confirmed, at assumed palladium price of US$704/oz and platinum price of US$1,047/oz AISC and AIC converge to approximately US$530/2Eoz from 2021 as capital at Blitz declines and production builds up US PGM Operations production and cost profile Ave spot 2E basket price YTD ~ US$1,019/2Eoz % 34% % E production (oz) AISC AIC Spot prices for 2E basket Source: Stillwater CPR 2017 Note: Production and costs are in line with the published CPR for the Stillwater operations (available on The Stillwater operations have a PGM 2E prill split of 3.4 palladium: 1 platinum ounce A value accretive and well timed acquisition 17

18 Relative price performance (%) Stillwater a well-timed acquisition Stillwater Transaction concluded Stillwater Transaction announced Discussions with Stillwater begin 0-20 Gold (LHS) Palladium (RHS) Platinum (LHS) Source: Inet BFA Fundamental outlook for palladium remains robust 18

19 Two rivers East Boulder Stillwater Mototolo Kroondal Zimplats Rustenburg Mogalakwena Modikwa Mimosa Union Lonmin Amandelbult Unki Booysendal Impala Boschkoppie Zondereinde Marula Cost R/Oz Two rivers Mototolo East Boulder Stillwater Zimplats Kroondal Union Marula Modikwa Amandelbult Mogalakwena Lonmin Mimosa Booysendal Rustenburg Impala Boschkoppie Unki Zondereinde Cost R/Oz Moving down the PGM AIC curves Jun-16 all-in costs 1 chart, by mine (R/6E ounce) 2 Avg. basket price R12,699/ounce (6E) Avg. all-in costs = R12,277/ounce (6E) Jun-17 all-in costs 1 chart, by mine (R/6E ounce) 2 Avg. basket price R12,128/ounce (6E) Avg. all-in costs = R12,589/ounce (6E) Sibanye-Stillwater mines 3 Source: Citi Research, Company reports, Note: 1. Includes cash costs, all capex exploration, corporate costs, cash taxes and other operating costs 2. Excluding base metal credits 3. Mines acquired by Sibanye-Stillwater in the Aquarius acquisition include Kroondal and Mimosa Other PGM mines Clear cost benefits realised at Kroondal and Rustenburg operations from integration with Sibanye-Stillwater 19

20 R/oz US$/oz Clear benefits from recent diversification US$/2Eoz PGM basket YTD ave = 23% higher than H R/4Eoz PGM basket YTD ave = 6% higher than H Ave H1 2017: US$830/2Eoz Ave H2 2017: US$946/2Eoz Ave H2 2017: R17,087/oz Ave 2018 YTD: US$1,019/2Eoz Ave 2018 YTD: R15,001/oz Ave H1 2017: R16,331/oz Ave H1 2017: R12,063/4Eoz Ave H2 2017: R13,074/4Eoz Ave 2018 YTD: R12,799/4Eoz Gold R/oz (LHS) PGM Basket R/4Eoz (LHS) PGM Basket US$/2Eoz (RHS) Source: Inet BFA *2E and 4E basket prices are based on Sibanye-Stillwater SA PGM and US PGM prill split Dollar metal prices gains partially offset by rand strength Stillwater basket price benefiting 20

21 Liquidity position robust US$ RCF refinanced US$350 million RCF refinanced (was due to mature in August 2018) and upsized to US$600 million on improved terms Three year facility with option to extend through two one year loans Option to increase by further US$150 million Interest rate of Libor plus 1.85% and Libor plus 2.00% dependent on gearing Strong support from group of various international banks continued confidence in Sibanye-Stillwater s business plan Facility is not currently materially utilised but extended facility maturity, and increased size, improves Group s liquidity position Net Debt:EBITDA covenant remains as a maximum of 3.50x up to and including 31 December 2018, and a maximum of 2.50x thereafter R Debt Maturity ladder* - R millions R5 000 R5 537 R5 945 R5 451 R6 651 R 0 (R5 000) (R1 545) (R4 124) (R3 090) R (R10 000) Cash (incl GBF's) Available Facilities ZAR RCF (R6bn) New USD RCF ($600m) 2022 Bonds ($500m) 2023 Convertible ($450m) 2025 Bonds ($550m) *Balances as at 31 December 2017 adjusted for the New USD RCF 21

22 More value unlock to come: DRDGOLD and Lonmin transactions 22

23 Transaction overview Sibanye-Stillwater Will vend selected gold surface processing assets and tailings storage facilities (TSFs) into DRDGOLD for a 38% stake worth c.r1.3 billion* Has an option to increase its ownership in DRDGOLD to 50.1% within 24 months by acquiring additional shares at a 10% discount to the 30 day VWAP Retains ownership of the Cooke and Ezulwini plants and associated uranium and gold TSFs with the ability to deposit processed surface material onto the Regional Tailings Storage Facility (RTSF), subject to paying an appropriate share of capital and costs DRDGOLD Will develop the West Rand Tailings Retreatment Project (WRTRP) in phases, commencing with initial production through the Driefontein DP2 and DP3 plants and culminating in the development of a Central Processing Plant (CPP) and RTSF * DRDGOLD s closing share price of R4.96 on 20 November 2017 multiplied by the 265 million shares to be issued to Sibanye-Stillwater An innovative and value accretive partnership 23

24 The proposed Lonmin acquisition Sibanye-Stillwater has made an all equity offer to acquire 100% of Lonmin Neutral to Sibanye-Stillwater debt profile will not add debt to the balance sheet R1.5 billion in annualised pre-tax cost and operational synergies* expected by 2021 Benefits of transaction include Value accretive to Sibanye-Stillwater shareholders Downstream processing business with a replacement value significantly higher than acquisition cost Significant synergies between Sibanye- Stillwater and Lonmin s contiguous PGM assets Sizeable PGM Resources with potential upside from advanced brownfield projects and greenfield project pipeline Western Bushveld Joint Venture Northam 2. Anglo America Platinum 3. Siyanda Resources 4. Sedibelo Platinum 5. Wesizwe Platinum 6. Royal Bafokeng Platinum 7. Impala Platinum 8. Eastern Platinum 9. Glencore Xstrata Sibanye-Stillwater Lonmin Pandora Joint Venture Sable project Should Sibanye-Stillwater shareholders not approve the transaction, agreement in principle to discuss asset acquisition *For further information in relation to the expected synergies, please refer to page 17 and pages 58 to 60 of the offer announcement dated 14 December 2017, available on A logical value accretive transaction 24

25 4E PGM ounces R million Revised Lonmin operational plan 1 Lonmin mining plan revised after detailed due diligence Planned for current economic and market conditions Lower for longer plan Conservative plan not contingent on expenditure of project capital thereby ensuring affordability Generation one shafts to be put on care and maintenance as per Lonmin plan Flexibility to delay project capital investment Optionality to significantly extend operating life in a higher PGM price environment Revised plan - adjusted 4E PGM ounces in concentrate K3 Saffy Rowland E3 4B K4 W1 E1 E2 Hossy Newman BTT Lonmin LoM 4E PGM ounces in concentrate 1 Source: Lonmin s company information and due diligence performed by Sibanye-Stillwater Affordable mining plan with optionality Mining capex Revised capital by category compared to Lonmin plan (Real terms) Concentrator capex Smelter and refinery capex Other capex New furnace capex Total LoM Capex 25

26 Material synergies with Lonmin operations Pre-tax synergies of approx. R1.5bn per annum by Quantified synergies 2 Incremental synergy potential 2 Overhead costs (R730m per annum by 2021) Corporate office rationalisation (closing the London office and delisting) Regional shared services Operational (mining) services One-off R80m cost required to achieve these synergies Processing synergies Differential cost benefits of R780m by 2021 and an average of approximately R550 per annum from 2021 Approximately R1bn of capex required for the purchase of a new furnace Ability to mine through existing mine boundaries Optimal use of surface infrastructure Optimising the mining mix Prioritisation of projects and new growth capital Capital reorganisation in line with new consolidated regional plan Note: 1. For further information in relation to expected synergies, please refer to page 17 and pages 58 to 60 of the offer announcement, dated 14 December 2017, available at https//sibanyestillwarer.com/investors/transactions/lonmin/documents 2. For overhead synergies, total savings anticipated when fully implemented in FY21; varies per toll agreement production throughput for processing synergies with average calculated between 2021 and Synergies which are unquantifiable at this point in time Realisation of synergies will ensure operational viability 26

27 Outlook and the way forward 27

28 South African green shoots The political environment in South Africa has recently undergone significant change and we anticipate this will be complemented by tangible actions While the strong rand creates short term headwinds we have confidence in the longer term benefits Starting to see an improvement in relations in contrast to the fractious environment of recent years A policy and regulatory environment conducive to business competitiveness will promote investment and growth in the South African mining industry which remains a critical part of the national economy and a significant employer Recent judicial ruling on once empowered always empowered another positive outcome for the industry Sibanye-Stillwater is committed to support inclusive growth in South Africa through mining Our recent South African investments provide significant exposure to South Africa and our company and its stakeholders stand to benefit significantly from this improving environment A vastly more favourable outlook for investment 28

29 Our three-year strategic goal Deleveraging our balance sheet Maintaining our focus on operational excellence Strengthen our position as a leading international precious metals mining company by: Improving our position on the global industry cost curves Addressing our SA discount Pursuing value accretive growth based on strengthened equity rating Consistently delivering on our market commitments Well positioned to benefit from any upside in metal prices 29

30 Contacts James Wellsted/ Henrika Ninham Tel:+27(0) / +27(0) Website: sibanyestillwater.com 30