Sibanye Stillwater's Q2 2025: Contradictions Emerge on South African Gold Production, Capital Allocation, and Uranium Strategy

The above is the analysis of the conflicting points in this earnings call

Date of Call: August 28, 2025

Financials Results

• Revenue: ZAR 54.8B, down 1% YOY
• EPS: ZAR 1.90 headline EPS, up from ZAR 0.10 prior year (19x)

Guidance:

• SA Gold FY25 production revised to 15–16 tonnes; AISC ZAR 1.45–1.55M/kg; Kloof under review.
• SA PGMs: guidance unchanged; positive H2 with inventory release and stronger basket prices.
• U.S. PGMs: multi-year plan to reduce costs to <$1,000/2E oz in 2–3 years; 45X cash inflows expected in 2026 from 2023–24 filings; trade case prelim duties in 3–5 months.
• Keliber: construction completion targeted H1 2026; 2025 capex guidance EUR 300M; evaluating phased/slow ramp to minimize losses.
• Dividend: no interim; board to reassess at year-end—management expects to be back in dividend-paying territory if prices hold.
• Debt: plan to refinance 2026 notes with ~US$500M issuance in H1 2026; focus on reducing gross debt.

Business Commentary:

* Operational and Financial Turnaround: - Sibanye Stillwater reported a significant improvement in adjusted EBITDA, which increased by 51% year-on-year to ZAR 10 billion. - This turnaround was driven by increased basket prices and reduced costs following restructuring efforts.

• Sustainability and Energy Initiatives:
• The company's renewable energy initiatives have contributed to significant cost savings, with Castle wind farm already reducing energy costs by ZAR 21.6 million.

• These initiatives are part of the broader strategy to reduce emissions and lower operational costs.

• Strategic Positioning in Critical Minerals:

• Sibanye Stillwater is positioned in ecosystems to deliver into long-strengthening markets, with a focus on lithium and PGMs.

• This strategy is supported by investments in critical projects like Keliber and the Section 45x credits, which are expected to contribute significantly to the company's value.

• Gold Operations and Strategic Realignment:

• The gold operations, despite operational challenges, remain strategic to the company's portfolio, contributing 48% to group adjusted EBITDA in Q2.

• The company is reassessing the Kloof operations to optimize long-term sustainability and commercial viability.

• Technological Advancements and Cost Reduction:

• The Montana PGM operations have seen a 41% decrease in all-in sustaining costs compared to pre-restructuring levels.
• Investments in technology like the electric furnace commissioning and debottlenecking efforts are aimed at further lowering operating costs and enhancing efficiency.

Sentiment Analysis:

• Management reported adjusted EBITDA up 120% YOY (60% normalized), net debt/EBITDA at 0.89x, most assets within guidance, and an “extremely positive” H2 outlook. They expect to re-enter dividend-paying territory by year-end if prices hold, and anticipate 45X cash in 2026. Offsets: SA gold guidance cut and noncash impairments led to a reported loss.

Q&A:

• Question from Arnold Van Graan (Nedbank): Have SA gold ops stabilized, and what is the 2–3 year production/CapEx outlook?
  Response: Beatrix and Driefontein have stabilized; Kloof likely halves due to seismicity and constraints; expect ~475–480koz/yr from underground; sustaining capex ~ZAR 3.5B p.a. unchanged.

• Question from René Hochreiter (Unspecified): How will Stillwater reduce costs below $1,000/oz?
  Response: No silver bullet—mechanize bolting, increase sublevel extraction, debottleneck ore handling/tailings, and optimize mine cycles; trajectory over 2–3 years.

• Question from Lorenzo Parisi (JPMorgan): Confidence in ~$285M 45X cash next year, future credits, capex and FCF outlook?
  Response: 45X is legislated; submissions in H2; cash expected in 2026; more credits accrue beyond; capex guidance to come; positive cash flow timing depends on prices and ongoing cost reductions.

• Question from Nkateko Mathonsi (Unspecified): Life-of-mine for Bathopele and tailings capacity; plans for surface ops?
  Response: Bathopele has ~4–5 years; surface reserves ~2 years with larger surface resource strategy in progress; ample tailings capacity for current LoM.

• Question from ING Bank (Unspecified): What does a ‘responsible’ Keliber start mean—mine or refinery?
  Response: Keliber is integrated; given low prices, start-up may be phased/slower to avoid losses while exploring supportive revenue options.

• Question from Alexandra Symeonidi (William Blair): Expected Keliber production cost and cost-curve position?
  Response: About $12,000–$12,500/t currently, placing it in the fourth quartile today; expected to be more competitive on the future cost curve.

• Question from Adrian Spencer Hammond (SBG Securities): Why change FCF definition, and how much deferred revenue is in EBITDA and net debt/EBITDA?
  Response: Definition aligned cash inflow/outflow matching; ~ZAR 1B deferred revenue in H1 EBITDA; net debt and EBITDA both reflect deferred revenue for consistency.

• Question from Christopher Nicholson (Morgan Stanley): 45X cash vs tax offset; recycling entitlement; and PGM processing if Valterra toll ends?
  Response: Early years are cash; later transferable credits monetizable at ~90–95%; recycling customers can’t claim 45X; Rustenburg/Kroondal can be processed in-house if needed.

• Question from Dmitriy Dyachenko (Investment Capital Ukraine): What drives the Burnstone restart decision—price or geology?
  Response: Project is technically sound; decision hinges on capital allocation, funding options, and near-term cash profile rather than geology or gold price.

• Question from Siphelele Mdudu (Matrix Fund Managers): Will H2 inventory releases pressure PGM prices?
  Response: No; releases are limited and gradual—recent price strength is mainly investment demand and China buying, while primary supply trends are declining.

• Question from Lorenzo Parisi (JPMorgan): Will you call the 2028 convertible soon?
  Response: No; it’s not callable before December 19, 2026 despite trading in the money.

• Question from Robert Sennott (Seaver Hill Capital): Why not add silver for diversification?
  Response: The group already has meaningful silver exposure via recycling (≈2Moz/year), with diversification pursued primarily through the recycling platform.