Sibanye Stillwater Ltd (JSE: SSW), a prominent player in the mining industry, has weathered a tumultuous start to the year, marked by a significant 28% decline in its share price.
This downturn stemmed from a loss of investor confidence fuelled by various factors, including a sharp drop in platinum group metal (PGM) prices, a core component of its operations. The company’s financial performance reflected these challenges, with a notable 18% decrease in revenue, translating into a staggering 50% decline in EBITDA and culminating in a substantial net loss of R37.43 billion in its Full Year 2023 report.
However, amidst these setbacks, Sibanye Stillwater has managed to claw back, trading flat year-to-date, buoyed by the surge in gold prices. Escalating geopolitical tensions, notably the Russia-Ukraine conflict and growing tensions in the Middle East, have propelled gold’s appeal as a safe haven asset, driving prices to record highs. Consequently, gold mining companies, including Sibanye Stillwater, have reaped the benefits of this price surge. As investors navigate the company’s journey through fluctuating commodity prices and global geopolitical dynamics, the stage is set for a closer examination of its resilience and potential for future growth.
Technical
Sibanye Stillwater’s shares recently underwent a notable shift in sentiment, marking a departure from a downward trend. Previously confined within a descending channel pattern and trading below the 100-day moving average, the shares broke out of this pattern, signalling robust upside momentum.
Resistance formed at R26.65 per share during the initial selloff, coinciding with overbought RSI conditions and the channel’s upper boundary. Conversely, support materialized at R17.85 per share, aligning with oversold RSI conditions and the channel’s lower boundary, paving the way for a rebound.
Currently, the share price has retested the resistance level. Given the overbought RSI levels, a potential downturn could occur if this level sees excess supply over demand. In such a scenario, Fibonacci Retracement levels might offer points of interest to the downside. Conversely, a break above the resistance level on high volumes could signify sustained upside interest, potentially targeting the R29.13 per share level.
Summary
Sibanye Stillwater finds resilience in record gold prices amid geopolitical tensions. Technical analysis suggests a potential upside if resistance at R26.65 is breached, with support at R17.85. Attention remains on RSI levels and Fibonacci Retracement for insights into future price movements, highlighting the company’s adaptability and potential for growth.
Sources: Sibanye Stillwater Ltd, Reuters, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
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