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Sibanye Closes Shafts to Curb South African Gold Losses

Sibanye Closes Shafts to Curb South African Gold Losses

(Bloomberg) -- Sibanye Gold Ltd. has finalized plans announced in February to restructure its South African gold mines that will include closing unprofitable shafts and cutting about 3,450 jobs.

  • The company also issued its first gold-production forecast for the second half of this year -- at 514,000 to 546,000 ounces -- after restarting the operations following a five-month strike. Normalized production levels will be reached early in the third quarter.

Key Insights

  • Sibanye’s gold and platinum-group-metal businesses have been heading in opposite directions, as PGM operations benefited from rising prices, while the gold mines -- like others in South Africa -- struggled with high costs even before the recent wage strike.
  • The restructuring plan, which was includes closing the Driefontein 6 and 7 shafts and Beatrix 2 plant and putting two other shafts on care and maintenance, will reinforce Sibanye’s shift toward PGM production. The company has become the world’s biggest platinum miner after securing shareholder approval to buy Lonmin Plc. It’s also preparing for platinum-wage negotiations this year in South Africa.
  • Sibanye also issued forecasts for expenses this year. In the second half, so-called all-in sustaining costs are seen at $1,350 to $1,450 per ounce, above the current spot gold price. The figures will be temporarily inflated by higher than normal capital spending and restructuring expenses, the company said.

Market Reaction

  • Sibanye pared gains to trade 0.8% higher at 12:08 p.m. in Johannesburg. The FTSE/JSE Africa Mining Index rose 1.8%.

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  • The company has reduced the number of jobs it’s cutting as part of efforts to reduce gold-mining losses, after saying in February that 5,870 of employees and 800 contractors could be affected. Early retirement, voluntary exits and natural attrition mean that only about 800 employees and 550 contractors were fired.
  • Statement here
  • Details here

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To contact the reporter on this story: Liezel Hill in Johannesburg at lhill30@bloomberg.net

To contact the editors responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net, Nicholas Larkin, Dylan Griffiths

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