Denver Gold Show September 2014
Delivering Sustainable Value
Disclaimer
Certain statements included in this presentation, as well as oral statements that may be made by Sibanye Gold, or by officers, directors or employees acting on their behalf related to the subject matter hereof, constitute or are based on forward-looking statements. Forward-looking statements are preceded by, followed by or include the words “may”, “will”, “should”, “expect”, “envisage”, “intend”, “plan”, “project”, “estimate”, “anticipate”, “believe”, “hope”, “can”, “is designed to” or similar phrases. These forward looking statements involve a number of known and unknown risks, uncertainties and other factors, many of which are difficult to predict and generally beyond the control of Sibanye Gold, that could cause Sibanye Gold‘s actual results and outcomes to be materially different from historical results or from any future results expressed or implied by such forward-looking statements. Such risks, uncertainties and other factors include, among others, Sibanye Gold’s operations, Sibanye Gold’s ability to implement its strategy and any changes thereto, Sibanye Gold’s future financial position and plans, strategies, objectives, capital expenditures, projected costs and anticipated cost savings and financing plans, as well as projected level of gold price and other risks. Sibanye Gold undertakes no obligation to update publicly or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this presentation or to reflect any change in Sibanye Gold’s expectations with regard thereto.
In accordance with the requirements imposed by the JSE, Sibanye Gold reports its reserves using the terms and definitions of the SAMREC Code (2007 edition). There are differences between the SAMREC Code and the Security and Exchange Commission’s Industry Guide 7. Mineral or ore reserves, as defined under the SAMREC Code, are divided into categories of proved and probable reserves and are expressed in terms of tonnes to be processed at mill feed head grades, allowing for estimated mining dilution, recovery and other factors.
2
What differentiates Sibanye Gold • Significant free cash generation
• Committed and delivering on a benchmark dividend strategy
• South African focused
• Proactively addressing stakeholder issues to ensure success and sustainability
3 Uniquely positioned in the industry
20%
32%
37%
2% 2% 8%
ChinaSouth AfricaUSALuxembourgUnited KingdomOthers
* Source: J.P.Morgan Cazenove 29 August 2014
Corporate information
4
Major Sibanye Gold shareholders *
Gold One Limited 19.81%
Allan Gray Investment Council 10.58%
Public Investment Corporation 7.83%
Shares in Issue ADRs in issue
898 585 354 229 155 629
Market Cap R22.2 billion (US$2.1 billion)
Listings • JSE Limited share code: SGL • New York Stock Exchange ADR
programme share code: SBGL
Debt* R1.8 billion (US$167 million) of R4.5 billion facility
Contact details Libanon Business Park 1 Hospital Road (off Cedar Avenue) Libanon, Westonaria, 1779 South Africa
Neal Froneman CEO
Tel: +27 11 278 9600 e-mail: [email protected]
James Wellsted Investor Relations
Tel: +27 11 278 9656 e-mail: [email protected]
Shareholder geographic distribution*
* Source: J.P.Morgan Cazenove 29 August 2014 * At 30 June 2014
South African focused
5 Concentrated and focused in the world class Witwatersrand goldfields
Gold Reserves
32.7 Moz
Uranium Reserves
102.83 Mlbs
Cooke acquisition
• Regional synergies - operational/infrastructure • Approximate five-year average annual production
of 250koz of gold and 500-570klbs of uranium • Unlocks 4Mozs gold and 43Mlb uranium from
Sibanye Gold TSFs – (WRTRP - 7Moz gold and 98Mlb uranium)
Wits Gold acquisition
• Secures key resources adjacent to Beatrix, which will extend Beatrix’s LoM
• Operational/infrastructure synergies enhance the value of Wits Gold’s advanced Southern Free State projects
• Beisa North and South provide critical mass to the Beisa uranium Section
• Burnstone provides a low cost growth option
6
Recent logical, value accretive acquisitions
Sibanye
Enhancing LoM, optimising asset utilisation and increasing ROIC
-
200 000
400 000
600 000
800 000
1 000 000
1 200 000
1 400 000
1 600 000
1 800 000
2 000 000
Ann
ual G
old
Prod
uctio
n (o
z)
SV4
Bloemhoek
Beisa
De Bron
Kloof drop down
Burnstone
WRTRP
Randfontein surface
Beatrix surface
Kloof surface
Driefontein surface
Cooke 4
Cooke 1-3
Beatrix u/g
Kloof u/g
Driefontein u/g
Underground reserves in LOM
Surface reserves in LOM
Feasibility study being undertaken or reviewed
Pre-feasibility study being undertaken or reviewed
(Phase 2)
Gold production profile
Project conversion required to sustain production profile 7
*Project profile is conceptual and subject to change on completion of detailed studies Assumptions: Gold price: 430,000 R/kg, Uranium 65 US$/lb and 10.50 ZAR:1US$ (real 2014 terms)
Global production ranking
8
0
1000
2000
3000
4000
5000
6000
Barri
ck
New
mon
t
Ang
loG
old
Kinr
oss
Gol
d C
orp
New
cres
t
Gol
d F
ield
s
Sib
any
e
Agn
ico-
Eagl
e
Yam
ana
Ha
rmon
y
Afri
can
Barri
ck
Ann
ual G
old
Prod
uctio
n (0
00oz
)
A top ten global gold producer
-
200 000
400 000
600 000
800 000
1 000 000
1 200 000
1 400 000
1 600 000
1 800 000
Ann
ual U
rani
um P
rodu
ctio
n (lb
)
Beisa
WRTRP
Cooke 4
Cooke 1-3
Feasibility study being undertaken or reviewed
Pre-feasibility study being undertaken or reviewed
Underground reserves
A substantial uranium business
Uranium production profile
9
*Project profile is conceptual and subject to change on completion of detailed studies Assumptions: Gold price: 430,000 R/kg, Uranium 65 US$/lb and 10.50 ZAR:1US$ (real 2014 terms)
Significant Free Cash Generation
Significant free cash generation H1 2014 FY2013 H1-14/FY13
Production ‘000oz 712 1,430 49.8%
Total cash cost US$/oz 848 885 (4.2)%
All-in cost US$/oz 1,017 1,148 (11.4)%
EBITDA/Operating profit US$m 327 767 42.6%
Cash generated by operations
US$m 364 775 47%
Dividend US$m ~42 79 53.2%
Net Debt US$m 58 48 120.8%
Net debt/EBITDA Mulitiple 0.09 0.06 150%
Gold Reserves Moz 32.70 19.73 166%
Uranium Reserves Mlbs 102.83 43.16 238%
11 Solid operating and financial metrics
Rand gold price relatively stable – a natural hedge
Weakening ZAR provides revenue protection
12
Source: Inet: 13 September 2014
0.65
0.70
0.75
0.80
0.85
0.90
0.95
1.00
1.05
1.10
Jan2013
Feb2013
Mar2013
Apr2013
May2013
Jun2013
Jul2013
Aug2013
Sep2013
Oct2013
Nov2013
Dec2013
Jan2014
Feb2014
Mar2014
Apr2014
May2014
Jun2014
Jul2014
Aug2014
Sep2014
Rela
tive
Gol
d Pr
ice
Perfo
rman
ce
Gold (US$/oz) Gold (R/oz)
Substantially outperforming our peers, the gold price and the indices
Sibanye relative share price performance
13
Source: Bloomberg: 1 September 2014
-20
0
20
40
60
80
100
120
140
160
Jan 2014 Feb 2014 Mar 2014 Apr 2014 May 2014 Jun 2014 Jul 2014 Aug 2014 Sep 2014
Sibanye Gold JSE All Share JSE Gold Index Gold $/oz Gold R/kg
Peer benchmarking
Source: Bloomberg consensus forecasts 9 September 2014
14
0.0
100.0
200.0
300.0
400.0
500.0
600.0
US$/
oz
EV/Reserve oz
0.0
1.0
2.0
3.0
4.0
5.0
%
Dividend Yield
-10.0
0.0
10.0
20.0
30.0
40.0
X
P/E ratio
0.0
10.0
20.0
30.0
40.0
50.0
60.0
%
Net debt/Market Capitalisation
Still offering significant relative value
Delivering on a Benchmark Dividend Yield
Dividends underpin the strategy
• Regular, consistent dividends are a key strategic imperative and differentiator
• Sibanye will strive to maintain a benchmark dividend in the mining sector
• Organic project development and acquisitions will be directed by the ability to sustain or enhance the dividend strategy
• Projects and acquisitions will be funded from cash flow after dividends or alternative funding options will be considered where appropriate
16 Ability to maintain superior dividends defines who we are
Production profile – reserves only
17
-
200 000
400 000
600 000
800 000
1 000 000
1 200 000
1 400 000
1 600 000
1 800 000
2 000 000
Estim
ated
Ann
ual G
old
Prod
uctio
n (o
z)
Randfontein surface
Beatrix surface
Kloof surface
Driefontein surface
Cooke 4
Cooke 1-3
Beatrix u/g
Kloof u/g
Driefontein u/g
Project conversion required to sustain production profile
Underground reserves in LOM
Surface reserves in LOM
*Project profile is conceptual and subject to change on completion of detailed studies Assumptions: Gold price: 430,000 R/kg, Uranium 65 US$/lb and 10.50 ZAR:1US$ (real 2014 terms)
Production profile – including feasibility studies
18
-
200 000
400 000
600 000
800 000
1 000 000
1 200 000
1 400 000
1 600 000
1 800 000
2 000 000
Estim
ated
Ann
ual G
old
Prod
uctio
n (o
z)
De Bron
Kloof drop down
Burnstone
WRTRP
Randfontein surface
Beatrix surface
Kloof surface
Driefontein surface
Cooke 4
Cooke 1-3
Beatrix u/g
Kloof u/g
Driefontein u/g
Project conversion required to sustain production profile
Feasibility study being undertaken or reviewed
Underground reserves in LOM
Surface reserves in LOM
(Phase 2)
*Project profile is conceptual and subject to change on completion of detailed studies Assumptions: Gold price: 430,000 R/kg, Uranium 65 US$/lb and 10.50 ZAR:1US$ (real 2014 terms)
Production profile – including pre-feasibility studies
19
-
200 000
400 000
600 000
800 000
1 000 000
1 200 000
1 400 000
1 600 000
1 800 000
2 000 000
Estim
ated
Ann
ual G
old
Prod
uctio
n (o
z)
SV4
Bloemhoek
Beisa
De Bron
Kloof drop down
Burnstone
WRTRP
Randfontein surface
Beatrix surface
Kloof surface
Driefontein surface
Cooke 4
Cooke 1-3
Beatrix u/g
Kloof u/g
Driefontein u/g
Project conversion required to sustain production profile
Underground reserves in LOM
Surface reserves in LOM
Feasibility study being undertaken or reviewed
Pre-feasibility study being undertaken or reviewed
(Phase 2)
*Project profile is conceptual and subject to change on completion of detailed studies Assumptions: Gold price: 430,000 R/kg, Uranium 65 US$/lb and 10.50 ZAR:1US$ (real 2014 terms)
Capital profile – reserves only
20 Stable capital cost per ounce produced
-
50
100
150
200
250
300
350
400
450
500
-
500 000
1 000 000
1 500 000
2 000 000
2 500 000
3 000 000
3 500 000
4 000 000
4 500 000
5 000 000
US$/oz
Estim
ated
Cap
ital C
ost (
R000
)
SV4
Bloemhoek
Beisa
De Bron
Kloof drop down
Burnstone
WRTRP
Randfontein surface
Beatrix surface
Kloof surface
Driefontein surface
Cooke 4
Cooke 1-3
Beatrix u/g
Kloof u/g
Driefontein u/g
US$/oz
Underground reserves in LOM
Surface reserves in LOM
*Project profile is conceptual and subject to change on completion of detailed studies Assumptions: Gold price: 430,000 R/kg, Uranium 65 US$/lb and 10.50 ZAR:1US$ (real 2014 terms)
Estimated capital profile – including feasibility studies
21 Stable capital cost per ounce produced
-
50
100
150
200
250
300
350
400
450
500
-
500 000
1 000 000
1 500 000
2 000 000
2 500 000
3 000 000
3 500 000
4 000 000
4 500 000
5 000 000
US$/oz
Estim
ated
Cap
ital C
ost (
R000
)
SV4
Bloemhoek
Beisa
De Bron
Kloof drop down
Burnstone
WRTRP
Randfontein surface
Beatrix surface
Kloof surface
Driefontein surface
Cooke 4
Cooke 1-3
Beatrix u/g
Kloof u/g
Driefontein u/g
US$/oz
Feasibility
Underground reserves in LOM
Surface reserves in LOM
(Phase 2)
*Project profile is conceptual and subject to change on completion of detailed studies Assumptions: Gold price: 430,000 R/kg, Uranium 65 US$/lb and 10.50 ZAR:1US$ (real 2014 terms)
Estimated capital profile – including pre-feasibility studies
22 Stable capital cost per ounce produced
-
50
100
150
200
250
300
350
400
450
500
-
500 000
1 000 000
1 500 000
2 000 000
2 500 000
3 000 000
3 500 000
4 000 000
4 500 000
5 000 000
US$/oz
Estim
ated
Cap
ital C
ost (
R000
)
SV4
Bloemhoek
Beisa
De Bron
Kloof drop down
Burnstone
WRTRP
Randfontein surface
Beatrix surface
Kloof surface
Driefontein surface
Cooke 4
Cooke 1-3
Beatrix u/g
Kloof u/g
Driefontein u/g
US$/oz
Underground reserves in LOM
Surface reserves in LOM
(Phase 2)
Pre-feasibility study being undertaken or reviewed
Feasibility study being undertaken or reviewed
*Project profile is conceptual and subject to change on completion of detailed studies Assumptions: Gold price: 430,000 R/kg, Uranium 65 US$/lb and 10.50 ZAR:1US$ (real 2014 terms)
-
50
100
150
200
250
300
350
400
450
500
-
500 000
1 000 000
1 500 000
2 000 000
2 500 000
3 000 000
3 500 000
4 000 000
4 500 000
5 000 000
US$/oz
Estim
ated
Cap
ital C
ost (
R000
)
SV4
Bloemhoek
Beisa
De Bron
Kloof drop down
Burnstone
WRTRP
Randfontein surface
Beatrix surface
Kloof surface
Driefontein surface
Cooke 4
Cooke 1-3
Beatrix u/g
Kloof u/g
Driefontein u/g
US$/oz
Estimated US$/oz capital profile
23 Stable capital cost per ounce produced
US$/oz
Underground reserves in LOM
Surface reserves in LOM
Capital cost US$/oz
(Phase 2)
Pre-feasibility study being undertaken or reviewed
Feasibility study being undertaken or reviewed
*Project profile is conceptual and subject to change on completion of detailed studies Assumptions: Gold price: 430,000 R/kg, Uranium 65 US$/lb and 10.50 ZAR:1US$ (real 2014 terms)
Estimated operating cash cost profile (US$/oz)*
24 Stable cost profile – sustained operational profitability
*Unit cash costs assuming all projects are progressed, ZAR10.50:US$1
400
500
600
700
800
900
1 000
1 100
1 200
Cas
h C
ost (
US$/
oz)
Estimated total cost profile (US$/oz)*
25 Total cost below current spot gold prices for foreseeable future
*Unit costs assuming all projects are progressed, real model, ZAR10.50:US$1 *Includes direct operational/project costs, excludes corporate, financing and other costs
-
200
400
600
800
1 000
1 200
1 400
US$/
oz
Total Capital Costs(US$/oz)
Total OperatingCash Costs (US$/oz)
Spot Gold Price(US$/oz)(2014/09/15)
Dividend sustainability model
26
-
1 000 000
2 000 000
3 000 000
4 000 000
5 000 000
6 000 000
Estim
ated
Fre
e C
ash
Flow
afte
r Cap
ital a
nd Ta
x (R
000)
Reserves only
Total including all projects
2013 Dividend escalatedby 17%2013 dividend escalated to account for extra shares in issue
Able to fund value accretive pipeline without risking dividend
*For illustrative purposes assuming all projects are implemented Includes direct operational/project costs, excludes corporate, financing and other costs Gold price: 430,000 R/kg, Uranium 65 US$/lb and 10.50 ZAR:1US$ (real)
Addressing Stakeholder Issues
Sibanye vision statement
SUPERIOR VALUE CREATION FOR ALL OUR STAKEHOLDERS
28
through a culture of caring
Sibanye values: we CARE about
• Safe production
• Our stakeholders
• Our environment
• Our company
• Our future
29 CARE underpins the way we do business and interact with each other
Implementing the CARE culture
• We are actively addressing the issues impacting on our employees:
• migrant labour – explored through alternative shift arrangements and bus in and bus out concepts
• sustainable employment – investment in projects and growth
• indebtedness – personal financial education and debt consolidation - “Care for Imali” programme started
• housing/home ownership – hostel conversions, house builds, home ownership programme
• unrealistic wage demands, standards of living and company allignment – aligning and rewarding employees in line with investors and management – gain share and profit share schemes
• community unrest – direct interaction with the communities bypassing incompetent muncipalities
30 Continuious communication, transformation, education and training
Platinum
Platinum rationale
• External factors have created the potential for value accretive platinum opportunities
• About leveraging our operating model and capabilities to enhance stakeholder value, rather than commodity or risk diversification
• The platinum industry shares many similarities to the gold industry facilitating skills leverage
• medium depth, tabular, hard rock mining • predominantly labour intensive, conventional mining methods • Socio-economic climate with which we are familiar
• Consensus long term PGM price forecasts remain attractive but will not be the basis of determining acqusition value
32 Leveraging our skills and knowledge base to create value for all stakeholders
Platinum review and current status
• Potential acquisitions are carefully assessed and will have to meet all internal investment criteria:
• must support the dividend strategy • must be cash flow enhancing at current commodity prices
• A number of platinum opportunities have been pursued and several abandoned as they did not meet Sibanye’s investment criteria
• A few remaining opportunities will still be evaluated, but processes are likely to continue well into 2015
• An entry into the platinum industry remains potentially value enhancing, but is not a strategic necessity
33 Entry into platinum sector must support the dividend strategy
Conclusion
1. Sibanye’s cash generative gold assets are high quality and fundamental to its strategic intent to sustain its dividend profile
2. Existing organic projects are able to sustain the current production profile without compromising Sibanye’s dividend strategy
3. Acquisitions will only be considered if they are earnings enhancing on an EPS basis
4. At the appropriate acqusition price platinum platinum assets could provide a value creative opportunity to leverage Sibanye’s operating model and proven mining capability
34 Sibanye’s strategy is driven by its ability to maintain superior dividends
Questions