It has been a relatively good year for gold and precious metals miners. The trend was further reinforced last week after South African firm Sibanye-Stillwater (NYSE:SBSW) announced its financial results for the third quarter last Thursday. Due to the higher prices of precious metals, the company managed to post a record profit in its third-quarter, and consequently, the stock rallied strongly as well. Here is a closer look at Sibanye-Stillwater.
Although it is true that the production dropped in the company’s platinum mines in South Africa, the rise in the price of metals more than made up for it. The company announced that its EBITDA earnings jumped by as much as 182% year on year to hit $922 million.
The considerable rise in the price of precious metals was the primary reason behind the performance. The coronavirus pandemic may have come as a major problem for most miners but at the same time, the price of gold topped $2000 an ounce and thereby boosted earnings considerably.
Cash Flow and Production
On the other hand, it is also necessary for investors to keep in mind that the weakness in the South African Rand and the rise in gold prices are going to help with Sibanye-Stillwater’s cash flow. The company managed to pay off some of its debts as well and that is another positive for investors.
Investors would also consider noting that the company’s PGM (platinum group metals) operations suffered in the third quarter owing to limitations placed due to the coronavirus pandemic.
Output fell by 18% year on year to hit 427715. On the other hand, gold production rose slightly to 288938 ounces from 287330 ounces in the year-ago period.
While the company’s performance in the third quarter has provided a positive boost, it is also pertinent to mention the wage agreement that Sibanye-Stillwater signed with the unions at its operations in Kroondal.
Last month, the company signed a three-year wage agreement with the AMCU (Association of Mineworkers and Construction Union) and the NUM (National Union of Mineworkers).
The agreement in question relates to both wages as well as the conditions of work. The agreement is going to be in place from the 1st of July 2020 up until 30 June 2023. The company stated that the agreement ensures a competitive wage to the employees and at the same time takes into account the long-term interests of Sibanye-Stillwater.
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