Sibanye Stillwater Limited (JSE: SSW)
The multinational precious metals mining company, Sibanye-Stillwater, has multiple mining projects throughout South Africa and the Americas and has recently approved the expansion of its operations into Finland.
In October 2022, the Board of Sibanye-Stillwater approved an R10.5 billion construction of the Kokkola refinery in Finland, aiming to produce lithium to satisfy demand requirements in a rapidly rising European battery sector. The general feeling amongst market participants is that this will play a pivotal role in assisting Europe to reduce its reliance on China for lithium, the key material used in producing vehicle batteries. Neal Froneman, CEO of Sibanye-Stillwater, expects the Keliber refinery “to have one of the lowest carbon emission footprints in the industry” and to contribute significantly to the growth of Sibanye’s portfolio of green metals that will assist in the global fight against climate change. Sibanye’s effort to remain ESG-conscious fares well in the hands of this new project.
Technical
The price action on Sibanye-Stillwater has been on a rollercoaster ride throughout the year, which has seen the share price down over 30% since the March 2022 high point. The price has rebounded somewhat, with a meager 4.4% gain year-to-date. The price action has broken out of the consolidation phase (green circle) supported by the 50-day simple moving average (blue line). We could see the price move lower from here and retest the R44.78 support level before pushing higher to the major resistance zone around the R52.06 per share level.
Fundamentals
ESG awareness has recently increased tremendously due to how vital the framework has become amongst market participants. ESG and sustainable investing are projected to increase rapidly in years to come. Morningstar forecasts that, by 2025, approximately 33% of all global assets under management will have ESG mandates. Given this, if Sibanye-Stillwater’s expectations concerning Keliber’s low carbon footprint are materialized, they may unlock a competitive advantage over non-ESG-compliant competitors.
Looking closely at Sibanye-Stillwater’s earnings, basic earnings increased by a healthy 46% to R12,016m from R8,218m over the latest six-month period ending 30 June 2022. Headline earnings incurred a very slight 0.89% decrease to R11,938m from R12,045m over the same six-month period ending 30 June 2022.
Adjusted EBITDA incurred a 20% decrease from R28,057m to R22,561m over the six months ending 30 June 2022. Adjusted free cash flow incurred a steep 82% decrease from R20,126m to R3,722m over the six months ended 30 June 2022. This is primarily due to a significant decline in net cash generated from operating activities which decreased by a high 77% from R18,960m to R4,389m over the same six-month period.
Summary
With the average analyst price target estimates around R55.76, share-level, long-term investors could be hanging on for dear life for the share price to reach new highs. A possible long entry does exist lower around the R44.78 support level, which could give investors better entry points.
Sources: Sibanye Stillwater Limited, KoyFin, TradingView, MarketScreener, Mining Review Africa.
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