strategic update: gold projects - the vault€¦ · project sensitive to both gold and uranium...

GOLD PROJECTSUpdate

Richard Stewart

Executive Vice President: Business Development

28 July 2016

Disclaimer

The information in this presentation may include forward-looking statements, which are based on current expectations and

projections about future events. These statements may include, without limitation, any statements preceded by, followed by or

including words such as “target,” “expect,” “may,” “anticipate,” “estimate,” “will,” and other words and terms of similar

meaning or the negative thereof. These forward-looking statements, as well as those included in any other material discussed

at the meeting, are subject to risks, uncertainties and assumptions, including, among other things, the development of

Sibanye’s business, general economic conditions and actions of regulators. In light of these risks, uncertainties and

assumptions, the events in the forward-looking statements may not occur. No representation or warranty is made that any

forward-looking statement will come to pass and no reliance should be placed on any forward-looking statement. No one

undertakes to publicly update or revise any such forward-looking statement.

2

Projects approach

• Dedicated project team established in 2014 to evaluate, rank and

progress organic projects – ensures production teams remain focused

on operational delivery

• Projects are managed in-house with consultants and contractors enlisted

for specialised inputs

• Project execution owners team is managed internally

• Projects proceed through stage gates of project investigation – from concept to prefeasibility study (PFS), feasibility study (FS), approval

and project execution

• Progression of projects is dependent on their meeting technical, commercial

and strategic benchmarks

• Primary focus on brownfields projects that create value for all stakeholders, extend operational LoMs, enhance or sustain cash flows and provide

a pre-determined return on invested capital

• Identified projects are assessed both at stage gates and annually at

strategic and LoM planning sessions

3Projects structure ensures focus, accountability, and ownership

Capital allocation framework

• Guide corporate decisions on project funding

• Project investment cannot compromise dividend strategy

• Projects must primarily be funded from cash flow, after dividends have been paid

• Alternative funding options may be considered where appropriate or if

returns are enhanced

• Organic projects and external growth opportunities are evaluated using

criteria based on:

– strategy: alignment with Sibanye strategic framework and creation of sustainable value

– technical risks: project delivery (OB2T)

– financial parameters: hurdle rates

• Projects must meet pre-determined investment hurdle rates (real rates in ZAR)

– conceptual: 30%

– prefeasibility: 20%

– feasibility: 15%

– 2015 projects evaluated at a gold price of R450,000/kg

4Organic growth must be aligned with Sibanye’s overall strategic framework

ORGANIC GROWTH PROJECT

Kloof 4 Shaft below

infrastructure project

5

Kloof: plan of mining right

6A well understood ore body

4#

Kloof: schematic of operations and geology

7A low-risk incremental mining approach

Schematic 3D section through the Kloof ore body looking north-northwestS/O = Subcrop

MR = Middelvlei Reef

VCR

MR

K4 below infrastructure target area

K4 below infrastructure project: location and reserves

8Extends Kloof LOM by 3 years and adds an additional 80,000oz through tail management

Ikamva Shaft (K4)

47 level

target area

46 level

target area

Description: K4 below infrastructure

Reserves

2016 LoM + 2015 FS

Moz recovered Life of mine

2016 LoM plan (Dec 2015) 2.612 2033

K4 below infrastructure total project 0.584* 2033

Project + LoM 3.196 2033

* Estimated at reserve pricing of 430,000 R/kg

Capital development plan

Mechanised development to 46 and 47 levels for a raise-bored

decline shaft (hoisting rock and material) and men by chairlifts

9

45 to 46 Level – mechanised development –

-100 chairlift decline (equipped with a chairlift

for men access in the permanent condition)

46 Level

(First cross-cut to reef)

46 to 47 Level - mechanised development – 100 chairlift

decline(equipped with a chairlift for men access in the

permanent condition)

46.5 Level

47 Level

(First cross-cut to reef)

46.5 to 47.5 Level

RBH shaft -34º

45 Level hangingwall access

45 Level footwall access

Winder Installation

Footwall decline shaft -34º for

rock and material hoisting

47.5 Level shaft bottom spillage

handling and dirty water pumping

Mechanised access with raisebored hoisting shaft

K4 below infrastructure project

10Project vital statistics

Project metrics (at R450,000/kg) UnitFeasibility study

2033 cut-off

Kloof 4 Shaft LoM Year 2030

Project life Year 2015 to 2033

First reef intersection Date July 2020

Average value mined cm.g/t 2,057

Recovered yield g/t 7.45

Project capital development m 6,246

Project capital cost* Rm 691

Gold ounces produced Moz 0.616**

Peak funding* Rm 709 (in 2021)

Total cash costs* R/t 1,821

Total all-in costs* R/t 2,473

Total all-in costs* R/kg 331,838

* Pre tax and royalties, costs in 2015 money terms as at time of the feasibility study

** Reserves estimated at R450,000/kg

0

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800

0

20

40

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100

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140

Pro

gre

ssive

Rm

An

nu

al R

m

K4 – below infrastructure project capital

FS Cashflow Forecast Actual 2015 2016 Forecast Total Progressive

Project capital

11

* Includes an annual 7.5% contingency from 2016

Capital spend is spread over seven years

R691 million*

Labour: R229 mil

Mining: R158 mil

Engineering: R262 mil

Contingency: R42 mil

Total: R691 million

Production profile

12Sustaining Kloof’s life of mine

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000Stoping centares per month (m2)

LoM 2015 45L Decline ProjectK4 decline project

0

10 000

20 000

30 000

40 000

50 000

60 000

70 000

80 000Milled tonnes per month (t)


0

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3 000Value mined (cm.g/t)


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600Gold recovered per month (kg)


Valuation and sensitivity analysis

• R1.17bn project NPV (post tax) at R600,000/kg (8% discount rate)

• Project meets required hurdle

rates at R450,000/kg and

has a 21% post tax IRR at R600,000/kg

• Low technical risk, well understood geology and mining

methods

• Project optimised with the mining and construction contract award

to a specialised decline mining

contractor

• Extended Kloof LoM allows

enhanced tail management of

other possible resources

13Robust economic returns at spot prices

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

NPV

(R

m)

Sensitivity analysis (R600,000/kg)

Gold price Operating cost Capital costs

0%

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25%

30%

0

200

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1 000

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IRR

%

NPV

(R

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Gold price sensitivity

NPV IRR

spot price

ORGANIC GROWTH PROJECT

Driefontein 5 Shaft below

infrastructure project

14

Driefontein: plan of mining right

15Well understood geology

Driefontein: schematic of operations and geology

16Down-dip extension has been well studied

Schematic 3D section through the Driefontein ore body looking north

D5 below infrastructure target area

D5 below infrastructure project: location and reserves

17

8 Shaft

5 Shaft

10 Shaft

1 Shaft

4 Shaft

2 Shaft

6 Shaft

52L Project target area

54L Project target area

56L - 58L Resources not considered

52 54

52

56

58Feasibility study target area

Down dip extension is not grade constrained

Description: D5 below infrastructure Reserves2016 LoM + 2015 FS

Moz recovered Life of mine

2016 LoM plan (Dec 2015) 1.985 2028

D5 below infrastructure total project 2.122 2042

Project + LoM 4.107 2042

D5 below infrastructure project – 26 line decline to 52 Level and 25 line decline

to 54 Level

Capital development plan

18

50 to 54L chairlift

Orepasses

Orepasses

Hoist chamber

26 Line Decline

Hoist chamber

25 Line Decline

22 X-Cut 25 X-Cut

50-26 Line

HW drive

54L Dams

Pump chamber

50 Level

52 Level

54 Level

24 X-Cut

23 X-Cut

27 X-Cut

26 X-Cut

26 X-Cut

25 X-Cut

26 X-Cut

26 X-Cut

Legend:

50 Level existing access haulages

50-25 and 50-26 decline shafts

Project capital development

Ore Reserve development

Two decline shafts accessing 52 and 54 levels

D5 below infrastructure project

19Project vital statistics

Project metrics (at R450,000/kg) Unit2015 feasibility study

2042 cut-off

Driefontein 5 Shaft LoM Year 2028

Project life Year 2015 to 2042

First reef intersection Date May 2021


Recovered yield g/t 6.1

Project capital development M 7,727

Project capital cost* Rm 1,016


Peak funding* Rm 969 (in 2022)




* Pre tax and royalties, costs in 2015 money terms as at time of the feasibility study

** Reserves estimated at 450,000 R/kg

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D5 – below infrastructure project

Project Annual 2015 Actual Project Progressive

Project capital

20Capital spend is spread over nine years

R1,016 million*

* Includes an annual 10% Contingency from 2016

2016 Operational plan

Labour = R152mil

Mining = R273mil

Engineering = R501mil

Contingency = R 90mil

Total = R1,016million

D5 below infrastructure project: upside potential

21

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

16 000

18 000Stoping centares per month (m2)

2015 LoM 52 Level 54 Level Potential 56 Level

0

20 000

40 000

60 000

80 000

100 000Milled tonnes per month (t)


0

100

200

300

400

500

600

700

800Gold recovered per month (kg)


FS no tail

management

56 Level

upside potential

56 Level

upside potential

0

500

1 000

1 500

2 000Value mined (cm.g/t)

2015 LoM 50L Decline ProjectD5 Decline Project

56 Level

upside potential

Significant upside to integrate into the LOM plan

Upside potential at 56 Level

0%

5%

10%

15%

20%

25%

30%

35%

0

500

1 000

1 500

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NPV

(R

m)


NPV IRR

spot price

0

500

1 000

1 500

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4 500

NPV

(R

m)


Gold price Operating cost Capital costs



• Project meets required hurdle

rates at R450,000/kg and

has a 27% post tax IRR at R600,000/kg

• Low technical risk, well understood geology and mining

methods. Significant

geotechnical analysis

undertaken

• Potential to enhance project

value through specialised

contractor decline

development services

• Potential to extend project pending additional reserve

definition

22Robust economic returns at spot prices

BEISA PROJECT

Prefeasibility study

23

Beatrix: plan of mining right

24Operation with rich history

Beatrix: schematic of operations and geology

25Project de-risked through existing access and historical mining

Schematic 3D section through the Beatrix ore body looking north-northeast

Beisa: 2016 LoM schedule and reserve declaration

26Substantial uranium and gold project

Beatrix Beisa Project − 2016 Ore Reserve declaration

Description Unit Content recovered Grade recovered Life of mine

Produced content – Gold Moz 0.473 2.0 g/t2029

Produced content – Uranium Mlb 7.81 1.056 lbs/t

Beisa: 2016 LoM reserve declaration and variances

27Project sensitive to both gold and uranium prices

Project metrics (at R430,000/kg) Unit 2016 LoM

Beisa LoM Year 2029

Project life Year 2019 to 2029, 11 years

Milled tons Millions 7.394

Gold ounces produced Moz 0.472

Uranium pounds produced MIbs 7.808

Total capital* Rm 2,850

Total cash costs* R/t 973

Total all-inclusive costs* R/t 1,359

Total all-inclusive costs* R/kg 305,719*

* Pre royalties and tax in 2015 money terms, iincludes uranium credits to gold costs (uranium price of R1,140/kg and gold price at R430,000/kg


• R362m project NPV (post tax) at R600,000/kg (at 8% discount

rate)

• The project did not meet the

required hurdle rate at

R450,000/kg but has a 20.4%

post tax IRR at R600,000/kg

• Low technical risk project from a mining and geological

perspective

• Requires new uranium plant –Uranium plant design is based

on Ezulwini plant

• Final project scale and life

inter-dependant on 4# gold

operations

28Robust economic returns at spot prices but marginal at valuation prices

-400

-200

0

200

400

600

800

1 000

1 200

NPV

(R

m)


Gold price Operating cost Capital costs Uranium Price

-20%

-10%

0%

10%

20%

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40%

0

1 000

2 000 IRR

go

ld a

nd

ura

niu

m

Go

ld a

nd

ura

niu

m p

ric

es

IRR Gold and uranium price sensitivities

Gold Price (`000) Uranium Price (R/kg)

IRR Gold IRR Uranium

Beisa prefeasibility study: conclusions

• No technical fatal' flaws

• PFS identified that environmental permitting process is critical

• Re-equipping 5 underground levels and building uranium plant, forecast

at 18-24 months

• All the necessary permitting for Beatrix, including the Beisa project permits, in

process – scheduled for completion in 2017

• Capital expenditure well-defined in the PFS and escalated for the 2016 LoM plan

• Uranium plant comprises 62% of total project capital

– total includes a 10% contingency

• Will continue to assess Beisa project against changing commodity prices and

other Sibanye project opportunities

29Provides valuable optionality for Beatrix West Complex

DE BRON MERRIESPRUIT

(DBM) PROJECT

Prefeasibility study

30

DBM project: plan of mining right

31Close proximity to Beatrix

Schematic of potential projects and geology

32

Mining from 1300 metres to 2500 metres below surface

Mining from 480 metres to 1200 metres below surface

Regional faulting results in rare shallow target

Ore Reserve declaration

33Multiple Reefs targeted

Leader Reef

1,2m BTX – KK Reef

2.4m BTX –KK Reef

Legend

B Reef

3D view looking south east

3D view development only

PFS mine design for 2016 LoM

DBM: design re-planned to Sibanye’s PFS

• Block models for each of the four reef horizons determined and only the

economic blocks targeted

• Wits Gold DFS mine access infrastructure and capital escalated and carried

into the PFS – the cost of the new plant build was saved and the transport of

ore to Beatrix included

• Operating costs benchmarked with the Burnstone study as similar planned

development and stoping methods and efficiencies

• Synergies with Beatrix determined in reducing central allocated costs

• Reduced MCF applied, based on Beatrix 3 Shaft historic factors

34Optimistion through integration

Description (at R430,000/kg) Unit DBM – 120ktpm

Project LoM year 2019 - 2037


Milled tonnes millions 15,400





* Pre tax and royalties, costs in 2015 money terms as at time of the prefeasibility study

** Reserves estimated at R430,000/kg



• Project is geared to revenue and

did not meet the required hurdle

rate at R450,000/kg but has a

18.1% post tax IRR at R600,000/kg

• Medium technical risk project from a mining and geological

perspective

• Additional trade off studies could

enhance project

• Very attractive project at spot

prices but requires sustained

high commodity prices

35Robust economic returns at spot prices but marginal at valuation prices

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

-1 000

-

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000

IRR

NPV

(R

m)

R/kg


NPV IRR

-1 000

-

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000

NPV

(R

m)


Gold price Operating Cost Capital Cost

DBM project: prefeasibility study, the way forward

• PFS completed for 'Best Trackless Cut option' at 120ktpm

– Sibanye’s first mine design and schedule with the latest inputs, block models

and cut-off grades re-calculated at “best cut” and 120ktpm

– Costs benchmarked against Beatrix operating costs with input from

the Burnstone feasibility study

– Allocated overheads based on Beatrix

– Wits Gold capital reduced based on Beatrix synergies and infrastructure

• A further study comparing trackless mechanised access to an option of

a deeper shaft with a conventional mine development design will be

considered going forward

• Project will be reassessed against new project opportunities and taking

into account new commodity prices

36A cheap option for substantial future value

BEATRIX 3 SHAFT

Below infrastructure project

scoping study

37

Beatrix below infrastructure project: location

38

Decline Position

Bloemhoek

Extending the life of Beatrix even further

Beatrix below infrastructure project: conceptual layout

39Conceptual access

Tram loop

25 Level

26 Level

27 Level

28 Level

29 Level

30 Level

31 Level

Silos

10º Conveyor decline

10º Chairlift & service way decline

Vertical dam

Ore passes

25 Level access incline and tip 274m

Conveyor decline 1,895m

Material service way 1,818m

Chairlift decline 1,818m

Vertical level spacing 50m

Beatrix below infrastructure project: resources

40

Plan

31 Level

30 Level

29 Level

28 Level

27 Level

Fault

Dyke

Boundary

N

Twin decline

system

2.8 km

2.4 km3 km

Large resources still to be accessed

Beatrix below infrastructure: project detail

Pre-feasibility study is currently being undertaken:

• Mine design and schedule with latest input, block models and cut-off grades

re-scheduled

• Ventilation and refrigeration requirements

• Rock engineering constraints

• Logistics for men/material and ore flow

• Operating cost – fixed/variable costing and review central cost allocations

• Capital – detailed cost estimate and project plan

• Structure and grade – 4 surface boreholes to be drilled in 2016 for down-dip

structure and grade results to feed into project

– drilling has begun on first two boreholes

• Pre-feasibility study project valuation to be completed by end of 2016

41

SUMMARY

42

Project pipeline

43Balanced and extensive project pipeline

Va

lue

Discovery Resource Scoping Prefeasibility Feasibility Construction Operational

Beisa

Burnstone

WRTRP

Bloemhoek/

Beatrix below

infrastructure

De Bron

K4 below

infrastructureKloof

Driefontein

Beatrix

Cooke surface

operations

D5 below

infrastructure

Beisa north and

south

Summary and conclusions

• Established core projects team to progress, evaluate and implement organic growth projects

• Strict project assessment criteria to ensure alignment with broader Sibanye strategy

• Capital approved projects have added in excess of 4Moz to Ore Reserves and extended the life of existing operations

• Continued progression of high-yielding projects will continue to support

the expansion of our reserve base, underpinning our ability to continue

paying industry-leading dividends

44Delivering on our strategy

strategic update: gold projects - the vault€¦ · project sensitive to both gold and uranium...

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