Operational Results for Q3-2019 Sibanye-Stillwater

SALIENT FEATURES FOR THE QUARTER ENDED 30 SEPTEMBER 2019

• Record safety performance by the SA gold operations – over 430 consecutive fatality free days & eight million fatality free shifts

−    two regrettable fatal incidents at the SA PGM operations (at Marikana) in Q3 2019

• Group adjusted EBITDA increased by 240% to R5.5 billion (US$377 million)

−    The SA PGM operations contributed R2.9 billion (53%), the US PGM operations R1.8 billion (32%) and the SA gold operations R843 million (15%)

• Outlook for precious metals prices remains constructive – prices continued to strengthen in Q4 2019 to date
• Deleveraging on track – net debt: adjusted EBITDA of 1.7x at end Q3 2019, down from 2.5x at end H1 2019
• Integration of Marikana operation progressing well

−    Operational review complete and set for implementation of revised operational plan in 2020

OVERVIEW FOR THE QUARTER ENDED 30 SEPTEMBER 2019 COMPARED TO QUARTER ENDED 30 SEPTEMBER 2018

The Group operating performance for the quarter ended 30 September 2019 (Q3 2019) signals a pleasing recovery in the operating and financial performance of the Group, after a difficult eighteen-month period. Most pleasing has been the way our SA gold operations have re-established and improved on what was an industry leading safety record prior to H1 2018, despite the additional challenges posed by the five-month strike, which ended in April 2019. Also encouraging is the strong operating performance from our SA PGM operations, which has been sustained, even as the integration of the Marikana operation has continued. Despite some setbacks, the recovery plans at our SA gold and US PGM operations have also advanced, with all the operations benefitting from higher precious metals prices and recording significantly improved financial results.

With precious metals prices rising further into Q4 2019 and further enhancement of our safe production delivery, the outlook for the remainder of the year remains positive. Should this momentum continue as expected, the Group will be on track to achieve its leverage target of 1x net debt: adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) and potentially resume dividend payments in the latter half of 2020.

Safe PRODUCTION

Q3 2019 marked the fourth consecutive fatality free quarter for the SA gold operations. On 18 October 2019, these operations achieved eight million fatality free shifts (on 29 October it had 430 consecutive days without fatalities), an achievement which is historically unparalleled in the deep level South African gold mining industry. We continue to promote meaningful engagement with all of our stakeholders, as part of the safety improvement journey and in the development of the required safety culture.  On 25 October 2019, the SA gold operations have been recognised as the ‘Best underground safety performer’ and awarded the JT Ryan Award at the SAMI Safety and health excellence awards.

Sadly, two fatal incidents at the recently acquired Marikana operation tarnished a fatality free quarter at all other areas of our business. On 28 August 2019, Mr. S. Bhani, a load haul dump (LHD) operator at Hossy shaft, tragically lost his life when he was caught between the LHD door and the cabin frame while disembarking from the LHD without turning it off. On 16 September 2019, Mr. Z. Booi, a Team Leader at the Saffy shaft, was caught between a derailing hopper and the sidewall during cleaning operations. Utilising the Incident Cause Analysis Method (ICAM) process, investigations into these incidents were conducted and action plans were devised to address and prevent any re-occurrence. The Board and management extend heartfelt condolences to the family and friends of our deceased colleagues.

Positively, the Kroondal operation has achieved 19 months without any fatalities, recording 3.5 million fatality free shifts as at the end of September 2019.

There was also a notable improvement in the safety performance of the US PGM operations for the quarter. A year-to-date total reportable injury frequency rate (TRIFR) of 13.1 (measured per million hours) was significantly better than for the comparable period in 2018 (15.5). The US PGM operations remain focussed on delivering further safety improvements by year-end.

ADJUSTED EBITDA AND GEARING

Group adjusted EBITDA of R5.5 billion (US$377 million) for Q3 2019, represents a 240% increase (up 226% in US dollar terms) from the R1.6 billion (US$116 million) adjusted EBITDA generated in Q3 2018. The SA PGM operations contributed 53% of the total Group adjusted EBITDA, the US PGM operations 32% and the SA gold operations made a positive 15% contribution.

The strong Q3 2019 financial performance has accelerated our deleveraging, with  net debt: adjusted EBITDA of 1.7x at 30 September 2019 (as calculated in terms of the debt facilities) significantly improved relative to net debt: adjusted EBITDA of 2.5x recorded at 30 June 2019, and remaining well below the 2019 covenant ceiling of 3.5x. Should current spot precious metals prices persist during Q4 2019, the Group will be on track to surpass the year-end leverage target of 1.8x.

As announced on 25 October 2019, the Rand Revolving credit facility (RCF), which was due to mature in November 2019, has been successfully refinanced on similar terms, improving liquidity and resolving any near-term financing risk. The new Rand RCF which is due in 2022, has an initial facility value of R5.5 billion, but includes a R2 billion accordion option, which allows for an option to upsize to R7.5 billion and to extend the tenor through two further one-year extensions in the future.

OPERATING REVIEW

US PGM operations

Mined 2E PGM production from the US PGM operations increased by 6% to 147,353 2Eoz compared to 139,178 2Eoz in Q3 2018.

The challenging geotechnical conditions experienced in H1 2019, continued to restrict stope access and negatively impact productivity during the quarter. The adoption of special ground control measures temporarily impaired advance rates and resulted in reduced stope flexibility. Concentrated development activities on the ramp system in the Blitz project area also resulted in diesel particulate matter (DPM) emissions beyond the capabilities of installed ventilation in certain development areas, which further impacted output. Under these circumstances, it is critical to operate with every step being taken to safely maintain the production ramp up at the Stillwater mine.

Both the ground control and DPM issues have been appropriately addressed. East Boulder is performing steadily with the Fill the Mill (FTM) project on track to deliver the scheduled production build up. Although these operational challenges have affected production for 2019, the impact is expected to be temporary, with the long-term trajectory of the Blitz production ramp up unchanged.

The average 2E PGM basket price for the quarter increased by 55% to US$1,388/oz compared with the same period in 2018, which, in addition to higher volumes, resulted in adjusted EBITDA (including recycling) increasing from US$49 million in Q3 2018 to US$123 million in Q3 2019 (a 151% increase or 162% increase in rand terms to R1.8 billion).

Whilst total operating costs and capital expenditures in absolute terms were in line with expectations, unit costs remained elevated due to relative under delivery of production during the period. AISC is further affected by increased tax and revenue royalties resulting from higher PGM prices, with AISC increasing by approximately US$5/2Eoz for every US$100/2Eoz increase in the 2E PGM basket price.  AISC increased by 3% year-on-year from US$769/oz for Q3 2018  to US$794/oz for Q3 2019.

The Columbus metallurgical complex performed solidly, processing 158,383 of 2Eoz of mined material and 202,141 3Eoz of recycle material during the quarter, a 20% increase compared to Q3 2018.

The recycling operation fed an average of 25.3 tonnes of material per day (tpd) in Q3 2019, a 38% increase compared to Q3 2018, further drawing down excess inventory which had accumulated during 2018.

Capital expenditure for the quarter amounted to US$60 million, including expansion capital at Blitz and FTM. US$24 million was incurred on sustaining capital and ore reserve development.

SA PGM operations

The SA PGM operations (including a full quarter contribution from the Marikana operation) delivered consistently pleasing operating results. The 70% increase in PGM production to 518,623 4Eoz primarily reflects the consolidation of the Marikana operation for the full quarter and a further 3% production increase from the Kroondal operation, partly offset by lower production from the Rustenburg, Mimosa and Platinum mile operations.

The significant gearing of the SA PGM operations is evident in the 321% increase in adjusted EBITDA, which increased from R696 million in Q3 2018 to R2.9 billion in Q3 2019, primarily driven by a 45% increase in the average 4E PGM basket price to R20,316/4Eoz. Furthermore, attributable adjusted EBITDA from Mimosa of approximately US$12 million (R171 million) compared favourably with the US$8 million (R111 million) for Q3 2018 and is not included in Group adjusted EBITDA as it is equity accounted.

Average AISC for the SA PGM operations of R16,190/oz (US$1,104/oz) for Q3 2019 are not directly comparable with the same period in 2018, due to the inclusion of the Marikana operations for a full quarter and the transition from a purchase of concentrate (PoC) to a toll processing agreement at the Rustenburg operation, as well as the consequential lower than planned production delivery . The planned realisation of synergies and cost savings at the Marikana operations is expected to result in reduced AISC for the SA PGM operations from H1 2020.

Chrome production (excluding the Marikana operation) was 243,000 tonnes (155,000 tonnes at Rustenburg and 88,000 tonnes at Kroondal) a 19% improvement from Q3 2018, however volumes sold for the quarter were lower than for Q3 2018 by 8.5%, due to the timing of sales, which together with a lower average chrome price of US$147/tonne for Q3 2019 (US$169/tonne for Q3 2018), negatively impacted on by-product credits. In addition, the Reflux Classifier was scheduled to deliver 10,000 tonnes chrome per month from June 2019, unfortunately the commissioning was delayed until November 2019. The team is focussing on achieving the planned efficiency by end Q4 2019. The Marikana operation produced 460,218 tonnes of chrome during Q3 2019.

The integration of the Marikana operation is proceeding as planned. Following a three-month review of the operations, stakeholders were notified on 25 September 2019 that consultation in terms of Section 189A (Section 189) of the Labour Relations Act, 66 of 1995 (LRA and associated services) (S189) would commence. While the review process concluded that the affected shafts, most of which were at the end of their operating lives were at risk, other shafts which had previously been at risk, such as 4B shaft, K3 mining into Siphumelele ground, Rowland mining into MK2 ground as well as K4 concentrator, will continue to operate, thereby reducing initially (12,500  as communicated by Lonmin before) anticipated job losses. Overall, the outcome will be a more sustainable business which will enhance the security of employment for the majority of the Marikana workforce for a much longer period. The six-month moratorium on forced retrenchments imposed by the Competition Commission Appeal Court will lapse on 7 December 2019.

The Section 189 is only one component of the integration process which enables consolidation synergies to be unlocked. Further updates on the progress of the integration as well as the 2020 plans are scheduled to be shared as part of the 2019 year end results, scheduled to be released on 19 February 2020.

SA PGM wage negotiations

Wage negotiations for the Rustenburg and Marikana operations are continuing according to due process. A dispute was declared by the organised labour and was referred to the Commission for Conciliation, Mediation and Arbitration (CCMA). To date, two sessions for both Rustenburg and Marikana have been facilitated by the CCMA commissioner. The Company continues to engage constructively with organised labour in an attempt to conclude a fair and sustainable wage agreement.

SA gold operations

The build-up to full production (adjusted for the impact of the closure of Beatrix 1, Driefontein 2, 6 and 7 shafts post the Section 189 process which was concluded in June 2019) at the SA gold operations, following the conclusion of the five-month AMCU strike in April 2019, has proceeded at a measured pace. Production has largely normalised, although an underground fire at Kloof 4 shaft, most likely related to illegal mining activities, and elevated levels of seismic activity following the resumption of safe production, has resulted in the temporary unavailability of some high grade panels (a few panels are permanently unavailable) and continued to constrain the Kloof operation. The Beatrix operation has recovered well, with production only 8% below that achieved for Q3 2018 and AISC of R552,679/kg (US$1,172/oz) in line with expectations. Quarter on quarter, gold production (excluding DRDGOLD) increased by 1,408kg (45,268oz) to 7,444kg (239,329oz).

Ongoing stabilisation of the operations during the quarter, coupled with a 26% increase in the average realised rand gold price to R683,500/kg (a 20% increase in US$/oz price at US$1,449/oz) for Q3 2019, has resulted in a significant turnaround in the financial results of the SA gold operations.

Production from DRDGOLD of 1,493kg (48,001oz) was approximately 6% higher than for the Q2 2019 and close to double what was consolidated in Q3 2018. AISC of R509,868/kg (US$1,081/oz) was 2% lower than for Q2 2019 and 10% lower than for Q3 2018 primarily due to the increase in production. The adjusted EBITDA contribution from DRDGOLD increased by 113% quarter-on-quarter, from R153 million for Q2 2019 to R326 million for Q3 2019.

Adjusted EBITDA from the SA gold operations (including DRDGOLD) for Q3 2019 increased by 247% to R843 million (US$57 million) compared to R243 million (US$17 million) for Q3 2018 and a R1.3 billion adjusted EBITDA loss for Q2 2019. These operations are significantly geared to the spot rand gold price and this financial recovery will be further enhanced if current spot rand gold price levels persist and as the operations continue to stabilise.

CORPORATE ACTION

Internal restructuring process, creating a new holding company and listings for the Group

On 4 October 2019, the Group announced an internal restructuring which is proposed to create a more efficient corporate structure and to facilitate the Group’s growth strategy. In order to create a corporate structure whereby the gold and PGM portfolios are each held within their own distinct legal entities, a new Group holding company, Sibanye Stillwater Limited, will be listed, with the same shareholders and the same shares in Sibanye Stillwater Limited being issued to existing Sibanye Gold Limited shareholders. This will be done by way of a scheme of arrangement (“Scheme”) in terms of section 114 of the South African Companies Act, 2008. The Scheme will therefore result in Sibanye Gold Limited, which houses the SA gold operations, becoming a subsidiary of Sibanye Stillwater Limited. The Scheme will require shareholder approval and is expected to be completed in Q1 2020. More information is available at https://www.sibanyestillwater.com/news-investors/news/holding-entity-change/.

Delaware Court of Chancery rules in favour of Sibanye-Stillwater in dissenting shareholder action

The Court of Chancery of the State of Delaware in the United States of America (the Court), in a Memorandum Opinion dated 21 August 2019, has ruled in favour of the Company in the appraisal action brought by a group of minority shareholders (the Dissenting shareholders) of the Stillwater Mining Company (Stillwater), following the acquisition of Stillwater by the Company in May 2017 for a cash consideration of US$18 per Stillwater share.

In terms of the ruling, the Dissenting shareholders (together owning approximately 4.5% of Stillwater shares outstanding at the time) received the same US$18 per share consideration originally offered to, and accepted by other Stillwater shareholders, plus interest. The remaining payment of approximately US$21 million due to the Dissenting shareholders has been paid by Sibanye-Stillwater.

Certain of the Dissenting shareholders have filed a notice of appeal in the Supreme Court of the State of Delaware. The Company will continue to defend itself against opportunistic, short-term and self-interested legal action, to protect the interests of our stakeholders.

OUTLOOK

Due to the challenging ground conditions at Blitz and the fall of grounds stoppages experienced year–to-date, mined production for 2019 from the US PGM operations is forecast between 590,000 – 610,000 2Eoz. As a result of this reduced mined output forecast, coupled with higher taxes and royalties associated with the noted increase in the US$ 2E PGM basket price, AISC is forecast to be between approximately US$755  – US$770/2Eoz. Capital expenditure is expected to be at the low end of the previous guidance range of US$235 million to US$245 million.

PGM production guidance from the SA PGM operations (excluding the Marikana operation) remains unchanged between 1,000,000oz to 1,100,000oz and AISC within annual cost guidance of between R12,500/4Eoz and R13,200/4Eoz. (US$922/4Eoz and US$974/4Eoz). Capital expenditure is forecast at R1,400 million (US$103 million). Marikana is expected to produce between 450,000 and 490,000 4E ounces for the seven months since acquisition, with an AISC range between R18,700/4Eoz and R20,056/4Eoz (US$1,380/4Eoz and US$1,480/4Eoz). Capital expenditure is forecast at R1,108million (US$82 million).

Due to operational constraints at the Driefontein and Kloof operations following the production build-up, production for H2 2019 from the SA gold operations (excluding DRDGOLD) is expected to be towards the lower end of guidance of 16,000kg (514,411oz) with AISC at the higher end of guidance of R630,000/kg (US$1450/oz) for H2 2019. Annual production for 2019 is likewise, forecast at the lower end of guidance of 24,000kg (771,617oz). AISC for the full year is forecast at the upper end of guidance of R750,000/kg (US$1,725/oz). Capital expenditure for the SA gold operations for 2019 is forecast to be slightly lower than the guided R2,350 million (US$173 million), which includes approximately R220 million (US$16 million) of project capital. Approximately R1,900 million (US$140 million) of this capital expenditure has been scheduled for H2 2019.