To The Moon

U.S. stocks ended slightly lower last Friday as investors weighed economic worries against optimism over interest rate cuts by the Federal Reserve after data showed U.S. job growth weakened sharply in August.

The best-performing concepts is Precious Metals & Minerals. Considering the different perceptions of the stock, this time TigerPicks chose $Sibanye(SBSW)$ to have a fundamental highlight to help users understand it better.

$Sibanye(SBSW)$

Sibanye Stillwater Limited is a multinational mining and metals processing group with a diverse portfolio of mining and processing operations, projects and investments across five continents. It also recycles platinum group metals (PGMs) auto catalysts and has interests in mine tailings retreatment operations.

I think that my overall bullish stance on SBSW still makes sense, as the headwinds that are constantly there for the miner should eventually be largely offset by its new strategic positioning and financial turnaround. The recently reported financials for fiscal 1H 2025, which came out a few days ago, seem to prove right about it, so it‘s "Buy" on SBSW unchanged for now.

Optimizes Strategy Amid Strong Results

Sibanye Stillwater showed a 127% YoY increase in EBITDA to ~$818 million with the S45X credits included, and according to RBC's analysts, it beat the initial consensus estimate for their first half 2025. The saw was true about SBSW's free cash flow generation, which seems to improve (relative to the consensus) thanks to lower CapEx.

SBSW's IR materials for 1H 2025

As noted by RBC's analysts, there are signs that "the company is willing to restructure low-margin operations," and if so, the Section 45X credits should move the needle in SBSW's consolidated margins story because, in addition to what they've already received (ZAR 5.2 billion), the management estimates a conservative fair value of ZAR 12.6 billion through fiscal 2034, which is a lot.

On operations, we saw that in 1H of this year, SBSW's SA gold operations remained under pressure due to the seismic issues at Kloof, but at Marikana, they managed to ramp up the K4 project to ~44,000 4E ounces (+68% YoY), so it's not that bad, net-net. In the U.S. PGM segment, the all-in sustaining costs are falling dramatically after the post-restructuring efforts, and now amid the recovering PGM prices across the board, I believe SBSW now has a clearer pathway to the management's targeted sub-$1,000/ounce cost structure over the next 2-3 years.

Also, the South African gold operations generated their highest adjusted EBITDA since H2 2020, according to the post-earnings commentary, so now it's ~48% of the group's consolidated EBITDA (vs. 33% last year). On this front, we see from the updated guidance that SBSW is planning to mine 15,000-16,000 kg from SA gold operations alone for the full 2025, and the cost discipline should stay generally in solid shape at $2,473-2,643/oz.

SBSW's IR materials

With the above guidance, it's clear to me that SBSW is actually way more than just a PGM producer - it's already reduced its PGM dependence (at least it's not that dramatic anymore), so I completely concur with another Seeking Alpha analyst, Grassroots Trading:

Seeking Alpha, Grassroots Trading's article on SBSW

By the way, the above screenshot mentions Sibanye Stillwater's improving balance sheet condition, so I can't ignore it as well on my end. SBSW is planning to invest heavily in its Keliber project (~€300 million), and the firm seems to have more financial capacity to make this operational diversification less painful, as its net debt-to-adjusted EBITDA ratio has fallen to just 0.89x, which is now well below the initial target of 1x. The current liquidity headroom is now enabling Sibanye to keep its work on further business diversification at lower risks, based on my understanding.

SBSW's IR materials

SBSW Stock Valuation

Now, what I also like about SBSW is its valuation. Yes, Sibanye Stillwater stock is up big over the past few weeks with the better outlook and rising underlying prices on the firm's key selling products they mine. But SBSW stock is still valued reasonably, trading at a 30-40% discount on most forward multiples, according to Seeking Alpha data:

Seeking Alpha, SBSW's Valuation

Sibanye's future earnings may vary quite meaningfully, but if the current consensus is used as a guide, the FY2027 EPS YoY growth of over 74%, and the implied P/E ratio of just under 8x, should bring an effective PEG ratio of ~0.1x. That's less than most other companies in any industry can give us.

Seeking Alpha, SBSW's forward PE and EPS figures

The firm's industry is very volatile, and I admit that anything can happen overnight against the current narratives and trends, but I believe that with what we can analyze right now, SBSW looks more than reasonably valued, and its operations are getting better quarter by quarter.

Stock Price Forecast:

Here are the target price forecasts for the next 12 months from analysts.

Based on 2 Wall Street analysts offering 12 month price targets for Sibanye Stillwater in the last 3 months. The average price target is $8.25 with a high forecast of $8.50 and a low forecast of $8.00. The average price target represents a -3.96% change from the last price of $8.59.

Resource:

https://seekingalpha.com/article/4818295-sibanye-stillwaters-diversification-strategy-pays-off

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