Sibanye Gold Surges Most in Two Months as Output Climbs 36%

Sibanye Gold Ltd. (SGL) rose the most in two months in Johannesburg after South Africa’s second-biggest producer of the metal said first-quarter output rose 36 percent as its mines had fewer halts than in the previous three months.

The stock rallied as much as 7.5 percent, the most on an intraday basis since March 7, and traded 2.6 percent higher at 8.40 rand by 9:19 a.m. in Johannesburg.

Production climbed to 299,400 ounces in the three months through March, the Westonaria-based company said in a statement. Sibanye expects earnings per share to be at least 98 cents in the first half through June, based on the stock in issue now, and 1.27 rand using the weighted average number of shares in the period, it said.

Sibanye was spun off from Gold Fields Ltd. (GFI) in February and comprises the Kloof-Driefontein complex, Africa’s largest gold operation, and the Beatrix mines. About 29,000 workers walked out at the mines in the previous quarter, then won pay gains that added to rising power costs and capital spending. Output was also curbed last year by a deadly blaze at the Ya Rona shaft.

“Kloof and Driefontein, which will in future be separately reported, continued to improve through the quarter, with Driefontein in particular recovering strongly from the strikes and fire at its Ya Rona shaft in 2012,” Chief Executive Officer Neal Froneman said.

Sibanye is concerned about high costs at its fire-stricken Beatrix West operation. South Africa’s ruling African National Congress criticized Sibanye after the company said it may cut 3,000 jobs at the operation. Talks with labor on the cuts should be concluded by June, Froneman said on a conference call today.

Wage Talks

The National Union of Mineworkers, an ally of the ANC, last month said it will ask for a double-digit increase in pay when negotiating with the Chamber of Mines’ members.

“Employees do not have an appetite for strikes,” Froneman said. “Double-digit increases are not going to happen.”

While the company is prepared for strikes to last three months, this isn’t expected, he said.

Sibanye, which is reviewing costs at all businesses, expects to produce 1.29 million ounces this year. The company forecasts production will rise 14 percent to 340,000 ounces in the second quarter through June, while total cash costs will decline 5 percent to $975 an ounce. While a current debt facility precludes it from paying interim dividends, Sibanye is in talks with banks about a payout after wage talks, it said.

AngloGold Ashanti Ltd. (ANG) is South Africa’s largest producer of the metal.

To contact the reporter on this story: Paul Burkhardt in Johannesburg at pburkhardt@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net

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