Executive Summary / Key Takeaways

• Sibanye Stillwater has demonstrated robust "antifragility" in H1 2025, significantly improving earnings and reducing leverage despite a volatile commodity landscape, driven by proactive operational restructuring and strategic diversification into green metals.
• The company's U.S. PGM operations are undergoing a transformative restructuring, targeting all-in sustaining costs below $1,000 per 2E ounce within 2-3 years, bolstered by Section 45X tax credits and advanced mechanization.
• Strategic investments in battery metals, particularly the Keliber lithium project in Europe and the GalliCam pCAM initiative in France, are positioning Sibanye Stillwater as a key player in critical mineral supply chains, despite current lithium market pressures.
• A strong balance sheet, characterized by a net debt to adjusted EBITDA of 0.89x and ample liquidity, provides the financial flexibility to navigate market cycles and pursue value-accretive growth opportunities, while maintaining a disciplined capital allocation framework.
• The company's expanding recycling footprint, enhanced by the Metallix acquisition, and significant renewable energy initiatives underscore its commitment to sustainability and a circular economy model, contributing to both environmental goals and operational cost savings.

A Diversified Powerhouse in a Shifting Global Economy

Sibanye Stillwater Limited (SBYSF) stands as a compelling investment narrative, rooted in its strategic evolution from a South African gold producer to a globally diversified precious and green metals powerhouse. Founded in 2013 from the unbundling of Gold Fields (GFI)' gold assets, the company quickly established a reputation for operational excellence, successfully revitalizing high-cost, end-of-life mines. This foundational strength provided the impetus and credibility to embark on an ambitious diversification strategy, first into Platinum Group Metals (PGMs) and subsequently into critical battery metals like lithium and nickel, alongside a growing recycling footprint. This strategic pivot, characterized by a proactive approach to market dynamics and a commitment to "antifragility," positions Sibanye Stillwater to not merely withstand but to thrive amidst global economic and geopolitical shifts.

The company's overarching strategy is deeply integrated with the accelerating global energy transition and the increasing demand for critical minerals. Sibanye Stillwater has deliberately positioned itself within key ecosystems in North America and Europe, recognizing the imperative for localized supply chains and beneficiation of metals. This foresight, termed its "multi-polarity strategy," is now yielding tangible benefits, such as the Section 45X credits in the U.S. and strategic project status for its European battery metals initiatives. The company's commitment to sustainability is not merely a compliance exercise but a core business driver, evidenced by significant investments in renewable energy and an expanding circular economy model through recycling.

In a competitive landscape dominated by larger, more broadly diversified miners like Anglo American plc (AGLOY), or specialized gold producers such as Barrick Gold Corporation (GOLD) and Newmont Corporation (NEM), Sibanye Stillwater carves out a unique niche. While it may not match the sheer scale of some rivals, its operational agility, deep regional expertise, and strategic focus on a diversified basket of metals—including PGMs, gold, lithium, nickel, zinc, and copper—provide a distinct competitive edge. This diversification mitigates the inherent volatility of single-commodity exposure, a vulnerability faced by more specialized competitors. For instance, while Barrick Gold's financial performance is heavily tied to gold prices, Sibanye Stillwater's broader portfolio offers greater revenue stability. The company's emphasis on low-capital-intensity brownfield projects also enhances its competitiveness relative to peers, allowing for efficient resource development.

Sibanye Stillwater's technological differentiators are central to its operational efficiency and long-term competitive moat. In its U.S. PGM operations, the company is implementing advanced mining techniques, including the full mechanization of cut-and-fill mining and increased sublevel extraction. These initiatives, coupled with the introduction of a digital twin capability for enhanced mine planning, are designed to significantly reduce costs. Management has set a clear target to lower all-in sustaining costs to below $1,000 per 2E ounce over the next two to three years, a quantifiable benefit that will materially improve profitability and competitive standing. Furthermore, the company's pioneering work with BASF (BASFY) on the tri-metal catalyst in 2020 demonstrated its innovation in PGM market development, enabling the substitution of palladium with platinum to ensure basket sustainability and manage price risk. In its European battery metals segment, the GalliCam project in France is exploring a chlorine route for pCAM (precursor cathode active material) production, which is anticipated to offer "less CapEx, less OpEx" and an "extremely good" CO2 profile compared to conventional sulfate processes. While specific quantitative metrics for these benefits are still emerging, the strategic intent is to establish a cost-efficient and environmentally superior production method. These technological advancements, combined with its expanding recycling capabilities, underscore Sibanye Stillwater's commitment to operational excellence and its ability to extract value across the entire metals value chain.

Operational Strength and Financial Discipline

The first half of 2025 (H1 2025) showcased Sibanye Stillwater's strategic resilience, with group adjusted EBITDA soaring by 120% compared to H1 2024, reaching ZAR 10 billion even after excluding Section 45X credits. This impressive financial turnaround was underpinned by solid operational performance across most segments and the benefit of increasing commodity basket prices. The company's leverage, measured by net debt to adjusted EBITDA, comfortably stood at 0.89x, well below its 1x target and significantly better than earlier market projections.

The South African PGM operations continued their consistent performance, delivering 840,000 4E ounces in H1 2025. Despite a 4% year-on-year production decrease, operating costs increased by a modest 4% to ZAR 19.3 billion, remaining below inflation. All-in sustaining unit costs rose 11% to ZAR 23,900 per 4E ounce, within guidance. Adjusted EBITDA remained consistent at ZAR 4.8 billion, supported by a 7% higher average basket price of ZAR 26,300 per 4E ounce. The Marikana K4 project contributed 44,000 4E ounces, a 68% increase, positively impacting unit costs. The approval of the Siphumelele-Bambanani mechanization project in June 2025 is set to further enhance efficiencies and unlock previously sterilized resources. Management anticipates a "very positive" outlook for these operations in the second half of 2025, driven by improved production and a 23% PGM price improvement since May.

South African Gold operations demonstrated their counter-cyclical value, with adjusted EBITDA (including DRD Gold (DRD)) surging 118% to ZAR 4.8 billion in H1 2025, accounting for 48% of the group's adjusted EBITDA. This was achieved despite a 13% decline in total gold production to 9.3 tonnes, largely due to a disappointing performance at Kloof. Kloof was significantly impacted by seismicity and infrastructure challenges, leading to reduced output and a comprehensive review of its future. In contrast, Driefontein and Beatrix improved to expected output levels in Q2 2025. The full-year production guidance for managed gold operations has been revised downwards to 15-16 tonnes, with all-in sustaining costs between ZAR 1.45 million and ZAR 1.55 million per kilogram. DRD Gold continued its strong contribution, with a 70% increase in adjusted EBITDA to ZAR 1.8 billion.

The U.S. PGM operations produced 141,000 ounces in H1 2025, with all-in sustaining costs decreasing 41% to $1,207 per ounce compared to pre-restructuring levels. These operations recorded an adjusted EBITDA of $151 million, significantly boosted by $159 million in Section 45X credits. An impairment of $238 million was recognized due to a change in the accounting treatment of Section 45X, which is now phased out from 2031 to 2034. The company has filed a petition for a palladium trade remedy against unwrought Russian palladium imports, highlighting its proactive stance against unfair trade practices.

Sibanye Stillwater's Recycling business is a strategic differentiator. The Columbus PGM recycling operation delivered an adjusted EBITDA of $129 million (ZAR 2.4 billion) in H1 2025, including $126 million from Section 45X credits. Reldan, acquired 15 months prior, contributed $18 million (ZAR 330 million) in adjusted EBITDA from processing 8.6 million pounds of industrial scrap and waste. The recent acquisition of Metallix, expected to close in September 2025, will further expand this footprint, adding scale, advanced processing technologies, and immediate contributions to earnings and cash flow.

In European Battery Metals, the Keliber lithium project in Finland is nearing construction completion, expected by H1 2026, with EUR 577 million of the revised EUR 783 million capital expenditure already utilized. However, a ZAR 5.3 billion impairment was recorded due to changes in lithium price assumptions, and the company is evaluating a "responsible start-up" to minimize losses in the currently depressed lithium market. Both Keliber and the GalliCam project in France have secured "strategic project status" under the EU Critical Raw Materials Act, providing access to grants and tax credits. The Sandouville nickel refinery is ramping down, with full care and maintenance expected by January 2026, as the company focuses on the GalliCam pre-feasibility study for pCAM production.

The Australian operations delivered a strong performance in H1 2025, with payable zinc metal production increasing 22% to 51,000 tonnes and unit costs falling 21%. This led to an adjusted EBITDA of $36 million, a significant improvement from a $19 million loss in H1 2024. The Mount Lyell copper project's feasibility study is on track for completion by year-end 2025, and a phosphate feasibility study leveraging Century's infrastructure is expected in Q1 2026.

Financial Strength and Future Outlook

Sibanye Stillwater's financial health remains robust, providing a solid foundation for its strategic ambitions. The company maintains cash reserves at its target of ZAR 20 billion, contributing to nearly ZAR 47 billion in available liquidity, including undrawn facilities. This ample liquidity ensures the company can navigate market volatility and fund its strategic projects without undue financial strain. Gross debt increased to ZAR 40.2 billion, with net debt at ZAR 19.2 billion. The company plans to refinance its 2026 $675 million notes in H1 2026, aiming to reduce the size to $500 million, reflecting a focus on gross debt reduction. The 2028 $500 million convertible bond is currently "in the money," with the share price trading above its ZAR 24 conversion price.

Management's outlook for the second half of 2025 is "extremely positive," particularly if commodity prices remain stable. The company anticipates improved results from Driefontein and Beatrix, with the U.S. PGM operations continuing their cost reduction pathway towards the $1,000 per 2E ounce target. Cash flow from Section 45X payments for 2023 and 2024 filings is expected in 2026, further bolstering the balance sheet. While no interim dividend was declared due to market volatility, the company's dividend policy of 25% to 35% of normalized earnings remains, with a review planned for year-end.

Despite the positive outlook, Sibanye Stillwater acknowledges several risks. Safety remains the "single biggest priority," with three fatalities in H1 2025 and another post-reporting period. Operational challenges, particularly seismicity at Kloof, necessitate ongoing review. The lithium market's current depression led to a significant impairment at Keliber, and the "responsible start-up" evaluation aims to mitigate further losses. Geopolitical and trade tensions, including tariffs and unfair trade practices (such as Russian palladium imports), continue to create uncertainty and impact demand forecasts. The company also faced a cyber-attack in July 2024, which temporarily impacted its U.S. metallurgical complex.

Conclusion

Sibanye Stillwater is executing a compelling investment thesis, transforming into a resilient, diversified, and sustainability-focused metals producer. Its "antifragility" culture, honed through years of proactive operational restructuring and strategic diversification, has enabled it to deliver strong financial results in H1 2025, marked by increasing earnings and decreasing leverage. The company's strategic pivot into green metals, underpinned by technological innovation in mining and recycling, positions it favorably within global critical mineral supply chains.

While challenges persist, particularly in the gold and lithium segments, Sibanye Stillwater's disciplined capital allocation, robust balance sheet, and clear strategic roadmap provide a strong foundation. The ongoing U.S. PGM restructuring, the development of Keliber, and the expansion of its recycling footprint are critical drivers for future value creation. With a focus on operational excellence, cost discipline, and a commitment to sustainability, Sibanye Stillwater is well-positioned to capitalize on the long-term demand for its diverse portfolio of metals, offering investors exposure to a company that is actively shaping a more sustainable future.