Sibanye Stillwater (SBSW) is an African mining and metals processing multinational company. It produces platinum, gold, palladium, copper, nickel, and rhodium, along with other PGMs. It is one of the leading primary producers of the aforementioned metals, and has begun diversifying its asset portfolio as it aims to increase its presence in battery metals mining.
While gold futures (GCJ24) have rallied sharply in recent sessions, shares of Sibanye Stillwater have struggled mightily. The stock is down 27% on a year-to-date basis, and set a new 52-week low of $3.85 earlier in today's trading, with traders sending SBSW down nearly 9% after its Q4 earnings report.
Given the dividend-paying stock's generous forward yield of more than 5%, investors are likely disappointed by news that SBSW will scrap its final dividend for 2023 due to the H2 operating loss - a capital-preserving decision the mining company previously warned about back in Q3.
Additionally, CEO Neal Froneman declined to rule out a potential capital raise, as weaker platinum prices offset strength in gold.
More Bad News for SBSW
Prior to today's sell-off, February brought a steady stream of negative headlines for SBSW that led to a monthly decline of nearly 15% for the mining stock.
The South African mining company lost the final bidding round to acquire Zambia’s Mopani Copper Mines. CEO Froneman confirmed the company’s hunt for copper assets will continue after losing out on this deal.
Last week, Sibanye reported a 15% decrease in its gold reserves due to the closure of its Kloof and Beatrix mines in South Africa. Gold reserves fell to 10.9M oz, while resources came in at 42.2M oz, declining 23% YoY. PGM reserves were cut short by 10% to 28.1M oz, while copper mineral resources were also down about 39% YoY to 8.16B lbs.
And ahead of its full-year results, Sibanye had warned of a 91% drop in FY23’s profit due to the steep fall in platinum group metal prices. Last year, steeply lower palladium prices had pressured the company to halt its expansion plans, and lay off about 100 workers in its two Montana mines.
Is Sibanye Stillwater Stock a Buy?
While the stock's steep price decline, suspended dividend, and potential capital raise are hardly encouraging for investors, SBSW is certainly fairly priced at current levels, given its forward price/sales ratio of 0.49.
That said, it's hard to argue with the tepid consensus “Hold” rating among analysts, given the challenging fundamental outlook for Sibanye Stillwater stock right now. There are currently 3 analysts tracking the stock, and all three have a “Hold” rating. The mean price target of $5.50 reflects an upside potential of 39.5% to current levels.
