Sibanye-Stillwater Limited (JSE: SSW) reported a significant loss for the year ended 2023, primarily due to a sharp decline in PGM (platinum group metals) prices. The company took a $2.6 billion impairment charge on its US palladium mines, French nickel operation, and South African gold mine, further impacting its financial performance. Additionally, Sibanye scrapped its final dividend.
Looking ahead, the outlook for Sibanye remains uncertain. The company acknowledges the possibility of further restructuring, especially in its US PGM operations and the French nickel refinery, if low commodity prices persist. This could lead to job cuts and further financial strain. However, Sibanye is exploring opportunities to monetize its uranium assets, potentially through partnerships or joint ventures, which could provide a much-needed financial boost.
Technical Analysis
Despite the negative news, SSW’s share price is currently experiencing a slight upward correction within a falling wedge pattern. This suggests a potential short-term reversal, although the overall trend remains downward. The price sits comfortably below the key moving averages [50-SMA (blue line), 100-SMA (orange line), 200-SMA (red line)], suggesting a strong bearish bias in the short to medium term. The RSI, although upward-sloping, remains below the 50 level, further highlighting the bearish sentiment.
With the price action riding the wave from the recent earnings release, a sustained push higher could initiate a break above the wedge, leaving the 50-SMA-enforced 2,184 cents price level as the initial resistance higher. A sustained break above the initial resistance might bring the 2,450 cents into play, with the 2,665 cents acting as the next level of significance.
However, the 1,756 cents price level could quickly come into play should the bears regain control in the near term. A break below the 1,756 cent price level, on significant volume, would leave the 1,537 cent support level as the next level of interest lower.
Summary
Despite the recent pullback, SSW’s share price is attempting to break above a falling wedge pattern, suggesting a potential reversal. A sustained push above the 50-SMA could see the price target 2,450 cents, with further upside potential towards 2,665 cents. Conversely, a break below 1,756 cents, with significant volume, could trigger further selling pressure towards the 1,537 cents support level.
Sources: TradingView, Trading Economics, MT Newswire, Reuters, Sibanye-Stillwater.
Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst
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