Sibanye-Stillwater Limited — FY2020 Form 20-F
Reporting period: Year ended 31 December 2020; filed 22 April 2021. This is an annual report, not a standalone Q4 filing. Financial statements are audited, prepared under IFRS, and presented primarily in South African rand (R). Comparative information reflects the group before and after its February 2020 reorganisation under Sibanye-Stillwater Limited.
Business context and financial performance
Sibanye-Stillwater is a global precious-metals miner with South African gold and PGM operations, US PGM mines and recycling, and interests in other projects. FY2020 combined pandemic-related operating disruption, especially in South Africa, with sharply higher precious-metal prices and a weaker rand. Management described the year as a record financial performance and said the focus had shifted from deleveraging to capital allocation.
| Metric | FY2020 | FY2019 | Change / context |
|---|---|---|---|
| Revenue | R127.4bn (US$7.7bn) | R72.9bn | Up 75%; higher metal prices and sales quantities |
| Profit for the year | R30.6bn | R0.4bn | Owners’ profit: R29.3bn versus R0.1bn |
| Adjusted EBITDA | R49.4bn (US$3.0bn) | R15.0bn | Up 230%; non-IFRS measure |
| Adjusted EBITDA margin | 38.8% | 20.5% | Adjusted EBITDA divided by revenue |
| Net cash from operating activities | R27.1bn | R9.5bn | Strongly higher operating cash generation |
| Adjusted free cash flow | R19.9bn | R0.3bn | Management-defined, non-IFRS measure |
| Capital expenditure | R9.6bn | R7.7bn | Includes sustaining and growth investment |
| Cash and cash equivalents | R20.2bn | R5.6bn | Balance-sheet amount at year-end |
| Recourse borrowings, excluding Burnstone | R17.1bn | R26.6bn | Gross debt reduced; definition differs from total IFRS borrowings |
| Net cash / (debt), management definition | R3.1bn net cash | R21.0bn net debt | Net cash-to-adjusted-EBITDA ratio: (0.06)x versus 1.4x |
| Dividends declared for FY2020 | R10.7bn; 371 cents/share | None | Reported as 35% of normalised earnings |
Total IFRS borrowings were R18.4bn, including Burnstone debt; the group separately reported recourse borrowings of R17.1bn for its net-cash calculation. Year-end current assets exceeded current liabilities by R34.8bn. Undrawn committed facilities were R7.3bn, in addition to R20.2bn cash. The group reported no off-balance-sheet arrangements.
Operations, prices and costs
- SA PGMs: 1.577Moz of attributable 4E production, down 2%; the average basket price rose 83% to R36,651/4Eoz. Adjusted EBITDA was R29.1bn and margin 53%. AISC rose 23% to R18,280/4Eoz.
- US PGMs: Mined production was 603koz 2E, up 2%; recycling output was 840koz 3E, down 2%. The average 2E basket price rose 36% to US$1,906/oz. Adjusted EBITDA was R13.1bn; AISC increased 11% to US$874/2Eoz.
- SA gold: Production including DRDGOLD was 982.6koz; managed SA gold production excluding DRDGOLD was 809.9koz, up 8%. The average rand gold price rose 43% to R924,764/kg. SA gold adjusted EBITDA, including DRDGOLD, was R7.8bn; managed operations’ AISC increased 4% to R743,967/kg.
- Costs: Cost of sales before amortisation and depreciation rose 35% to R75.8bn, below the 75% revenue increase. Reported reasons include a full year of Marikana, higher sales volumes, higher recycling costs and royalties, and increased metal prices.
Material changes versus FY2019
- Revenue and adjusted EBITDA increased substantially, reflecting higher gold and PGM prices, currency movements and improved operating performance relative to the disrupted 2019 gold period.
- Net debt of R21.0bn turned into net cash of R3.1bn. The R383m remaining US$ convertible bond was converted into shares in October 2020, reducing debt while diluting shareholders; 248.0m shares were issued.
- Profit included significant non-recurring and valuation items: a R1.5bn loss on settlement of the convertible bond, R0.4bn restructuring costs, a R0.2bn loss on early settlement of the BTT arrangement, a R0.6bn legal-dispute settlement income, and a R0.1bn impairment reversal. The tax charge also reflected recognition/utilisation of previously unrecognised deferred tax assets, principally related to Marikana.
- Marikana was included for a full year in 2020 versus seven months in 2019. Management reported annualised Marikana integration synergies of approximately R1.83bn by year-end, above its initial estimate of about R0.73bn.
Guidance, outlook, risks and contingencies
2021 guidance: US PGM mined production 670–680koz 2E, AISC US$840–860/oz; recycling 790–810koz 3E. SA PGM production 1.75–1.85Moz 4E, AISC R18,500–19,500/4Eoz. Managed SA gold production 27,500–29,500kg, AISC R760,000–815,000/kg. Guidance excludes unplanned events, including COVID-19 disruptions, and uses stated price, tax and exchange-rate assumptions.
Longer-term plans: Management expected Stillwater East (Blitz) to reach a steady-state rate of approximately 300koz 2E annually in 2024, after a delay of up to two years, with about US$375m of remaining project capital. The group forecast US PGM AISC of about US$750/oz at steady state. In February 2021, the Board approved the K4 and Klipfontein PGM projects and Burnstone gold project, with approximately R6.3bn of project capital and management-estimated potential to create or sustain about 7,000 jobs. A 30% investment in Finland’s Keliber lithium project was announced after year-end for €30m, with an option to increase the stake.
- Principal risks: South African social unrest and community instability; unreliable and costly electricity; production or cost shortfalls; metal-price and rand volatility; fatality and serious-injury risks; regulatory change; cybersecurity; competition and limited access to capital. COVID-19 remains a risk to labour availability, productivity and supply chains.
- Contingencies: A contractor, Redpath USA, was pursuing an approximately US$20m arbitration claim concerning additional and rework costs at the Stillwater decline; management considered the claim without merit. The silicosis settlement trust was established under a R5bn industry settlement; Sibanye-Stillwater had provided R1.195bn for its share. The 2020 US securities class action and Stillwater appraisal litigation were dismissed or terminated.
- Unusual operational and environmental matters: Nine fatalities occurred at South African operations (five PGM and four gold); US PGM operations had remained fatality-free since 2011. The group recorded five Level 3 environmental incidents and no Level 4 or 5 incidents. The South African carbon-neutrality target is 2040.
- Controls and audit: EY issued an unqualified opinion on the financial statements and internal control over financial reporting as of 31 December 2020. Management said a material weakness identified at year-end 2019 concerning timely recording of foreign-currency cash receipts was remediated. The audit highlighted impairment testing and measurement of Marikana PGM-in-process inventory as critical audit matters.
Most important facts for investors to verify
- Reconcile the R3.1bn management-defined net cash position with total IFRS borrowings, Burnstone debt, restricted cash and the group’s facility availability and maturities.
- Review the quality and repeatability of FY2020 earnings and cash flow, including price sensitivity, working-capital movements, deferred revenue, tax benefits and the non-IFRS reconciliations.
- Test 2021 production and cost guidance against COVID-19, labour availability, power supply, commodity prices, exchange rates and sustaining capital needs.
- Assess the assumptions, remaining capital, schedule and returns for Stillwater East, K4, Klipfontein, Burnstone and Keliber, including the post-year-end approval and investment terms.
- Monitor safety performance and fatality prevention, South African regulatory and community risks, the Redpath arbitration, environmental obligations and the status of the Marikana occupational-health settlement.