Sibanye Stillwater Limited (SBSW) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
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.
Key Financial Performance
EBITDA Highest EBITDA in 3 years at just under ZAR 38 billion or just over $2 billion, with a headline earnings per share up by just under 300%. This improvement is attributed to operational stability and a turnaround in financial performance, particularly in the second half of the year.
Net Debt to Adjusted EBITDA Declined to below 0.6x, comfortably within covenant limits. This reflects a focus on reducing gross debt to ensure stability through cycles.
Dividend Declared at ZAR 131 cents per share, equating to a 2% dividend yield. This reflects earnings primarily from the second half of the year and is at the top end of the dividend policy.
South African PGM Operations Total 4E PGM production reached 1.8 million ounces, stable year-on-year. Underground production increased 2%, while surface production was lower by 29% due to higher rainfall and feed resource transitions. Operating costs increased by 7.3%, and all-in sustaining costs rose 10% to just over ZAR 24,000 per 4E ounce.
Gold Operations Total production, including DRDGOLD, was lower by 10% at 19.7 tonnes. Underground production reduced by 8% due to challenges at Kloof operations, while surface production was down 16%. All-in sustaining costs increased 15% to ZAR 1.4 million per kilogram. Adjusted EBITDA increased 115% to ZAR 12.5 billion, driven by a 39% increase in the gold price received.
U.S. PGM Operations Production of 284,000 3E ounces with an all-in sustaining cost of $1,203 per ounce, beating guidance. Improved mining productivity and cost efficiencies contributed to profitability.
Recycling Business 3E recycling volumes were up 9% year-on-year, though still below pre-COVID levels. The integration of acquisitions like Reldan and Metallix has strengthened the recycling platform.
Century Zinc Operations Increased production to 101 kilotonnes of payable metal, with a 17% decrease in all-in sustaining costs to $1,920 per tonne, exceeding guidance.
Renewable Energy Savings Achieved close to ZAR 100 million worth of savings and avoided over 300,000 tonnes of carbon dioxide during the year. Expected to reach ZAR 1 billion in savings over the coming years.
Lithium Operations (Keliber Project) Initial capital of EUR 783 million with phased ramp-up. Expected production of 15,000-20,000 kilotonnes of spodumene concentrate in 2026. Optimization efforts are targeting cost reductions and efficiency improvements.
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Operating Highlights
Keliber Lithium Project: A greenfield project in Finland with a staged ramp-up approach to mitigate market risks. Mechanical completion achieved for most components, with production of spodumene concentrate expected in 2026.
Renewable Energy Program: Expanded to 765 MW, positioning the company as a leader in South African mining renewable energy. Expected to generate over ZAR 1 billion in annual savings and avoid 2.6 million tonnes of CO2 annually by 2028.
Gold and PGM Market Positioning: Gold prices increased by 73% in 2025, driving strong cash flows. PGM prices reset at a higher base due to geopolitical tensions and supply disruptions, with significant imports into the U.S. and China.
Lithium Market Trends: Lithium prices rose due to China's anti-evolution drive and increased demand for battery energy storage systems. Medium-term market expected to remain in surplus, tightening from 2028-2029.
Operational Simplification: Focused on maximizing operating margins by simplifying the operating model and portfolio to prioritize high-return, cash-generative assets.
Safety Improvements: Achieved a 40% reduction in serious injuries since 2021, with a focus on eliminating fatal incidents through enhanced compliance and cultural transformation.
Cost Management: Maintained cost discipline with a 7.3% increase in operating costs for SA PGM operations and a 15% increase in all-in sustaining costs for gold operations, supported by higher byproduct credits.
Strategic Refresh: Simplification of operations and portfolio, disciplined capital allocation (1/3 to shareholder returns, 1/3 to debt reduction, 1/3 to growth), and focus on organic growth from existing resources.
Sustainability Initiatives: Significant progress in renewable energy and water independence, with 4 operations fully independent of municipal potable water and substantial CO2 reductions.
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Risk or Challenges
Leadership Transition: The company underwent a significant leadership transition, which could pose challenges in maintaining strategic continuity and operational stability.
Keliber Lithium Project: The volatility in the lithium market required a staged ramp-up approach to mitigate risks, indicating potential market and operational uncertainties.
Kloof Operations: Increased seismic risks led to the cessation of mining in deeper areas, materially impacting output and future profitability. The operation is now dependent on sustained higher gold prices and is being evaluated on a year-by-year basis.
Appian Court Case Settlement: A settlement payment of $215 million was made, which represents a significant financial outlay and could impact cash reserves.
South African Gold Wage Negotiations: Prolonged negotiations created operational uncertainty, though they were eventually resolved.
Safety Risks: Despite improvements, six fatal incidents occurred in 2025, highlighting ongoing safety challenges and the need for cultural transformation to enhance compliance and reduce risks.
U.S. PGM Operations: Legacy semi-mechanized mining methods and high costs pose challenges. A transformation program is underway but will take time to yield results.
Keliber Project Costs: The project faces high initial capital costs and operational ramp-up expenses, with profitability dependent on market conditions and successful execution.
Kloof Infrastructure Challenges: Aging infrastructure and seismic risks at Kloof have led to operational disruptions and increased costs.
Lithium Market Volatility: The lithium market remains volatile, with prices influenced by geopolitical and market dynamics, impacting the Keliber project.
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Guidance & Outlook
Simplification Strategy: The company is focusing on simplifying its operating model and portfolio to maximize and drive operating margins. This includes focusing on high-return, cash-generative assets and implementing a disciplined capital allocation framework.
Capital Allocation Framework: The framework allocates roughly one-third of capital to shareholder returns, one-third to reducing gross debt, and one-third to growth. Growth is primarily focused on internal resource value, particularly in South Africa's PGM operations.
Keliber Lithium Project: The project in Finland will proceed with a staged ramp-up approach to mitigate market risks. The company plans to produce 15,000-20,000 kilotonnes of spodumene in 2026, with a decision on refinery commissioning dependent on market conditions.
Kloof Gold Operations: Operations will continue on a year-by-year basis, contingent on sustained higher gold prices. The company has removed high-risk areas from the long-term plan to align with risk tolerance.
Renewable Energy Initiatives: The company aims to achieve 765 megawatts of renewable energy capacity by 2028, supplying over half of its South African energy needs, generating ZAR 1 billion in annual savings, and reducing CO2 emissions by 2.6 million tonnes annually.
U.S. PGM Operations: The company is targeting a cost reduction to $1,000 per ounce by 2027 through mechanization and operational efficiency improvements. This includes a phased transformation program starting at Stillwater East.
Gold Operations Outlook: The company expects a positive outlook for 2026, with spot gold prices up 9% year-to-date. The Burnstone feasibility study is underway, with a final investment decision expected in the first half of 2026.
PGM Market Outlook: The company anticipates potential earnings and cash flow improvements in 2026 due to stronger PGM prices, which have risen 43% early in the year.
Lithium Market Outlook: The lithium market is expected to remain in surplus over the medium term but will tighten from 2028-2029. The company is focusing on cost optimization and efficiency improvements in its lithium operations.
2026 Guidance: The company expects stable production in South African PGM operations, a slight increase in U.S. PGM output, and spodumene concentrate production at Keliber. Total costs for Keliber are estimated at EUR 180-190 million.
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Shareholder Return Plan
Dividend Declaration: The Board declared a dividend of ZAR 131 cents per share, equating to a 2% dividend yield. This dividend is at the top end of the company's dividend policy and reflects earnings primarily from the second half of 2025.
Dividend Policy: The dividend declaration aligns with the company's policy of allocating 1/3 of capital to shareholder returns, 1/3 to reducing gross debt, and 1/3 to growth.
Share Buyback Program: No specific share buyback program was mentioned in the transcript.
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Key Q&A
Q:How does the company assess the risk of achieving specification grade during the early stages of ramp-up at Keliber?
A:The company is confident in achieving the specified grade due to feasibility studies and test work showing high spodumene grades of over 5%. The concentrator uses traditional technologies, and the first pit, Syvajarvi, has a high lithium oxide percentage of 1.1% or more.
Q:What long-term lithium price assumption underpins the revised recoverable amounts at Keliber, and at what price level does the project fail to meet the hurdle rate?
A:The average price used over the life of the mine is just under USD 17,500 per tonne, equating to a long-term price of about USD 20,000 per tonne. The project requires prices well above USD 12,000 per tonne to meet the hurdle rate, ideally in the range of USD 14,000 to 15,000 per tonne.
Q:What is the remaining book value for Keliber?
A:The remaining book value for Keliber is ZAR 9 billion or just under EUR 460 million.
Q:What are the next steps in the battery metal strategy?
A:The company aims to supply metals supporting decarbonization and energy transition. The short-term strategy focuses on optimizing the current portfolio, including South African gold, PGMs, U.S. PGMs, recycling, and Keliber. The company will assess growth opportunities based on metals and jurisdictions.
Q:Can one expect the current level of financial performance to continue if commodity prices hold?
A:The financial performance may improve slightly if commodity prices remain stable, as the previous year included one-off items. The company expects tailwinds from commodity prices but acknowledges potential volatility.
Q:Would a sustained higher gold price justify re-extending the mine life at Kloof?
A:The decision to reduce Kloof's reserves was based on safety, not price. While Kloof remains profitable at current prices, the company will continue mining as long as it is profitable but will not significantly change the life of mine or reassess capital.
Q:What are the environmental liabilities for gold operations, and how are they funded?
A:The liability for gold operations is ZAR 5.4 billion, with ZAR 4.7 billion funded and the balance covered by guarantees.
Q:How should the benefits of Section 45 ex credits in 2026 and 2027 be modeled, and when are credits from 2023 and 2024 expected?
A:Credits from 2023 and 2024 are expected in 2026 due to examination processes. Future credits will flow in the year following the claim, e.g., 2025 claims will flow in late 2026 or early 2027.
Q:What factors contribute to higher CapEx at SA PGMs in 2026?
A:The increase is due to specific projects, including upgrades to the precious metal refinery and trackless mining machinery, rather than deferred spending from 2025.
Q:What type of development is funded from CapEx versus operating costs, and what is the layout for the Kopaneng deeps project?
A:Ore reserve development to open up ore blocks is funded from CapEx, while on-reef development is expensed. The Kopaneng deeps project is in the concept study phase, with initial access through Bambanani and Khomanani shafts. A pre-feasibility study is planned for 2026.
Q:How will the GFEX impact prices this year, particularly for May and June?
A:The GFEX will lead to heightened metal flows into China until the settlement date, supporting platinum prices. After the settlement, a price correction is expected.
Q:Are U.S. PGM operations repositioned for current 2E PGM prices, and is there further downside risk?
A:The company aims to reduce costs to USD 1,000 per ounce to sustain operations through price cycles. Current focus is on achieving cost targets, with potential to reassess operations once targets are met.
Q:What are the details of the streaming deals and the hedging book?
A:The company has two streams: one at Stillwater for palladium and gold, and another for South African PGMs covering gold and platinum. Gold hedges for South African operations concluded at the end of 2025, with no further hedges in place.
Q:What are the plans for the convertible bond due in 2028?
A:The company will monitor the bond, which is in conversion territory, and focus on refinancing the 2026 $675 million bond. The convertible bond has a value of $500 million.
Q:Are the Finnish and Australian assets potentially available for sale?
A:The Keliber lithium project is considered a strategic priority and not for sale. The company remains committed to Australian assets like New Century Zinc and is assessing other projects like Mt Lyell and Phos 1.
Q:What is the company's renewable energy ambition and pipeline?
A:The company aims to achieve over 700 megawatts of renewable energy by 2028. Current projects include Castle wind farm and Springbok Solar, with additional wind farms (Umsinde and Witberg) coming online by 2026.
Q:What are the key drivers of lower SA PGM volumes and higher costs?
A:Lower volumes are due to reduced surface and third-party material. Higher costs are driven by sustaining capital projects, including upgrades to the refinery and mechanized equipment.
Q:What is the status of the Appian settlement and its accounting?
A:The Appian settlement has been fully paid and accounted for under cash flow from operating activities.
Q:When will there be value unlock from uranium assets?
A:The Beatrix 4 shaft (Beisa) is in a transaction process with Neo Metals, while the Cooke Tailings project is undergoing feasibility review, with decisions expected in the next quarter.
Q:What accretive investment opportunities exist in South Africa, and what is the update on Burnstone?
A:The focus is on current resources rather than M&A. Burnstone requires an investment decision, with first gold expected quickly but a 4-5 year ramp-up to steady-state production of 120,000-130,000 ounces.
Q:What is the company's position on DRDGOLD and potential stake changes?
A:The company sees long-term collaboration with DRDGOLD and is not looking to sell its stake. Increasing the stake may be considered in the future if value-accretive.
Q:Is the company seeking more copper exposure?
A:The company is open to copper opportunities if they are value-accretive and align with its strengths.
Q:What is the company's chrome strategy and its importance?
A:Chrome remains an important byproduct, contributing 10-12% of revenue. The company is the third-largest chrome producer and aims to unlock further value through synergies and surface tailings.
Q:What is the estimated CapEx for Burnstone, and what is the timeline for steady-state production?
A:Most project capital for Burnstone has been spent. Remaining capital is for development, with steady-state production of 120,000-130,000 ounces expected in 4-5 years.
Q:What is the recycling guidance and the status of Columbus volumes?
A:Columbus volumes have not materially decreased, with only a 2% decline. The company plans to outline its broader recycling strategy in April.
Q:What are the closure liabilities for Kloof, and do they cover pumping costs?
A:Kloof is not interconnected with other operations, so it can be flooded upon closure. Pumping liabilities like those at Cooke are not applicable.
Q:Review of Unclear Management Responses
A:Management avoided providing specific CapEx numbers for Burnstone, stating that the feasibility study is still in progress. Additionally, they did not provide a detailed breakdown of renewable energy contributions by solar versus wind, promising to share more details later.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Charl
Chief Officer
Stage
ZAR cent
ZAR ounce
ZAR price
approach
battery grade
category
cent share
chart
completion
compliance
energy storage
equipment
excellence
family
improvement
investment decision
item
kilotonnes
optimization
ounce reserve
ounce resource
peer
pillar
pit
price cycle
price gold
priority
rally
refresh
regard
resource base
saving
settlement
simplification
spodumene sale
storage system
surface
tariff uncertainty
tonne
water
yield
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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