Sibanye Gold's Cooke 3 processing plant
South African gold mining company Sibanye Gold increased it gold production by 14% during the quarter ended 31 March 2016.

Sibanye Gold on Monday also reported 30% higher average rand gold price, resulting in a 240% increase in operating profit to R2.5 billion, compared with R744 million for the March 2015 quarter.

Total cash cost remained flat year-on-year, despite the implementation of above inflation wage and electricity tariff increases, while all-in sustaining cost was 3% lower.

The gold producers forecast production for the year remains unchanged at 1.61 Moz at a total forecast cash cost of approximately US$735/oz and an all-in sustaining cost of approximately $880/oz.

The company also advised its shareholders on Monday that advised that earnings per share for the six months ending 30 June 2016 is expected to be at least 150% (or 30c a share) higher than the 20c a share reported for the previous corresponding period in 2015.

Headline earnings per share for the six months ending 30 June 2016, is expected to be at least 158%, or 30c a share, higher than the 19c a share reported for the previous corresponding period in 2015.

Both increases are a result of increase in the average rand gold price, which was 301% higher for the March 2016 quarter than for the comparable quarter in 2015.

Progressing its entry into platinum

Progress on the platinum transactions was pleasing with shareholders overwhelmingly approving both transactions and both receiving competition authority approval. The acquisition of Aquarius Platinum was concluded on 12 April 2016. The acquisition of the Rustenburg assets remains subject to Section 11 approval for the transfer of mineral rights by the Department of Mineral Resources, which is anticipated in the second half of 2016.

Although Sibanye will only consolidate Aquarius’ operational and financial results from April 2016, it is pleasing to note a strong operational result for the March 2016 quarter during which Aquarius delivered record quarterly production from Kroondal and Mimosa and lower unit cash costs at all the operations.

This production result is notable given the seasonal disruptions that generally occur during the first quarter of a calendar year. With the recent improvement in the rand PGM basket price, the outlook for Aquarius is positive.

Aquarius’ attributable platinum group metals production for the June 2016 quarter is forecast at 87 500 oz (4E), at an average cash cost of R10 300/oz (4E), while attributable capital expenditure is forecast at approximately R95 million.

Sibanye Gold CEO Neal Froneman is pleased with the company’s start to the year, with the March 2016 quarter, generally positive, not only as a result of the much improved operational performance from its gold division, but also due to the steady progress with its platinum acquisitions, he notes.

Meanwhile, Froneman says that the constructive outcome of Sibanye Gold’s engagement with organised labour is also significant. “We have averted a potentially destructive strike at a fragile point for our industry and our economy and managed to secure stability for our company and all its stakeholders. The constructive manner in which this was achieved, with minimal disruption and value loss is extremely positive,” he added.