Sibanye Considers Special Dividend as Profit and Production Rise

Sibanye Gold Ltd. (SGL), the South African miner spun off from Gold Fields Ltd. earlier this year, said it may consider paying special dividends after profit and output increased in the first half from the previous six months.

Operating profit rose 63 percent to 3.3 billion rand ($363 million) in the six months to June 30, compared with the previous half-year period, the Westonaria-based company said today in a statement. Gold production advanced 23 percent to 656,300 ounces and available cash rose seven-fold to 2.1 billion rand in the period.

“The improving operational performance and the debt restructuring has ensured that the company is well placed to declare a maiden dividend, once there is sufficient financial and operational stability,” the company said in the statement.

Sibanye, formed as a collection of South African gold-mining assets in February, has pledged to cut costs and improve productivity, paving the way for dividends. The company renegotiated the terms of its debt with its lenders earlier this year, removing the constraint on a potential half-year payout, which can be made once wage negotiations are completed.

Sibanye, alongside fellow South African miners AngloGold Ashanti Ltd. (ANG) and Harmony Gold Mining Co., are battling labor unions over demands for wage increases of more than 100 percent amid a gold price that has fallen 20 percent this year. The KDC and Beatrix mines lost 110,000 ounces of output following strikes last year, Gold Fields said in a February statement.

“We are well prepared for extended strikes and have made plans to limit losses should production disruptions occur,” Sibanye said. “We are aware of the critical need to control costs in order to stabilize production and extend the lives of the operations and will not be coerced into unsustainable outcomes.”

All-in costs reduced to $1,322 an ounce in the first half, compared with $1,623 in the six months to December and $1,275 an ounce in the first half of 2012, Sibanye said.

So-called headline earnings, which exclude one-time items, almost doubled to 881 million rand in the first half from the previous six months, and dropped 65 percent from the 2.52 billion rand reported in the first half of 2012.

To contact the reporter on this story: Kevin Crowley in Johannesburg at kcrowley1@bloomberg.net

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

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