Analyst recommendation

                                                                                                           As at 02 March 2023

Executive Summary

On 10 May 2024, Sibanye released an operating update for the quarter ending 31 March 2024. Key takeaways from the
report were as follows:

• PGM production was higher at US underground (+22%), SA (+2.5%) and slightly lower at US recycling
  (-1%).
• Gold production was 18% lower at 164.5koz.
• Nickel production increased by 42% and Zinc metal production increased from 1ktZn to 16ktZn although both remain fairly small contributors to group EBITDA.
• 2E ($971/oz), 3E ($1289/oz) and 4E ($1273/oz) PGM basket prices decreased by -32%, -56% and -38%, respectively. 
• The average gold price was 11% higher at $2069/oz
• Average exchange rate was R18.86/$ (Mar 2023: R17.76/$)
• Adjusted EBITDA was 75% lower at $113m.
• The outlook for PGM’s remains asymmetrically positive and Sibanye is positioned to benefit from the recovery of PGM prices as it reaps the benefits of the restructuring at the US and SA operations.
• Of increasing concern is Sibanye’s balance sheet and the group is engaging with lenders to increase debt covenants. For the time being, Sibanye has sufficient liquidity to meet debt obligations, however, a prolonged depressed commodity environment does increase liquidity risk.
• We estimate that the PGM basket price needs to decline roughly 30% from current levels to cause Sibanye’s coverage ratio to fall below the minimum as defined by the debt covenants. 
• Sibanye maintained operating guidance for 2024.
• We have updated our forecasts and valuation to FY25. Intrinsic value is trimmed slightly to R24.50
  and we maintain a hold recommendation.

Analyst thesis

We like Sibanye for its increasingly diverse portfolio of PGMs, gold and green energy metals. Sibanye has a proven track
record of pivoting from gold into PGM’s and we think this bodes well for the group as it diversifies further into battery
metals. Sibanye has a strong balance sheet and earns over a quarter of EBITDA from operations in the US.

Valuation

Table 3: Valuation

Table 3: Company data

Source: FactSet