February 7, 2019 / 9:04 AM / in 9 months

S.Africa's Sibanye-Stillwater expects 2019 EBITDA to double, eyes gold acquisitions

CAPE TOWN (Reuters) - Sibanye-Stillwater, whose workers have downed tools at its bullion operations, said on Wednesday it expects its EBITDA to double in 2019 paving the way for dividends and acquisitions in it’s gold business.

Miner works deep underground at Sibanye Gold's Masimthembe shaft in Westonaria, South Africa, April 3, 2017. REUTERS/Mike Hutchings/File Photo

Precious metals producer Sibanye, which has flagged that its 2018 bullion production would miss guidance due to the strike, expects earnings before interest, tax, depreciation and amortization (EBITDA) to double this year compared with 2018.

Sibanye said it will begin looking in North America, where it already has its platinum group metals operations, for acquisitions in the gold sector once it has improved its balance sheet.

“We see our balance sheet improving within a year. Which would be a sign we can start thinking differently in other words returning cash back to shareholders through dividends, looking at growth opportunities,” Froneman said.

“In 18 months to two years we should probably be in a position to start looking,” he said. “2018 was a really disruptive year, a very tough year and commodity prices only really started moving towards the second half.”

The miner said it expected 2018 production to come in at 1.1 million ounces compared with a guidance of between 1.13 million ounces and 1.16 million ounces, despite plans being implemented to curb losses.

Members of the Association of Mineworkers and Construction Union (AMCU) at Sibanye’s gold operations have been on strike over wages since mid-November, denting gold output.

AMCU president Joseph Mathunjwa said his union could intensify the strike at Sibanye where it has majority representation.

AMCU called the strike after wage talks with Sibanye broke down. Five people have since been killed in strike-related violence, and the dispute has hit Sibanye’s production. Sibanye said it expects to miss its 2018 bullion forecast.

Gold producers in Africa’s most industrialised economy have argued that above inflation wage hikes have added to the cost burden of the bullion industry, which has been hit by depressed prices and labour unrest.

On their part, the unions have demanded what they describe as a living wage for its members.

Editing by James Macharia

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