South African mining company Sibanye Gold, formed as a result of multinational gold miner Gold Fields unbundling its South African assets following shareholder discomfort over the country’s labour relations turmoil, listed primarily on the Johannesburg Stock Exchange yesterday.Signalling the official local listing of the company with a kudu horn, Sibanye Gold CEO, Neal Froneman, lamented the importance of the occasion. “The listing of Sibanye Gold is significant. The company has world class assets and is a proudly South African company.” Froneman said that Sibanye Gold would try and remain leveraged to the gold price while generating free cash flow, admitting that there were certain changes needed to achieve this. Changing the way we operate will be important as it will help us reduce costs, reduce our margins and optimise our balance sheet. Amid labour relations instability, Froneman indicated that the company took the crippling situation of striking in South Africa‘s mining sector seriously. “Pre-Marikana did not do enough to contain the situation and we intend to do more. We have about 45 000 employees and if everyone can do the right thing, then we can see anything between five and 10 years of employment,” he said.
Sibanye Gold chairperson Mathews Sello Moloko also commented on labour unrest in the mining sector. “It is critical, for all stakeholders in the mining sector, to find sustainable solutions to address the social issues brought about by the migrant labour system. Within the array of solutions, it is key to foster a strong alignment between the interests of the company and those of its workforce. “Continued existence of the social issues and commercial misalignment provides fertile ground for further division and strife in the sector, while it is also important for management to develop a constructive and trusting direct working relationship with the workforce.”
With cash generation being Sibanye Gold‘s core focus, it has set a target of 1.4 Moz of gold produced for 2013 and will optimise extraction at its KDC Complex and Beatrix mines.Despite trading at the bottom half of the bourse on the day it was listed, Moloko explains that he is optimistic about the companys future, adding that not too much should be read into its first day of trading on the JSE. “Markets often respond to views, news and events with extreme optimism or pessimism. The opening price is not a reflection of the fundamental value of Sibanye Gold, but anticipation of sell-off by some of the offshore players. One should not attach too much to one day on the exchange.Our focus is to manage this business and to demonstrate the creation of value in the medium to long term. We are optimistic about the prospects of this business and we believe, given the strength of our assets and strategic plans, investors will get well rewarded in the next few years.” With positive feedback from investors during the companys roadshow, as well as the interest created in the unbundling of Gold Fields‘ assets and listing of Sibanye Gold, Moloko is bullish about future prospects for the companys assets, which constitute some of the oldest gold mining operations in South Africa. “The objective of undertaking the roadshow was to articulate the vision and plans for Sibanye Gold. To this end, the feedback from the roadshow was largely positive,” he concluded. Sibanye Gold was trading at around R14/share on the day of its JSE listing, giving it a market capitalisation of about R10 billion.