Sibanye Stillwater's Record Half Hides Labor, Cost Pressures

Sibanye Stillwater (NYSE: SBSW) reported financial results for the first half of 2025 that showed a sharp reversal from a year earlier. Revenue rose 64% to R90 billion ($5.5 billion), and headline earnings per share jumped 216% to R6.01 from R1.90. The company posted an R18.8 billion profit compared with a R3.9 billion loss in the year-ago period. Higher platinum group metal and gold prices drove the improvement, but the allocation of cash flow toward debt reduction and dividends, rather than acquisitions, marks a strategic shift.

Gross debt fell 18% to R32.1 billion over six months, pulling net debt to 0.18 times adjusted EBITDA. Chief Financial Officer Charl Keyter said the company remains on track to halve gross debt over two to three years, with most of that reduction already achieved. Adjusted EBITDA more than doubled to R31.8 billion. Cash conversion from operations reached 65%, which allowed the board to declare an interim dividend of R2.01 per share, the top of its 25% to 35% payout policy, for a total of R5.7 billion. Liquidity stood at R47.6 billion, split between R22.4 billion in cash and R25.2 billion in undrawn credit facilities.

The board approved two new growth projects. Burnstone, a shallow gold project that uses existing shaft infrastructure, received $98 million for 2026 and is targeted to produce 130,000 ounces annually over a 25-year life starting in 2029. Mt Lyell, a Tasmanian copper project, received $7.5 million for setup work and carries a net present value above $1 billion at current spot prices. The recycling business, built through the Metallix acquisition, sold 2.8 million precious metal ounces, up 142%, and generated $164 million in adjusted EBITDA at a 13% margin. Renewable capacity of 165 megawatts is on track to reach 835 megawatts by 2028, a shift management expects to save more than R1 billion a year in energy costs.

Costs rise across operations

The underlying operations told a tougher story. South African PGM production slipped 2% to 789,647 4E ounces on weaker surface output. All-in sustaining cost rose 10% to R26,252 per ounce, largely because of a R1.1 billion jump in royalties. Gold production fell 2% as underground output at Kloof dropped 9%. Gold's all-in sustaining cost climbed 14% to R1,638,089 per kilogram on higher royalties, shaft maintenance, and pumping costs at Driefontein, where electricity charges rose 13%. In the US, PGM production edged down 2% on lower grades at East Boulder and labor shortages. The US operation posted a $1,347 per ounce all-in sustaining cost that included a $181 credit from Section 45X tax incentives.

Labor negotiations and mine risk

Executive Vice President Charles Carter told investors the US workforce has resisted incentive changes tied to the mechanization plan at Stillwater, noting that "they don't like change." New union labor agreements are still being negotiated. Chief Executive Richard Stewart warned that if mechanization fails to push Stillwater's costs toward $1,000 an ounce, management may eventually have to end the operation. Stewart called crime tied to mining work an epidemic in South Africa, after the company lost three employees to criminal incidents during the half. Century Zinc production fell 13% to 45,000 tonnes as that asset nears the end of its life and worked through a wet, rainy season.

Hedge fund ownership rose from 27 funds to 29 funds in the most recent quarter. Short interest stands at 1.69% of float. Shares trade at a forward price-to-earnings ratio of 3.44 as of September 9, a multiple that assumes little of the current earnings power will last. The company has no Alpha Score available and is listed as Unscored in the Basic Materials sector.

Sibanye Stillwater used the commodity price run to cut debt, fund projects, and pay dividends. The results also show rising costs at its deepest mines and a labor negotiation in Montana that is unresolved. For the balance sheet story to continue, prices must hold and Burnstone and Mt Lyell must deliver on schedule.