Sibanye Stillwater Gold Operations
Sibanye’s Gold Operations comprise the Betrix operations in the Free State and the Kloof,
Driefontein and Cooke mines on the West Rand of Johannesburg. Included in the stated
Reserves and Resources of Sibanye’s gold division are the Cooke Operations that are
currently on care and maintenance and 38% of the West Rand Tailings Retreatment Project
(“WRTRP”) that was recently sold to the listed DRD in exchange for 38% of the issued
shares of DRD.
Some of the salient features of the gold operation are summarized in the table below
Sibanye-Stillwater SA
Gold operations
Ore milled (000 tonne)
Underground
Surface
Total
Yield (g/t)
Underground
Surface
Combined
Gold produced (kilogram)
Underground
Surface
Total
Operating costs (Rand per tonne)
Underground
Surface
Total
Capital expenditure (R'm)
Ore reserve development
Sustaining capex
Major/growth projects
Total capex
Unit revenue/costs - Gold Operations
Gold price - R/kg
Gold price - US$/oz
Operating cost - R/kg
Operating cost - US$/oz
All-in sustaining cost - R/kg
All-in sustaining cost - US$/oz
All-in cost - R/kg
All-in cost - US$/oz
Average exchange rate R/US$
7 575
11 455
19 030
5 816
21 388
27 204
5,19
0,38
2,30
5,21
0,32
1,53
39 285
4 349
43 634
30 263
6 361
36 624
8 451
647
3 756
10 176
647
2 868
2 288,0
516,8
203,7
3 008,5
2 053,6
545,5
447,2
3 046,4
536 203
1 253
0
0
482 708
1 129
501 716
1 173
13,31
536 422
1 264
484 036
1 137
558 589
1 312
584 775
1 373
13,24
RESERVE AND RESOURCE
The Gold Reserve and Resource across the operations are as follows in M’oz
Reserve and Resource Statement 2018
Reserve
Underground
Beatrix
Driefontein
Kloof
Total underground
Surface
Total
1,187
3,302
5,020
9,509
2,599
12,108
Resource
Measured
Underground
Beatrix
Driefontein
Kloof
Total underground
Surface
Total
Indicated
Inferred
4,003
5,386
7,216
16,605
3,433
4,732
0,905
9,070
0,004
2,388
1,264
0,489
0,089
0,093
Total
7,440
10,118
8,210
25,768
4,141
29,909
VALUATION
To calculate an approximate transaction valuation we have considered the margins and NPV
based on a gold price of $ 1,400/oz and $ 1,500/oz and the reserve table above.
Reserve
Annual Production kg
Annual Production oz
Life of mine
Gold Price
Exchage Rate
All in costs
Margin
NPV (R'm)
Beatrix
1,187
8 536
273 280
0
1 500
14
1 208
292
4 001
Driefontein
3,302
9 573
306 480
Kloof
5,020
15 253
488 325
Total
9,509
33 362
1 068 084
1 500
14
1 443
57
1 756
1 500
14
1 104
396
18 949
1 400
14
1 252
148
24 705
We arrive at a total NPV for the mines of R 24,7bn. No bidder would pay full NPV for an
operating mine. Given labour issues, country risk etc. a starting bid (used by myself and Neal
when negotiating a purchase price) would be 30% of NPV or R 7,4bn.
We now need to consider the value of the resource in the ground. Using a recent comparable
of South African listed gold companies we have a value per measured and indicated
underground ounce of R98/ounce and for surface material R 60/ounce. This values the
resource in the ground at R 2.9bn.
Finally we need to take into account the value of Sibanye’s 38% shareholding in DRD,
assuming this would be part of the transaction. DRD’s current market cap is R 4,7bn valuing
Sibanye’s stake at R 1,8bn.
If we use the above assumptions and mechanics, the transaction value calculates to around R
12bn or $864m.
Salient Information on the gold operations below:
Driefontein
Ore milled (000 tonne)
Underground
Surface
Total
Yield (g/t)
Underground
Surface
Combined
Gold produced (kilogram)
Underground
Surface
Total
Operating costs (Rand per tonne)
Underground
Surface
Total
Capital expenditure (R'm)
Ore reserve development
Sustaining capex
Major/growth projects
Total capex
Unit revenue/costs
Gold price - R/kg
Gold price - US$/oz
Operating cost - R/kg
Operating cost - US$/oz
All-in sustaining cost - R/kg
All-in sustaining cost - US$/oz
All-in cost - R/kg
All-in cost - US$/oz
Average exchange rate R/US$
2017
2018
2 137
3 905
6 042
1 634
1 509
3 143
6,21
0,45
2,49
5,44
0,50
3,30
13 262
1 742
15 004
8 952
621
9 573
10 219
734
4 098
13 664
878
8 501
876,1
235,0
44,4
1 155,5
817,1
228,1
0,4
1 045,6
535 373,79
1 251,43
0,00
0,00
488 812,25
1 143,10
491 762,50
1 150,30
13,31
537 968,43
1 266,89
626 846,57
1 460,02
746 515,25
1 736,14
746 553,75
1 736,24
13,24
Kloof
Ore milled (000 tonne)
Underground
Surface
Total
Yield (g/t)
Underground
Surface
Combined
Gold produced (kilogram)
Underground
Surface
Total
Operating costs (Rand per tonne)
Underground
Surface
Total
Capital expenditure (R'm)
Ore reserve development
Sustaining capex
Major/growth projects
Total capex
Unit revenue/costs
Gold price - R/kg
Gold price - US$/oz
Operating cost - R/kg
Operating cost - US$/oz
All-in sustaining cost - R/kg
All-in sustaining cost - US$/oz
All-in cost - R/kg
All-in cost - US$/oz
Average exchange rate R/US$
2 177
3 574
5 751
1 821
5 287
7 108
6,81
0,45
2,85
7,11
0,45
2,17
14 826
1 606
16 432
12 940
2 313
15 253
9 376
730
4 003
11 840
759
3 620
876,2
210,2
147,1
1 233,5
839,6
220,5
141,9
1 202,1
536 157
1 253
0
0
431 585
1 009
440 553
1 030
13,31
537 091
1 265
417 908
983
490 870
1 154
500 325
1 177
13,24
Beatrix
Ore milled (000 tonne)
Underground
Surface
Total
Yield (g/t)
Underground
Surface
Combined
Gold produced (kilogram)
Underground
Surface
Total
Operating costs (Rand per tonne)
Underground
Surface
Total
Capital expenditure (R'm)
Ore reserve development
Sustaining capex
Major/growth projects
Total capex
Unit revenue/costs
Gold price - R/kg
Gold price - US$/oz
Operating cost - R/kg
Operating cost - US$/oz
All-in sustaining cost - R/kg
All-in sustaining cost - US$/oz
All-in cost - R/kg
All-in cost - US$/oz
Average exchange rate R/US$
2 737
778
3 515
2 282
670
2 952
3,25
0,29
2,60
3,68
0,36
2,89
8 859
232
9 091
8 291
245
8 536
5 647
566
4 524
6 888
429
5 302
482,0
63,1
0,5
545,6
396,9
82,6
1,7
481,2
536 372
1 254
0
0
502 994
1 176
503 262
1 176
13,31
538 890
1 269
461 245
1 089
524 964
1 240
525 182
1 240
13,24
Cooke
Ore milled (000 tonne)
Underground
Surface
Total
Yield (g/t)
Underground
Surface
Combined
Gold produced (kilogram)
Underground
Surface
Total
Operating costs (Rand per tonne)
Underground
Surface
Total
Capital expenditure (R'm)
Ore reserve development
Sustaining capex
Major/growth projects
Total capex
Unit revenue/costs
Gold price - R/kg
Gold price - US$/oz
Operating cost - R/kg
Operating cost - US$/oz
All-in sustaining cost - R/kg
All-in sustaining cost - US$/oz
All-in cost - R/kg
All-in cost - US$/oz
Average exchange rate R/US$
524
3 198
3 722
79
4 018
4 097
5,03
0,29
0,91
0,80
0,33
0,34
2 338
769
3 107
80
1 314
1 394
14 166
567
2 321
373
682
598
53,7
8,5
11,7
73,9
0,0
0,0
0,0
0,0
540 485
1 263
0
0
677 340
1 583
680 760
1 591
13,31
547 830
1 292
493 180
1 164
487 001
1 159
487 001
1 159
13,24