Bright spot in SA’s mining gloom – Sibanye should attract bargain hunters

In December last year I took a close look at Sibanye Gold’s $2.2bn transformative purchase of US palladium miner Stillwater. The share got a big thumbs down in my piece for Biznews Premium. Being so pessimistic gave me no pleasure because of my huge admiration for CEO Neal Froneman. Who, to his credit, was his usual friendly self when we bumped into each other a few weeks later.

In the nine months since that piece, the Stillwater acquisition has been bedded down, but Sibanye shares have lost 40% from R25 to R15. Which will attract the attention of any value investor. So I was all ears at lunch on Friday with Sibanye director Barry Davison (72), former CEO of industry giant Anglo Platinum and the PGM sector’s senior statesman.

Davison reminded me Stillwater had two two major attractions for Sibanye – as a hedge against the fragile Rand, and the Blitz project which promises to raise production 50% to 850,000 ounces when it comes on stream in 2022. A SENS announcement yesterday from the renamed Sibanye-Stillwater told us Blitz is three months ahead of schedule and a sampling of its orebody has delivered a juicy 39g of PGMs per ton.

With mining stocks, it’s usually best to buy when everyone else has lost interest. Sibanye shares are trading at the same price they were at four years ago. Such is the pessimism that there’s been no uptick despite the Rand’s recent plunge and the good Blitz news. Anyone who loves a bargain won’t be able to keep their hands in the pockets for too long.

Visited 128 times, 1 visit(s) today