Sibanye Stillwater Limited (SBSW) Q2 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reveals mixed signals: strong financial performance but vague guidance on future projects like Keliber and GalliCam. The company's focus on optimizing current operations and potential M&A is positive, yet the lack of specifics on inventory impact and strategic plans tempers enthusiasm. The market cap suggests moderate volatility, aligning with a neutral sentiment.
Key Financial Performance
Group adjusted EBITDA 120% higher than the same period in 2024. Even excluding the 45x credits, it was still 51% higher at ZAR 10 billion. This increase was due to solid operational performance and the benefit of increasing basket prices in the latter half of the year.
45x credits Amounted to ZAR 5.2 billion to date. At current conservative production rates, the total fair value of these credits until 2034 increases to ZAR 12.6 billion, which is 32% of the acquisition value of the Stillwater operations in Montana. This reflects the value created from the acquisition and operational strategies.
Net debt to adjusted EBITDA Measured at 0.89x, well below 1x, indicating strong leverage management and far below market projections from earlier in the year.
South African PGM operations production Total production for the first half of 2025 was 840,000 4E ounces, 4% lower year-on-year. This was due to consistent underground operations but impacted by higher seasonal rainfall and lower purchase of concentrate volumes.
South African PGM operations costs Operating costs increased by 4% to ZAR 19.3 billion, below inflation, due to restructuring and closure of high-cost shafts. All-in sustaining unit costs increased 11% to ZAR 23,900 per 4E ounce, impacted by lower production and higher sustaining capital.
South African gold operations EBITDA Increased by 118% to ZAR 4.8 billion from ZAR 2.2 billion in the first half of 2024. This was driven by a 36% increase in the average gold price received and improved operational performance at Driefontein and Beatrix.
Montana PGM operations costs All-in sustaining costs decreased by 41% to $1,207 per ounce, and total capital reduced by 52% to $45 million. This was due to restructuring efforts and operational improvements.
Montana PGM operations Section 45X credits Provided a benefit of $159 million credited to costs in the first half of 2025, reflecting financial support under the Inflation Reduction Act.
Keliber lithium project capital expenditure Revised to EUR 783 million, with EUR 577 million spent so far. The project remains on schedule and within the revised budget.
Castle wind farm energy savings Generated ZAR 21.6 million in cost savings for the South African region and reduced the total carbon footprint by 60,000 tonnes since its commissioning at the end of the first quarter of 2025.
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Operating Highlights
Section 45X credits: The company benefited from Section 45X credits amounting to ZAR 5.2 billion, with a total fair value projected to increase to ZAR 12.6 billion by 2034. This credit is tied to the U.S. operations and reflects the company's strategic positioning in critical minerals.
Keliber Lithium Project: Construction is nearing completion and is expected to be finalized by early 2026. The project has been granted strategic project status under the EU Critical Raw Materials Act, providing access to grants and tax credits.
Metallix Acquisition: The acquisition of Metallix expands the company's recycling footprint and is expected to contribute immediately to earnings and cash flow.
Palladium Trade Remedy: The company filed a petition for a palladium trade remedy in the U.S. as part of its multipolarity strategy, aiming to address unfair trade practices and enhance its market positioning.
Lithium Market Positioning: The company has developed the first fully integrated lithium project in Europe, positioning itself strategically in the growing EV market.
Safety Improvements: The company reported a 15% year-on-year decline in serious injury and total recordable injury frequency rates, achieving its lowest-ever rate of 3.9.
Operational Restructuring: U.S. PGM operations reduced costs significantly, with all-in sustaining costs decreasing by 41% year-on-year.
Renewable Energy Initiatives: The Castle Wind Farm became operational, saving ZAR 20 million in energy costs and reducing the carbon footprint by 60,000 tonnes.
Strategic Project Status: Both the Keliber and GalliCam projects were granted strategic project status under the EU Critical Raw Materials Act, enhancing their long-term value.
Brownfield Investments: The company is selectively investing in low-capital-intensity brownfield projects to enhance operational efficiency and resource utilization.
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Risk or Challenges
Safety: Three fatalities occurred during the reporting period, and seismicity at Kloof gold operations led to reduced production due to safety concerns. Despite improvements in safety frequency rates, eliminating fatal incidents remains a top priority.
Operational Performance: Disappointing performance at Kloof gold operations due to seismicity and infrastructure challenges. Production was reduced in certain areas, and the life of mine is under review for long-term sustainability.
Market Conditions: Lithium market remains under pressure with oversupply and depressed prices. The company is evaluating a responsible start-up for Keliber operations. PGM markets face tight supply and demand challenges, with palladium prices impacted by Russian imports.
Regulatory and Trade Challenges: The company filed an antidumping petition against Russian palladium imports into the U.S., citing unfair trade practices. The outcome of this petition could impact market dynamics.
Economic Uncertainty: Global economic and geopolitical uncertainties, including tariff impacts and slower GDP growth in key markets, pose risks to demand for PGMs and other commodities.
Strategic Execution: Challenges in transitioning Kloof operations to a higher-volume, low-grade operation. The company is also managing the ramp-down of Sandouville operations and evaluating the Burnstone project for viability.
Supply Chain and Production: Heavy rainfall in South Africa impacted chrome ore production and sales. Infrastructure limitations at Kloof and other operational disruptions have affected production stability.
Financial Risks: Impairments at U.S. operations, Keliber, and Mimosa due to changes in economic factors and regulatory impacts. The company has decided not to pay interim dividends due to global uncertainty and commodity price volatility.
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Guidance & Outlook
Section 45X Credits: The company expects significant Section 45X payments to be realized in 2026, benefiting the balance sheet.
Keliber Lithium Project: Construction is on track to be completed by early 2026. The company is evaluating a responsible ramp-up strategy due to current depressed lithium market fundamentals.
Sandouville Operations: The Sandouville facility will be placed on full-time care and maintenance by January 2026, reducing losses from the operation.
PGM Operations in Montana: The company aims to reduce costs to below $1,000 per 2E ounce over the next 2-3 years through operational improvements and cost management.
Gold Operations Guidance: Production guidance for South African gold operations has been revised to 15-16 tonnes for 2025, with all-in sustaining costs between ZAR 1.45 million and ZAR 1.55 million per kilogram.
Dividend Policy: The company has decided not to pay an interim dividend for 2025 due to global uncertainty and commodity price volatility but will review this decision at year-end.
Renewable Energy Projects: The company aims to achieve a 600-megawatt renewable energy target by 2027, reducing annual emissions by 1.5 million tonnes of CO2 equivalent.
Lithium Market Outlook: The company remains bullish on long-term lithium demand despite current market oversupply and price pressures.
PGM Market Outlook: The company is cautiously optimistic about short-term PGM market conditions but remains fundamentally bullish in the medium term.
Debt Management: The company plans to refinance the $675 million notes in H1 2026, targeting a downsized $500 million issuance.
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Shareholder Return Plan
Dividend Policy: The company has a dividend policy of 25% to 35% of normalized earnings. However, dividends have not been paid in recent years due to challenging market conditions. The company is optimistic about returning to dividend-paying territory by the end of the year, contingent on stable commodity prices.
Dividend Payment Decision: No interim dividend will be paid for the half year due to global uncertainty and commodity price volatility. The decision on year-end dividends will be reviewed based on the second half's performance.
Share Repurchase: No share repurchase program was discussed or announced during the call.
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Key Q&A
Q:Richard, you had some challenges at the SA gold ops. Have we seen the brunt of the impact of these challenges, I assume, meaning end? And when do you expect the operational performance to stabilize? How should we think about the SA gold production and CapEx profile over the next 2 to 3 years?
A:Richard Andrew Stewart stated that Beatrix and Driefontein operations have stabilized, but Kloof operations remain a challenge due to seismicity and safety decisions. Driefontein is expected to produce 8-8.5 tonnes of gold annually, Beatrix around 4 tonnes, and Kloof's production may halve to 5-6 tonnes. Underground operations are projected to produce about 475,000-480,000 ounces per annum. CapEx is expected to remain consistent at ZAR 3.5 billion per annum.
Q:Can you expand on how you can get costs down below $1,000 per ounce at Stillwater?
A:Charles Carter explained that cost reduction at Stillwater involves mechanizing cut and fill, increasing sublevel extraction, and optimizing mining cycles. Trials with a mechanized bolter at Stillwater East have shown promise. The goal is to achieve $1,000 per ounce over 2-3 years, with further guidance expected early next year.
Q:How confident are we to receive the $285 million actual cash inflow next year from the Section 45X credits? Would we expect to receive additional Section 45X credits in future on top of the $285 million?
A:Charles Carter expressed confidence in receiving the $285 million cash inflow next year, as the process is legislated. Future Section 45X credits are expected, and the company is navigating early submissions for these credits.
Q:What is the expected CapEx for next year? At current prices, would you expect to generate free cash flow next year excluding Section 45X credits?
A:Charles Carter stated that CapEx guidance for next year will be provided later. Positive cash flow is expected at 2E prices of $1,200-$1,300, depending on cost improvements and market conditions.
Q:When shall the Metallix acquisition be finalized? Will this affect the 2025 figures and how?
A:Grant Stuart confirmed that the Metallix acquisition is expected to close by the end of September. The operation is anticipated to be cash-generative from day one and positively impact 2025 financials.
Q:What is the sense in the longer term for Sibanye Stillwater when thinking about the strategy of the company?
A:Richard Andrew Stewart stated that recycling remains a core part of the strategy, providing exposure to critical metals and the circular economy. The company will focus on operational excellence, increasing margins, and strengthening the balance sheet, with no significant strategic shifts expected.
Q:What PGM incentive basket price is needed for recycling to return? Are current spot basket prices of around $1,700 per ounce higher than this incentive price?
A:Richard Andrew Stewart explained that recycling is influenced by factors like scrappage rates, interest rates, and supply chain efficiencies rather than a specific price trigger. Current spot prices are not the sole determinant for recycling recovery.
Q:Can you give guidance on the life of mine of Bathopele and the surface operations at SA PGM? Do you plan to open up new tailings dams?
A:Richard Andrew Stewart stated that Bathopele has 4-5 years of life remaining, and surface operations have about 2 years of reserves. A significant surface strategy is being developed, with no immediate need for new tailings capacity as existing capacity is sufficient.
Q:Does it mean M&A is no longer a priority as we generate more cash?
A:Richard Andrew Stewart clarified that M&A remains part of the company's DNA, but the current focus is on optimizing existing operations, increasing margins, and completing brownfield projects.
Q:What does the responsible start of Keliber refer to? Is it related to mine or the refinery part of the project producing lithium hydroxide?
A:Richard Andrew Stewart explained that the responsible start of Keliber involves evaluating options to minimize losses due to current depressed lithium prices. This includes potential phased or slower ramp-ups, with decisions considering all stakeholders.
Q:What do we expect the production cost to be at Keliber? Where do we expect it to be in the global cost curve?
A:Richard Andrew Stewart stated that production costs at Keliber are expected to be $12,000-$12,500 per tonne, placing it in the fourth quartile of existing projects. Future cost competitiveness is being evaluated.
Q:Please talk about the uranium business progress, Neo Energy, as well as the tailings. What is Greg Cochran cooking up?
A:Richard Andrew Stewart mentioned that the sale of Beatrix 4 to Neo Metals is in process, awaiting regulatory approvals. The Cooke tailings project feasibility study is expected by year-end, with significant uranium resources offering potential value.
Q:How much zinc is still left in the dumps and in the ground at Century? Are there any mine developments surrounding the underground pipeline at Century?
A:Richard Andrew Stewart stated that Century has about 2 years of zinc operations remaining in the tailings dams. Significant phosphate resources around the infrastructure are being evaluated for future opportunities.
Q:Does the Mount Lyell feasibility focus include recoveries from the historical waste dumped into the river?
A:Robert Van Niekerk clarified that the Mount Lyell feasibility study focuses on underground operations, but surface sources may be considered for optimization.
Q:Are you not worried that this inventory buildup will be released in H2 2025 comments -- will put downward pressure on PGM prices in the near term as it seems that the industry has built up inventories?
A:Richard Andrew Stewart stated that inventory release is not expected to materially impact PGM prices, as primary supply continues to decline and investment buying has been a significant driver of price increases.
Q:What does the GalliCam pre-feasibility study entail?
A:James R. Wellsted mentioned that the GalliCam pre-feasibility study is expected by year-end, with details to be revealed afterward.
Q:Would we call the convertible bond soon?
A:Charl A. Keyter clarified that the convertible bond cannot be called before December 2026.
Q:Considering that many countries are looking for alternative trading partners to the U.S. in light of the tariff war, is it not the time to look east from a strategic growth perspective?
A:Richard Andrew Stewart emphasized the company's focus on delivering into Western ecosystems, particularly the U.S., while maintaining a competitive position in those markets.
Q:Why has Sibanye Stillwater not acquired silver for diversification?
A:Richard Andrew Stewart highlighted that the company already has significant exposure to silver through its recycling operations, producing nearly 2 million ounces annually.
Q:What factors will influence the decision to restart the Burnstone project?
A:Richard Andrew Stewart stated that the decision to restart Burnstone will depend on capital allocation and alternative financing mechanisms, with no technical concerns or gold price issues affecting the project.
Q:Review of Unclear Management Responses
A:Management avoided providing direct answers or lacked clarity on the following:
1. Specific guidance on the timing and CapEx for the GalliCam project, as details will only be revealed after the pre-feasibility study.
2. The exact impact of inventory buildup on PGM prices, as the response was general and lacked specific data.
3. Detailed plans for the Keliber start-up, as the response was vague about the options being considered.
4. The potential for M&A activity, as the response was broad and did not specify any immediate plans.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Act
Charl
Columbus
DRD Gold
Executive Director
GalliCam project
Production
Section credit
Siphumelele project
ZAR ounce
ZAR share
acquisition value
auto cat
byproduct
cat recycling
chrome ore
duty
filing
gold price
impairment
import
industry
loss
ounce line
petition palladium
platform
platinum
practice
price supply
price tonne
remedy
result presentation
scale
scrap
share ZAR
tariff
transition
trend
SBSW Transcript
Sibanye Stillwater Limited (SBSW) Q4 2025 Earnings Call Transcript
Unknown2-20
The earnings call reveals mixed elements: strong renewable energy ambitions and strategic asset retention are positives, but concerns about cost management, unclear CapEx, and price corrections post-GFEX are negatives. The company's focus on cost reduction and renewable energy projects, combined with strategic asset management, balances out the negative aspects such as potential price corrections and high costs, leading to a neutral sentiment.
Sibanye Stillwater Limited (SBSW) Q2 2025 Earnings Call Transcript
Unknown8-28
The earnings call reveals mixed signals: strong financial performance but vague guidance on future projects like Keliber and GalliCam. The company's focus on optimizing current operations and potential M&A is positive, yet the lack of specifics on inventory impact and strategic plans tempers enthusiasm. The market cap suggests moderate volatility, aligning with a neutral sentiment.
Sibanye Stillwater Limited (SBSW) Q2 2024 Earnings Call Transcript
Unknown9-12
The earnings call presents mixed signals: improved balance sheet strength and liquidity, but significant financial losses and declining revenues. The Q&A reveals management's confidence in operational sustainability but avoids clear answers on some restructuring concerns. Despite production increases in certain areas, the decline in PGM prices and increased costs in gold operations weigh negatively. The market cap suggests moderate sensitivity to news. Overall, the neutral sentiment reflects a balance between positive balance sheet improvements and negative earnings performance.
Sibanye Stillwater Limited (SBSW) Q4 2023 Earnings Call Transcript
Unknown3-5
The earnings call presents a mixed picture: strong improvements in South African gold operations and a positive Keliber project outlook are offset by decreased revenue, increased net debt, and challenges in U.S. PGM operations. The Q&A section reveals uncertainties about cost management and potential delays in key projects. Despite some positive developments, the lack of clear guidance and ongoing challenges suggest a neutral sentiment. Given the market cap, the stock price is likely to remain stable, with limited movement in either direction over the next two weeks.
SBSW Report
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