ARTICLES

Sibanye Revisited

In these uncertain times, when nobody really knows to what extent Trump will back down on the international trade war which he has initiated, many investors are moving into precious metals as a hedge against the weakness of paper currencies (especially the US dollar) and paper assets like equities and bonds.

The problem with holding precious metals themselves, however, is that they pay no dividends and so can only be seen as a short-term haven. In the longer term it is always better to own an asset which generates a return, even if that means taking a higher risk. A compromise would be to invest in a company which produces precious metals such as Sibanye (SSW).

Sibanye was cobbled together by mining expert, Neal Froneman, between 2013 and 2021 through a series of daring and brilliant acquisitions. For half of that time (until January 2016) precious metals prices were under pressure and Froneman was snapping up valuable assets that were going for  bargain basement prices. He acquired the Stillwater palladium mine in America for $2,2bn and Lonmin following the Marikana massacre for shares. Both assets substantially improved Sibanye’s portfolio, but at some considerable risk.

In more recent times and as he approaches his retirement date (September 2025), Froneman has seen the need to diversify away from precious metals and has been acquiring and building mines which can produce and refine zinc and lithium. But the diversification that Sibanye has benefitted the most from in the past 18 months is its South African gold mines.

Gold is a sought-after hedge against the uncertainty which exists in international markets at the moment. Many central banks are reducing their reliance on US Treasury bills and increasing their investment in bullion. The US dollar price of gold has risen 62% since it broke above resistance at $2060 in March last year (first alerted in our Confidential Report of March 2024). This has given Sibanye a windfall, increasing its earnings before interest taxation depreciation and amortisation (EBITDA) in that area by 178% in the latest quarter.

Technically, SSW was in a long-term downward trend from March 2022 until September 2024 mainly because of the decline in commodity prices and precious metals generally. It broke up through its long-term downward trendline on the 1^st of October 2024 and has been in a rising trend since then. Consider the chart:

The chart shows the downward trendline associated with the extended period of falling commodity prices as well as the upside break at the beginning of October last year. We have also recently added the share to our Winning Shares List (WSL).

You should also note that the share made a double bottom at about 1410c with bottoms on the 11th of September 2024 and the 28th of February 2025. This is often a good bullish signal that the direction of the bottom of a downward trend has been reached. Since then, the share has moved up to close last Friday at 2285c.

Of course, Sibanye is a share whose performance depends on the prices of the commodities which it produces and sells – and so it is dependent on the prices of those commodities on international markets. Some of this risk has been reduced by the company’s policy of diversification, but not all.

We believe that it is one of the premier mining houses in the world and will continue to perform well even after Neal Froneman’s retirement.

DISCLAIMER

All information and data contained within the PDSnet Articles is for informational purposes only. PDSnet makes no representations as to the accuracy, completeness, suitability, or validity, of any information, and shall not be liable for any errors, omissions, or any losses, injuries, or damages arising from its display or use. Information in the PDSnet Articles are based on the author’s opinion and experience and should not be considered professional financial investment advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional. Thoughts and opinions will also change from time to time as more information is accumulated. PDSnet reserves the right to delete any comment or opinion for any reason.

PDSNET ARTICLES

New Listings

Two new companies, ASP Isotopes and Greencoat Renewables, have recently come to the JSE. Both are developing companies that have recently made losses and have been funding those losses by raising capital and selling assets. They both have substantial “blue sky” potential but also carry substantial investment risk. This is probably truer of ASP

Exponential Growth

The  S&P 500 index is important because all the stock markets around the world tend to follow it. If the S&P is in a bull trend then London, Tokyo and the JSE will also be in a bull trend – and vice versa.

The S&P500 index began 68 years ago on 4 th March 1957 with an initial value of 43,73. It took nearly

The US Jobs Market

International investors who trade on Wall Street are generally negative about any good news from the economy because it tends to make the monetary policy committee (MPC) more hawkish and less likely to reduce interest rates. The opposite is also true. But there comes a point where bad news is so bad that investors begin to fear that the US economy is heading

Jackson Hole

Once a year in late August central bankers and academics congregate in Jackson Hole to discuss the state of the economy and consider the way forward. Traditionally, the Chair of the Federal Reserve Bank (“the Fed”) addresses the meeting and gives direction to its thinking on monetary policy in the US. This year, the comments of Jerome Powell resulted in the

Choppies

Choppies is a supermarket chain which operates in Botswana, Namibia and Zambia. It is listed both on the Johannesburg Stock Exchange (JSE) and on the Botswana Stock Exchange (BSE). Notably, the company has resisted the temptation to re-enter the highly competitive and cut-throat retail market in South Africa, having exited that market in 2020 due to sustained losses. Despite

Gold Resistance

All investments throughout the world can be ranked on a scale from high risk to low risk. As a general rule, in the world of investment, risk and return rise together. In other words, as the risks in an investment increase, so does the return necessary to attract investors.

At the one end of the scale there are very low risk investments

Sibanye takes off

We have been writing about Neal Froneman and Sibanye for years now. Beginning in 2013, Froneman assembled the Sibanye group over a period of 7 years, buying up mining operations both in South Africa and America at bargain prices. Initially he bought precious metals producers, but more recently he has been diversifying into base metals like zinc and lithium which

The 16 Year Bull Trend

Since the Second World War, the stock markets of the world, including the JSE, have always tended to follow the New York Stock Exchange (NYSE) - and the NYSE is best measured by the S&P500 index (S&P) of its 500 largest companies.

For this reason, we believe it is important for private investors to constantly

CA Sales Revisited

Retailing in Africa is difficult with many of our leading retailers having attempted to open stores in countries to the North of us without notable success. These countries are often unstable and volatile politically. Getting adequate stock to branches has proved problematic and expensive.

It is not surprising therefore that a company has been

Bluetel

Bluetel (BLU) is a company involved in pinless top-ups, prepaid electricity, ticketing and universal vouchers. As such it is a company with substantial repeat business from existing customers. This type of business model is attractive to investors because it implies minimal working capital and strong cash flows.

Bluetel’s purchase