Neal Froneman
Photo by: Duane Daws
JOHANNESBURG (miningweekly.com) – Mining company Sibanye Gold is forecasting a capital expenditure of R3.9-billion ($250-million) on its gold assets in its 2016 financial year.
Sibanye CEO Neal Froneman told the European Gold Forum in Zurich on Wednesday that capital investment of R1.6-billion ($115-million) had been approved for below ground infrastructure projects at the Kloof and Driefontein gold mines on the West Wits, and R1.7-billion ($120-million) for development of the new Burnstone gold mine on the South Rand.
Declared reserves currently provided a quarter century of operating life for the company’s gold mines, where there was also considerable uranium potential, Froneman added.
Moreover, the company’s surface tailings at the 55-year-old Cooke operation in Randfontein have high uranium reserves of 14.7-million pounds and uranium reserves at the 33-year-old Beatrix mine in the Free State, which last year produced 315 000 oz at all-in sustainable costs (AISC) of $865/oz, total another 11.7-million pounds.
Permitting and detailed engineering work were also continuing on the West Rand Tailings Retreatment Project, the gold forum heard.
The custodian of the world’s ninth biggest gold reserve of 31-million ounces, which ranks third in AISCs after Newcrest and Barrick Gold, expects to produce 1.6-million ounces or 50 000 kg of gold in 2016, at an AISC of $840/oz or R425 000/kg.
Its 64-year-old Driefontein gold mine, which produces at a level of 553 000 oz at an AISC of $780/oz, still has a mine life of 27 years and reserves of 19.8-million ounces of gold.
The 48-year-old Kloof gold mine, which last produced 488 000 oz at an AISC of $825/oz and grade of 15.4 g/t, still has a mine life of 18 years and reserves of 6.5-million ounces.
Bloomberg and INet report that Sibanye’s shares are outperforming those of gold mining companies Barrick, Newmont, Gold Fields, AngloGold Ashanti and Harmony Gold.
Since listing at $10.58 a share in February 2013, Sibanye reports that shareholders have received a total percentage return of 194% from a company that is leveraged to the rand/dollar exchange rate.
With a market capitalisation of R53-billion, Sibanye has a wide geographic shareholder distribution that includes the US at 36%, South Africa at 31% and China at 20%.
Its imminent entry into platinum mining is set to be the next step on its journey of “multi-commodity value creation”, facilitated by mining companies selling mines to cut debt.
“We believe the platinum fundamentals remain positive, robust and sound,” Froneman told the forum.
Sibanye is intent on removing the farm fences that keep Kroondal away from the suite of Rustenburg platinum mines that it is acquiring from Anglo American Platinum.
It foresees operational synergies, direct cost savings and shared service benefits as it consolidates the acquired Rustenburg and Aquarius assets to become a top-five platinum producer with reserves of 15.2-million ounces of platinum, palladium, rhodium and gold, or four element (4E), which is a smidgen ahead of where calculations from company documents position Northam’s 15.1-million 4E reserves.
Sibanye falls into sixth position globally when it comes to resources, but jumps back into fifth place on potential production of 1.1-million ounces of 4E a year, 0.7-million ounces of which will be platinum.