Sibanye-Stillwater, once a shining star in the mining sector, plunged into a R2.49 billion ($132.1 million) loss in 2023, a sharp reversal from its R103 million ($5.5 million) profit the prior year. The mining giant, under the leadership of South African mining magnate and executive Neal Froneman, is grappling with a series of impairments and liabilities that threaten its future.
The $132.1-million loss stemmed from writedowns on subsidiary investments totaling $2.27 billion under Froneman, reflecting lower prices for platinum, palladium, and rhodium. Additionally, a R1.62 billion ($86.4 million) financial guarantee liability and other costs of R74 million further strained Sibanye’s finances.
Strategic maneuvers backfire
These financial woes follow Sibanye’s aggressive acquisition spree for battery metals in France, Finland, Australia, and the United States. To counter the financial strain, the company is undergoing a restructuring to ensure the sustainability of its South African PGM operations.
Sibanye’s attempt to secure funding for its Keliber project through a stake dilution to the Finnish Minerals Group has backfired. This reduced control and potential future earnings, hindering the company’s ability to fully capitalize on the project’s success.
Mounting pressure, sinking shares
Sibanye confronts a sea of red ink beyond its headline loss. The company shoulders a hefty R8.257 billion ($440 million) in accumulated losses, while shareholders’ funds have plunged from R21.09 billion ($1.12 billion) to R13.65 billion ($728.5 million). With accumulated losses nearing the half-billion-dollar mark, Sibanye teeters on the brink of financial instability.
In a move that will disappoint investors, the Board of Directors of Sibanye-Stillwater (SGL) has withheld the final dividend for the year. This decision comes in stark contrast to the R0.122 ($0.0064) per share dividend declared in 2022.
The company’s total equity and reserves have also contracted significantly, raising concerns about its financial health. This turmoil has impacted all shareholders, including CEO Neal Froneman, who holds a 0.3-percent stake in the company. Sibanye’s share price has undergone a double-digit decline over the past year, tumbling from over R40 ($2.13) to R22.19 (approximately $1.184) at the time of writing.
Sibanye-Stillwater faces a challenging path forward as it navigates a period of restructuring and declining precious metal prices. Froneman’s stake in the company is now valued at R186.02 million ($9.87 million). For individual investors who have held onto their shares for over a year, the market value of their investment in the mining giant has declined by more than 40 percent.
