You are on page 1of 40




BNPP Target Price* (ZAR) EPS 2013 (ZAR) TARGET* CLOSE* UP/DOWNSIDE ZAR700.00 ZAR745.00 -6.0% Market Recs * in cents EPS 2014 (ZAR) 700.00 1.15 (0.44) Positive 2 Consensus 1072.75 2.14 2.57 Neutral 3 % Diff (37.7) (46.3) N/A Negative 3



YE Dec (ZAR m) Revenue Rec. net profit Recurring EPS (ZAR) EPS growth (%) Recurring P/E (x) Dividend yield (%) EV/EBITDA (x) Price/book (x) Net debt/Equity (%) ROE (%)
Feb-13 1,693 1,493 1,293 1,093 893 693

Sunset on Sibanye
A new South African gold mining company with old assets Sibanye was unbundled from Gold Fields to become the tenth largest gold producer in the world. We expect it to produce 1.2moz this year from marginal deep underground mines and surface rock dumps in South Africa. Production has been falling sharply and the company is the only one amongst its peer group with a declining production outlook.

2013E 16,623 842 1.15 (75.0) 6.5 3.9 2.4 0.4 22.6 6.3

2014E 14,813 (320) (0.44) (138.0) neg 0.0 4.2 0.3 35.3 (2.0)

2015E 15,074 (795) (1.09) 148.5 neg 0.0 5.8 0.3 39.4 (4.6)

Sibanye’s new plans – a hard buy Management intends to hold production steady but we expect it to fall further before stabilising. New projects could sustain production in the longer term. However, plans to mine pillars in the short term are unlikely to add value, while increasing safety risk. These and other new plans will require capital that the company cannot afford at current prices.

4 (6) (16) (26) (36) (46) (56) (66) (76) Sibanye Gold Ltd Rel to FTSE JSE All Share (%)

Initiating coverage with a HOLD and TP of ZAR7/share at spot Our DCF-based target price of ZAR7/share (based on the current spot gold price) factors in lower-than-guided production but includes upside from potential reserves. The company is highly geared and earnings are hedged by the USD/ZAR exchange rate. Buyers of this stock should expect the gold price to rise or the rand to continue to weaken.

493 (ZAr)

Share price performance Absolute (%) Relative to country (%) Next results Mkt cap (USD m)

1 Month 3 Month 12 Month (21.3) (24.2) (42.7) (46.8) -

August 2013 568 7.4 89 Investec (15%) 1630.00/673.00 62.9 SBGL US 3.01 733

3m avg daily turnover (USD m)

Long-term fundamentals look weak Although short-term metrics look attractive (forward PE of 6x and FY13E dividend yield of at least 4%), the long-term fundamentals are likely to get worse. Surface rock dumps will contribute about 23% to free cash flow this year but their declining reserves and falling grades means Sibanye expects this number to fall to 7% real in two years’ time. This will make funding for new projects even more difficult. In addition, declining production and fixed costs of 80% will likely move Sibanye even more towards the top of the global cash cost curve.

Free float (%) Major shareholder 12m high/low (ZAR) 3m historic vol. (%) ADR ticker ADR closing price (USD; 24 May 13) Issued shares (m)

Sources: Bloomberg consensus; BNP Paribas Cadiz Securities estimates

Adrian Hammond +27 11 088 2181

BNP Paribas Securities (Asia) Ltd. research is available on Thomson One, Bloomberg,, Factset and on Please contact your salesperson for authorisation. Please see the important notice on the back page.


29 MAY 2013

Sibanye Gold Ltd

Adrian Hammond

Executive summary __________________________________________________________________________ 4 Introduction _________________________________________________________________________________ 5 Sibanye’s plan _______________________________________________________________________________ 5 Potential reserves ____________________________________________________________________________ 5 Is pillar mining a game changer?_______________________________________________________________ 6 Can declining production be stopped? __________________________________________________________ 6 Surface rock dumps (SRD)_____________________________________________________________________ 7 Costs aligned with industry ___________________________________________________________________ 7 Risks _______________________________________________________________________________________ 8
Cash costs _____________________________________________________________________________________________________ 8 Once empowered, always empowered? ______________________________________________________________________________ 8 Loss of skills ___________________________________________________________________________________________________ 8 More safety-stoppages ___________________________________________________________________________________________ 8

Earnings ____________________________________________________________________________________ 8 Valuation ___________________________________________________________________________________ 9 Sensitivity __________________________________________________________________________________ 9 Investment recommendation _________________________________________________________________ 10 Appendix 1: Company background _____________________________________________________________ 11 Appendix 2: Geology and mining operations ____________________________________________________ 12
KDC _________________________________________________________________________________________________________ 12 Beatrix _______________________________________________________________________________________________________ 12 Pay-limits and rationalising the operations _________________________________________________________________________ 13

Appendix 3: Reserves ________________________________________________________________________ 14
Underground reserves __________________________________________________________________________________________ 14 Where did all the reserves go? ____________________________________________________________________________________ 14

Appendix 4: Life-of-mine and amortisation _____________________________________________________ 16
Historical life-of-mine (LoM) _____________________________________________________________________________________ 16 Impact on amortisation _________________________________________________________________________________________ 17



29 MAY 2013

Sibanye Gold Ltd

Adrian Hammond

Appendix 5: What is left in the lease? __________________________________________________________ 18
Management’s strategic plans for KDC _____________________________________________________________________________ 18 Kloof ________________________________________________________________________________________________________ 20 Driefontein ___________________________________________________________________________________________________ 21 Beatrix _______________________________________________________________________________________________________ 22 Opportunities beyond the lease area _______________________________________________________________________________ 23

Appendix 6: Potential upside _________________________________________________________________ 24 Appendix 7: Surface rock dumps ______________________________________________________________ 25 Appendix 8: Tailings project __________________________________________________________________ 26
Assumptions and results ________________________________________________________________________________________ 26 Environmental challenges _______________________________________________________________________________________ 27

Appendix 9: Current life-of-mine plans _________________________________________________________ 27 Appendix 10: Historical production ____________________________________________________________ 29 Appendix 11: Production outlook ______________________________________________________________ 29 Appendix 12: Costs and capex ________________________________________________________________ 30
Cost inflation __________________________________________________________________________________________________ 31 Cost savings ___________________________________________________________________________________________________ 31 Global cash costs ______________________________________________________________________________________________ 32 Capex ________________________________________________________________________________________________________ 33

Appendix 13: Valuation ______________________________________________________________________ 34
Model assumptions and inputs ___________________________________________________________________________________ 34 Other cost assumptions: _________________________________________________________________________________________ 34 Results _______________________________________________________________________________________________________ 34

P&L, Balance Sheet and Cash Flow ____________________________________________________________ 36

To find out more about BNP Paribas Equities Research:
Visit : For ipad users :



29 MAY 2013

Sibanye Gold Ltd

Adrian Hammond

Executive summary
Management intends to hold production steady at between 1.2moz to 1.3moz over the next three years. However, production has been falling sharply over the last decade as a result of declining grades, volumes, development metres and productivity. Sibanye’s new plans will attempt to arrest this trend by maintaining development rates and mining pillars and secondary reefs. Details of their new plans will be revealed later this year. After taking a comprehensive look at their assets, we estimate there are no less than 3.7m oz of potential reserves from pillars and projects below infrastructure. Plans to mine pillars could take two years to implement fully and new projects below infrastructure could start in 2017. Secondary reefs are unlikely to add any value, in our view. There are no other attractive growth options or opportunities with neighbouring mines, in our view. Pillar mining is a low volume and slow process and will likely increase safety risks. To realise any benefit, management’s first step will be to arrest the current decline in production first in order to keep unit costs from escalating. Additional capital will be required for development but, in our view, the company cannot afford any new projects at current prices. We expect production is unlikely to recover from FY12 levels and management could take about two years to stabilise production. Q1 FY13 development rates indicate a good recovery from labour unrest last year, but further improvement in these rates is necessary. Surface rock dumps (SRD) are an important source of low-cost ounces for the business, contributing as much as 23% to group free cash this year. However reserves will soon be depleted and will make the challenge for management even harder. We estimate that plans to replace these cash flows from a tailings project are unlikely to add value. Although Sibanye’s C1 cash costs are one of the highest in the industry, C3 costs are in line with peers’. We estimate that real C3 cash costs could be maintained at about ZAR380,000/kg for three years if production is sustained above 1.15moz and cash savings of at least ZAR1b (10%) are achieved, as expected. Beyond this period, real costs are likely to rise as production falls. Sibanye is currently cash generative and the short-term metrics look attractive. The share is highly geared to the gold price and the USDZAR exchange rate has provided a good hedge to earnings from falling gold prices. The share is currently trading at a forward PE of 6x and we expect a dividend yield of at least 4% this year. However the long-term fundamentals will get worse. Buyers of this stock need to hold the view that the gold price will rise or the Rand will continue to weaken. The company cannot generate any earnings or free cash in the next year at current prices . Based on the current life-of-mine plan, we value Sibanye at ZAR11/share. This is a result of our more bearish outlook on production in the early years as well as more capital to develop new projects. Based on our realistic view of production as well as potential reserves, we value Sibanye at ZAR7/share, at current spot prices. We initiate coverage with a HOLD recommendation.
3 1 2

1 2

C1 = mining costs C3 costs = mining costs + corporate overheads + ongoing capital 3 Current prices taken at USD1,380/oz gold and ZAR9.4/USD



29 MAY 2013

It is the tenth largest gold producer in the world. Reserves have declined over 70% in the last five years as a result of higher pay-limits. of which 3. Production has steadily fallen to around 1.3 3-6 Life (years) Annual production (koz) 190 130 220 2015 2017 2017 Start year There are also potential reserves from secondary reefs. secondary reefs and new projects below infrastructure Reduce the workforce by 4. About 92% of production comes from underground and 8% from surface rocks dumps. deep-level and marginal. Some of its new plans have already begun to be implemented and include the following: 1 Hold production steady at between 1. 4 5 6 See Appendix 9: Current life-of-mine plans for details See Appendix 4 and 5 for our detailed assessment Assumes all the pillars that were previously removed can be brought back 7 The secondary reefs are low grade and management are prepared to mine them at cost 5 BNP PARIBAS 29 MAY 2013 . Whilst under the Gold Fields umbrella. Sibanye’s new plan is set to be released later this year. although we do not expect mining them will be 7 value accretive to the business.3moz over the next three years by doing the following: a b 2 3 4 Maintain development rates and improving the blast frequency Assess potential reserves from pillars. These mines are mature. Sibanye holds the Kloof.0 4. we estimate 5 there is no less than 3.000 have already been retrenched Reduce costs by 20% within 18 months. Costs are as much as 80% fixed and are highly geared to the ZAR gold price. in our view.1006 560 1. Beatrix West section is expected to close this year and further shaft closures remain an option for management. with about 5% achieved so far Develop a new tailings project to address the decline in SRDs Potential reserves Based on our assessment of opportunities within and beyond the lease for KDC and Beatrix.2moz to 1.000 people. BNP Paribas Cadiz estimates 2. The company is being led by Neal Froneman who previously managed Gold One and Uranium One. Management is reviewing two options for a new tailings project. Driefontein and Beatrix mines located in South Africa’s Witwatersrand Basin.7m oz of potential reserves (EXHIBIT 35) . There are no other attractive growth options. Kloof and Driefontein mines are currently cash generative while Beatrix isn’t.3moz. capital programmes at KDC and Beatrix had been held back. EXHIBIT 1: Potential reserves Source Potential reserve (koz) Pillars Shaft pillar Projects below infrastructure Sources: Sibanye Gold. We have low confidence in the current life-of-mine plans . This has caused amortisation charges to increase almost 70% which we expect will continue to 4 rise.000 to 5.Sibanye Gold Ltd Adrian Hammond Introduction Gold Fields [GFI SJ. lower mine call factors and a more strict SAMREC code. Sibanye Gold.030 11. KDC and Beatrix together produced over 3moz per annum 10 years ago. Of this about 1moz lies below infrastructure and the balance comes from safety-related and shaft pillars at KDC. The average life-of-mine has fallen from 20 years to 14 years over this period. Not Rated] unbundled its mature South African assets into a separate vehicle. which was listed on 11 February 2013. but only necessary to de-stress the mining of pillars below. The new management team plans to re-vitalise the business by reviewing previously withheld projects. Sibanye’s plan The company is reviewing current LoM plans and will reveal its new strategy by the end of the year. Mining has progressed towards the lease boundaries.

2 – 1.Sibanye Gold Ltd Adrian Hammond Is pillar mining a game changer? Management believes mining pillars holds significant upside. Can declining production be stopped? Management faces a difficult task to buck a 10-year trend of falling grades. EXHIBIT 2: Sibanye Gold production outlook (moz pa) 2. We therefore expect these plans to take at least two years to implement. Additional capital will be required for development. New projects should come online by 2017.3 1.0 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2016E (moz) 1. pillar mining is a low volume and slow process.5 2.3 1.22 1.5 0.16 The BNP Case assumes production is unlikely to recover from FY12 levels and it will take at least two years 10 to stabilise production . volumes. To therefore realise any benefit from pillar mining. grades 4% pa.1.3 1. tonnages have fallen 8% pa. Below we show the current Life-of-Mine Plan and the BNP Case. 10 See Appendix 11: Production outlook for further details on our assumptions 2012 6 BNP PARIBAS 29 MAY 2013 . 8 9 EXHIBIT 25 Since 2008. The potential reserves are not likely to become reserves until updated pre-feasibility studies are complete and/or further drilling is done.29 1.16 Current LoM plan BNP case 2007 2008 2009 2010 2011 Source: BNP Paribas Cadiz estimates EXHIBIT 3: Potential reserves 2012 (moz) Management guidance Life-of-mine plan BNP Case Source: BNP Paribas Cadiz estimates 1.2 – 1.25 1.0 0. current fixed costs are as high as 80%.2. development metres 9 and productivity . management will need to arrest the current decline in production first to keep unit costs under control. Some pillars are high grade and mining them 8 would appear to be highly profitable .5 1.15 2015E (moz) 1.17 1.0 1. In addition.22 2014E (moz) 1.29 1. However.26 1.22 1. and development metres 6%pa. Blast frequencies have halved.22 2013E (moz) 1.

See Appendix 8: Tailings project BNP Paribas Cadiz mining cost definition:C1 = mining cash costs BNP Paribas Cadiz mining cost definition:C3 costs = mining costs + corporate overheads + on-going capital 14 We estimate about ZAR0.15moz and cash savings of at least ZAR1b (10%) are achieved .100 1.300 1. Sibanye is currently cash generative at current gold prices with C3 cash margins of about 10%.000 900 800 700 C1 C3 Harmony Gold Sibanye Gold AngloGold Gold Fields 12 13 Normalised cash costs for Q1 2013. 7 BNP PARIBAS 29 MAY 2013 . Costs aligned with industry Sibanye has one of the highest C1 cash costs in the industry. its C3 cash costs. However. 11 12 13 This is due to declining grades. which are more reflective of sustaining cash flows. Sibanye expects SRDs to contribute 23% to group free cash in 2013. However reserves are almost depleted and production will shrink to one third by 2015. are similar to the rest of its South African peer group’s (EXHIBIT 6).000/kg for three years if 14 production is sustained above 1. we include capex for South Deep as part of Gold Fields C3 costs Source: BNP Paribas Cadiz estimates We estimate that Sibanye’s real C3 cash costs can be maintained at about ZAR380. From our analysis. Our “NPV-neutral” price is USD1. the project could yield positive cash flows in the first two to three years but the 11 project as a whole is NPV negative .750/oz gold and USD65/lb U3O8.Sibanye Gold Ltd Adrian Hammond Surface rock dumps (SRD) Surface rocks dumps are an important source of low-cost ounces for the business.5b in savings have already been achieved largely as a result of retrenchments.200 1. EXHIBIT 6: Spread between peer group C1 and C3 cash costs (USD/oz) 1. EXHIBIT 4: LoM production from SRDs (koz) 120 100 80 60 40 20 0 2012 2013E 2014E 2015E 2016E 2017E Kloof Driefontein Beatrix EXHIBIT 5: Real free cash from SRDs (ZAR m) 600 500 400 15 300 10 200 100 0 2012 2013E 2014E 2015E 2016E 2017E 5 0 Real free cash before tax Contribution to group (%) 25 20 Source: BNP Paribas Cadiz estimates Source: BNP Paribas Cadiz estimates Real free cash from SRDs is expected to diminish by 2015 and the contribution to the group is expected to fall from 23% this year to 7% by then. Management is considering a new tailings project to replace the SRDs.400 1.

086 200 48 2015E (ZAR m) 1. Rehab Restructuring EBITDA Net interest Net profit before tax Tax Deferred tax Tax rate Net income HEPS Source: BNP Paribas Cadiz estimates 1.000 employees this year so far. The risk is that not maintaining a direct 26% ownership could come back to haunt shareholders. 8 BNP PARIBAS 29 MAY 2013 . The company maintains a dividend policy of 25% to 35% of earnings.837 229 48 500 3. companies appear to be interpreting it in different ways.935 21 2.44) 0% (795) (1.450/oz or ZAR440.380 9.4 15. Management will have to thoroughly understand the rock mechanics in order to minimise seismicity if they decide to mine these pillars.75%. EXHIBIT 7: Sibanye’s earnings outlook 2012 (ZAR m) Gold price USD/oz ZAR/USD Revenue Cash costs Gen.171 90 240 28% 842 1. Sibanye’s real C3 cash costs will likely rise above USD1.15 0% (320) (0.000/kg should sustain positive earnings for two more years.978 4. Earnings We forecast earnings of ZAR1. We expect restructuring costs of about ZAR500m this year. Loss of skills Management has already retrenched 3. Interest charges are likely to rise as the need for debt increases. This could have a negative impact on productivity. A gold price of USD1. at constant prices.669 8.150/share for FY13. & Admin.615 475 (840) (14%) 2. We expect the company should also manage to fund a dividend this year of about 30cpsfrom free cash. Safety and regional pillars are left over from previous mining activities to provide support.813 12.460 9.554 10.400/oz in FY14. However the company has a legal opinion that it complies with the minimum 26% ownership requirement based on Mvela’s sale of its 15% stake in Gold Fields in 2009.623 11.4 14.074 12.681 216 48 We forecast earnings at constant gold prices but using nominal costs. always empowered? Sibanye’s direct Black Economic Empowerment (BEE) ownership is 11. with more expected.054 478 (613) 2014E (ZAR m) 1. Plans to cut out middle management could cause senior managers to be spread more thinly between operations.Sibanye Gold Ltd Adrian Hammond Risks Cash costs Sibanye already has one of the highest cash costs in the industry at the C1 level. It is the only company amongst its peer group with a declining production outlook. We think this could result in more safety stoppages and negatively impact production. fixed costs of almost 80% are higher on average compared to other deep-level South African mines. We include real cost savings of ZAR1b over the next 18 months. largely for retrenchments.380 9.5km below surface. These pillars are located between 2km and 3. In addition. However.09) 2.874 229 48 124 5. If management cannot arrest the falling production trend.3 16. More safety-stoppages Pillar mining is a high-risk activity.08 2013E (ZAR m) 1.21 16. and become the highest cost South African producer. the company is unlikely to generate any future earnings. Although the Mining Charter is not part of the MPRDA Mining Act.363 393 (83) 2. Once empowered.821 359 1.

0 11. EXHIBIT 8: Valuation of Sibanye Gold based on BNP Case and current LoM plan (ZAR/share) 12 10 8 6 4 6.0 Source: BNP Paribas Cadiz Securities Sensitivity Below we show the sensitivity of the gold price and ZARUSD exchange rate to our Best Case DCF valuation. EXHIBIT 9: Sensitivity of target price to ZAR gold -------------------------------------------------------.ZAR/USD --------------------------------------------------------9.380 USD/oz 1.0 11 12 14 26 20 23 26 10.0 19 21 23 26 30 33 37 High C1 and C3 costs as well the high fixed/variable cost ratio makes the share highly geared to ZAR gold.400 1.450 1. If we 16 based our valuation on the current LoM plan.5 0.550 1. Below we show the NPV of the mines including net debt to arrive at our target price . 15 16 We do not include any environmental liabilities since these funds are currently fully funded.5 15 17 18 22 25 28 32 11. This is a result of our more bearish outlook on production in the early years as well as more capital to develop new projects that will sustain production for longer in the later years.4/USD.380/oz and 15 ZAR9. 9 BNP PARIBAS 29 MAY 2013 .8 7.1 2 0 Driefontein Kloof Beatrix Net debt BNP Case Current LoM Case 4.350 1.Sibanye Gold Ltd Adrian Hammond Valuation We value Sibanye at ZAR7/share based on a real DCF methodology at current prices of USD1.3 3. our valuation would be ZAR11/share .0 1.600 Source: BNP Paribas Cadiz Securities 1 3 4 8 11 14 16 9.500 1. This is due to higher production in the early years and declining capex from next year on.4 5 7 8 12 14 17 20 10.

To arrest this trend development rates will need to be maintained.Q1 FY13 development rates indicate a good recovery from last year’s labour strikes.2moz to 1. 10 BNP PARIBAS 29 MAY 2013 . This will require a change to labour working schedules. We value Sibanye at ZAR7/share at current prices. USD/ZAR exchange rate. The company cannot afford any new projects at current prices. has an attractive forward PE of 6x and dividend yield of at least 4%. Based on historical trends and the current LoM plan. in our view.Sibanye Gold Ltd Adrian Hammond Investment recommendation Sibanye is currently cash generative. although further improvement is necessary. production and potential safety stoppages. In addition. management has a bullish view that production of between 1. We initiate coverage with a HOLD recommendation. the fundamental outlook looks poor. However. We think this is optimistic. its C3 cash costs are in-line with peers’ and the weaker rand has helped boost cash margins above its competitors’. blast frequencies need to be improved.8b and will not be able to generate enough free cash as production from the low-cost SRDs begins to fall.3moz pa can be sustained over the next few years. Upside and downside risks include the gold price. Production has been falling sharply over the last decade in line with falling development. Buyers of this stock need to hold the view that the gold price will rise or the rand will weaken further. Although Sibanye has one of the highest C1 cash costs in the industry. It currently has net debt of ZAR2. Plans to mine pillars and secondary reefs will take at least two years to implement although mining them will be unlikely to provide any upside but more safety risk. something management will likely struggle to negotiate in the upcoming wage review.

EXHIBIT 11: Corporate structure of Sibanye Gold EXHIBIT 12: Top shareholders as at 26 April 2013 Shareholder Ownership (%) Investec Allan Gray 15. Beatrix is located near the town of Virginia in the Free State province. Their lease areas are contiguous although their mining operations are not.90 4. Sibanye Gold Source: Sibanye Gold 11 BNP PARIBAS 29 MAY 2013 .40 4. on the south-western corner of the Witwatersrand Basin. The location of these mines is shown in EXHIBIT 10 below. Below we show the corporate structure of Sibanye Gold and top shareholders. The company is also developing a tailings project in partnership with Gold One.21 10. EXHIBIT 10: Location of mines Source: Sibanye Gold The KDC complex is situated in Carletonville outside Johannesburg and consists of KDC East (Kloof) and KDC West (Driefontein).Sibanye Gold Ltd Adrian Hammond Appendix 1: Company background Sibanye Gold owns and operates the KDC complex and Beatrix mines.34 Sibanye Gold 100% First Eagle Van Eck Kloof Driefontein Beatrix Tailings project PIC Source: BNP Paribas Cadiz Securities.13 5.

000 300. Mining takes place at depths of between 600m and 2. VCR. Mining takes place at depths of between 600 and 3. although they are highly integrated with respect to ventilation and ore transport systems.North: 1. 3 shaft (North section) and 4 shaft (West section).000 150.000 350. The dip of these reefs is to the north between 0° and 15° except for the deeper Kalkoenskrans Reef which dips to the east at 8° to 15°. EXHIBIT 14: KDC Business Units Business unit 1 2 3 4 5 Source: Sibanye Gold Mine Driefontein Driefontein Driefontein Kloof Kloof Shafts 1 and 5 2 and 4 6.We expect that these units may be consolidated as part of cost cutting measures.155m below surface.Four shaft was initially developed as a uranium mine. South section reaches depths of 1. 12 BNP PARIBAS 29 MAY 2013 . The VCR is the dominant reef mined.000 250. There is a deeper lying Beisa Reef although it is too fractured to be mined at current gold prices. 8 and 10 3 and 4 Main. This reef dips at 22° to the south-southeast. EXHIBIT 13: Annual production (FY12A) of existing operations Kloof Driefontein Beatrix SRDs (oz) 0 50.000 200. The main mining method is conventional breast mining.000 450. There are secondary reefs although these account for less than 10% of current reserves. Beatrix includes 1 and 2 shaft (South section).350 metres below surface (mbs). Operations consist of 12 separate shaft systems. Any such details will be released this year when management reveals its new strategy for the company.500mbs and West: 2. Costs are allocated per shaft. VS5 Reef and Kalkoenkrans Reef.500mbs. The KDC lease area is effectively split into two by the Bank Fault.000 Source: BNP Paribas Cadiz Securities Appendix 2: Geology and mining operations KDC Currently three main reefs are mined.000 400.The main mining method is breast stoping with dip pillars.000mbs. grouped together into five business units (EXHIBIT 14). 8 and 10 Beatrix The reefs being mined include Beatrix Reef.Sibanye Gold Ltd Adrian Hammond Below we show the relative size of each operation based on production in FY12. Middlevlei and Carbon Leader. 7. The mine has high levels of methane gas which is a hazard to safety and production although this appears to be well managed. Kloof lies to the east and Driefontein to the west.000 100. 7. Aandenk Reef. Over 80% of operating profits are generated by North section.000 500.

Sibanye Gold Ltd Adrian Hammond Pay-limits and rationalising the operations Kloof and Driefontein are mining at levels 37% above the pay-limit. The West section is plagued by depth. EXHIBIT 15: Pay-limits and mined values (cmg/tonne) 2.000 500 0 Kloof Sources: Sibanye Gold. Management at both KDC and Beatrix plan for unpay/pay ratio of 30%/70%.500 1. Management has two choices: 1 2 Continue operating the mine at a cash loss of at least ZAR300m pa at current prices. Gold grades at this mine are4. the presence of smectite in the footwall has caused excavations to close making mining technically challenging in this area. Beatrix however has been operating at the margin (EXHIBIT 15). Beatrix West has not been profitable since 2011 and is currently in a Section 189 process. South and West sections Mined value (cmg/tonne) 1. The reserve pay-limit is 1. Place the mine on care and maintenance and keep it as an option on gold and uranium.800 1.3g/t on average. In addition.4kg/t on average and the breakeven price is about USD55/lb U3O8. Management intends on pursuing the second choice in order to maintain the option on uranium.045cmg/tonne 900 1.045cmg/t for (EXHIBIT 16). This will come with a once-off cost of about ZAR250m for the retrenchment of about 3. cash costs are currently about R550.000 1.200 1.690 Reserve pay limit Driefontein Beatrix North Sources: Sibanye Gold. as of 2012.000/kg which places this mine in a cash negative position.690cmg/t. This is due to the high costs associated with the West section. heat and long haulage distances. Although the mine only contributes 6% to group production.000 800 600 400 200 0 780 Average mined value: 1.000 people. 2012 figures South West Pre-developed ore reserves have been significantly depleted as a result of the strikes in Q4 2012 as well as from a fire earlier this year. well below the average mined value of 1. 13 BNP PARIBAS 29 MAY 2013 . 2012 figures EXHIBIT 16: Pay-limit at Beatrix North. The pay-limit for Beatrix would fall to about 900cmg/t without Beatrix West. Uranium grades at Beatrix West are 0. the outcome of which will determine whether the mine will remain open or not.500 2.400 1.600 1.

Sibanye Gold held 13moz of underground reserves and 520koz of surface rock dump material.4 5.9 8.8moz (31%) reserves lying below infrastructure18 17 KDC and Beatrix Technical Short Form Report 2011 – for a 10% increase in the gold price.4 4.2 19. the following major changes were made: 10.1 ? 8. 14 BNP PARIBAS 29 MAY 2013 .9 3.0 2007 reserves Production Removal of reserves below infrastructure Exclusion of pillars due to safety Other exclusions 2012 reserves Sources: Gold Fields. reserve grades represented for underground operations only Despite the rise in gold price . reserves for underground operations only 17 Sources: Sibanye Gold.3 6 4.0 10.30 8 7.6g/t to 7g/t over the same period. EXHIBIT 19: Reconciliation of underground reserves (moz) 50 45 40 35 30 25 20 15 10 5 0 42.3 10. Underground reserves Of the three main operations.9 8. Reserve grades have fallen from 8. reserves have fallen 70%in the last five years.2 6. has the highest reserve grade of 8.4 4.0 2007 2008 2009 2010 2011 2012 EXHIBIT 18: Historical reserve grade per mine (g/tonne) 12 10 8.7 6. EXHIBIT 17: Historical reserves per mine (moz) 25 20 15 10 5 0 Kloof Driefontein Beatrix 21. Where did all the reserves go? Below we show the reconciliation of underground reserves since 2007.0 13.9 13. it is expected that reserves should increase about 10%.30 4 2 0 Kloof Driefontein Beatrix Sources: Sibanye Gold.7 10.5 6. Kloofholds the majority of the reserves (42%). Below we show the change in reserves and reserve grades for each mine since 2007.Sibanye Gold Ltd Adrian Hammond Appendix 3: Reserves As of December 2012.4 5.9 7.5 18. Sibanye Gold Since 2007.50 2007 2008 2009 2010 2011 2012 11.3g/t and the longest life of 15 years.2 7.8 2.

5moz due to lower MCF and higher pay-limits. As costs have been rising unexpectedly.000 800 600 500 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: Gold Fields 19 400 200 0 Kloof Source: Gold Fields Driefontein Beatrix Historical unit costs at KDC and Beatrix have risen 14% and 16% y/y since 2005. future costs may have been underestimated. hence reserves have fallen. raising the pay-limit in the estimation of reserves.400 2009 2012 KDC Beatrix 1. Not all South African companies apply the same principles in this regard. Below.000 1. we show historical costs as well as the pay-limits in 2009 compared to 2012. This is largely due to falling tonnages but also poor mining practice. which details the rules for declaring reserves in South Africa Closures of certain mining areas to conserve cash in the short term 4 Rising pay-limits Resources above the pay-limit can be considered reserves. It is likely that in calculating reserves historically.200 EXHIBIT 21: Pay-limits in 2009 and 2012 (cmg/t) 1. 2. The rate at 20 which costs have been rising has also been on the rise.9moz were removed for “economic reasons” which includes the following: 2.500 1. This has resulted in higher dilution. Approximately 1moz were removed from D1 shaft after further drilling confirmed those reserves were not actually there. Channel widths have widened from about 180cm to 140cm. had to be removed from the reserve statement. 18 These reserves did not form part of a Feasibility Study and since management took the decision to follow SAMREC compliance more strictly. This would have artificially inflated estimates for reserves. Below we list the four main reasons for the decline in reserves and discuss the first three: 1 2 3 Rising pay-limits Lower mine call factor A more strict adherence to the SAMREC Code. respectively. 19 CAGR calculated based on quarterly data 20 See “Appendix 12: Costs and capex” 15 BNP PARIBAS 29 MAY 2013 .000 1.1moz (6%) from pillars (as a result of safety concerns) The outstanding 8.500 2. EXHIBIT 20: ZAR/tonne costs at KDC and Beatrix (ZAR/tonne) 2.6moz from the closure of D8 and K8 shafts.8moz unaccounted for although we expect this was removed for similar reasons discussed above.Sibanye Gold Ltd Adrian Hammond 2.600 1. This leaves 2. A primary input in calculating the pay-limit is an estimation of costs. This was done to conserve cash in the short term by focusing on the most profitable mining areas only. increasing the paylimits.

16 BNP PARIBAS 29 MAY 2013 . in line with reserves.5 2010 (%) 83 90 84 2011 (%) 85 85 74 2012 (%) 81 80 79 SAMREC In 2009. Kloof’s LoM has increased from 2023 to 2027 but has been volatile following the inclusion and then the exclusion of the KEA project. in the declaration of reserves.7moz. as opposed to only a Concept Study.Sibanye Gold Ltd Adrian Hammond Lower mine call factor The mine call factor has fallen as much as 10% since 2008 (EXHIBIT 22). made a significant change to its guidelines. the South African Code for the Reporting of Exploration Results. Sibanye Gold Kloof LoM Driefontein LoM Beatrix LoM 2008 2009 2010 2011 2012 Driefontein’s LoM has been reduced from 2041 to 2023. This included the requirement of a Pre-Feasibility Study. In the case for KDC. a total of 3. Below we show the estimated life-of-mine since 2007. Management cites the reasons to be poor discipline and the depletion of old gold which does not get accounted for in the MCF calculation. EXHIBIT 22: Historical mine call factor MCF 2008 (%) Kloof Driefontein Beatrix Source: Sibanye Gold 86 90 88 2009 (%) 85 91 85. the KEA project at Kloof and the tailings project were removed. Beatrix LoM has increased from 2020 to 2025. Mineral Resources and Mineral Reserves (SAMREC CODE). Appendix 4: Life-of-mine and amortisation Historical life-of-mine (LoM) The downward adjustment to the reserves has significantly impacted Sibanye Gold’s life of mine. EXHIBIT 23: Historical LoM estimates (LOM calendar year) 2045 2040 2035 2030 2025 2020 2015 2007 Sources: Gold Fields.

200 1.700 1. Amortisation charges to at least remain steady. and consequently the fall in life-of-mine.300 1.500 1. together with steady stay-in-business capital. Sibanye Gold. 17 BNP PARIBAS 29 MAY 2013 .800 1.600 1. has resulted in larger amortisation charges.100 1.Sibanye Gold Ltd Adrian Hammond Impact on amortisation Amortisation of capital is largely determined by LoM estimates.000 900 800 2007 2008 2009 2010 2011 2012 2028 2026 2024 2022 Amortisation LOM avg (LoM calendar year) 2036 2034 2032 2030 Sources: Gold Fields. EXHIBIT 24: Life of mine and amortisation (Rm) 1. We illustrate this trend in EXHIBIT 24 below. BNP Paribas Cadiz Securities We expect capex to remain at least steady and LoM is unlikely to increase.400 1. The rapid fall in reserves.

Sibanye now wish to re-capitalise the business by re-visiting previously withheld projects. De-stress mining is intended to be achieved by mining the secondary reefs that lie above the pillars. capital programmes at KDC and Beatrix had been held back. The high safety risk relating to pillar mining is largely due to challenging rock mechanics. Research on the extraction of pillars at KDC Main Shaft in 2005 indicated an average cost of ZAR750/tonne or about ZAR1. including safety-related pillars. The pillars are scattered over a large area and their economic viability will largely depend on a shaftby-shaft basis. KDC has relatively high fixed costs (80%) and in many cases. Pillars were removed from reserves in 2010. This was largely a management decision due to safety concerns. regional pillars and shaft pillars at KDC Mining of secondary reefs including the Middlevlei and Kloof Reefs at KDC Mining below infrastructure at both KDC and Beatrix Management’s strategic plans for KDC Pillars The extraction of remnant pillars between 2km and 3. de-stress mining and over-stoping techniques. we think it will be difficult to maintain a single shaft by extracting pillars alone.5x since 2005. 21 Adjusted for production based on a fixed: variable split of 80:20. 18 BNP PARIBAS 29 MAY 2013 .5km below surface at KDC is being reviewed.Sibanye Gold Ltd Adrian Hammond Appendix 5: What is left in the lease? Whilst under the Gold Fields umbrella. High cost inflation over the last few years will likely have an impact on the economics of extracting these pillars. due to the inherent safety risk in mining pillars. Management intends mining these pillars by using “new technologies”. management will need to get consent from the DMR.900/tonne in today’s money. These projects include the following areas of potential: 1 2 3 Mining of pillars. We expect that it will be difficult for the company to bring all these ounces back into reserves for the following reasons: 1 KDC’s normalised ZAR/tonne costs have increased 2. 21 2 In addition.

mining cost of ZAR1. However. dip Source: Sibanye Gold We make the following observations: The pillars are spread over a wide area which would require many shafts to remain open. 24 A good example is the mining approach for Wafi Golpu. Kloof and Libanon Reefs.900/t or R86. it will allow for de-stressing of the pillars. 19 BNP PARIBAS 29 MAY 2013 . Management is expected to provide plans by July 2013 for potential ways in which to mine these reefs. As mentioned previously. this practice alone poses a high safety risk. Of the three reefs. hence falls of ground. However. 22g/t average grade. Due to existing infrastructure. management intends mining pillars in conjunction with secondary reefs. 63kt. we do not expect all the pillars to re-enter reserves. We also show the cost to extract certain pillars at Main 22 Shaft . This risk is similar to the limitation miners have in the number of lifts one can mine at once using the block-cave mining 24 method . By mining the secondary reefs first.5km deep. The extraction of shaft pillars is a slow incremental process and volumes would be significantly lower compared to current volumes22. management appears most interested in the Middlevlei Reef. Based on the above. They are low grade but shallow. 22 23 Adapted from estimates from “Project report – pillar mining at No. This is not factored into the mining cost. Van der Merwe (SAIMM) As much as 80% of cash costs are fixed. EXHIBIT 25: Location of pillars Pillars at main Shaft: between 2km and 3. accessing this reef would require less-thannormal development and costs should be relatively lower. Secondary Reefs There are three secondary reefs located at Kloof mine: Middlevlei. Some pillars are high grade and mining them would appear to be highly profitable. development will be required to access the secondary reefs in order to de-stress the pillars. The Middelvlei Reef lies 50m to 75m above the Carbon Leader (at Driefontein) and mining this ground above a void makes seismicity. No resource data has been made available. more likely.Sibanye Gold Ltd Adrian Hammond Below we show the location of the pillars at KDC.000/kg.1 and 2 sub-shaft on Kloof Gold Mine” by S. mined over 21 months. 45k oz. We also do not expect pillar mining to add a significant benefit to the business due to low volumes and the existing high fixed cost base 23 of the business .

EXHIBIT 27: Kloof lease area EXHIBIT 28: Kloof reserves by mine shaft (December 2012) (koz) 3.2 Driefontein (moz) 8. below infrastructure. It refers to resources that exist although not declared based on management’s decision not to mine.500 Grade too low Pillars: potential to re-open 10m oz resource 2.2 11 19. EXHIBIT 26: Resources and Inventory at Kloof and Driefontein Kloof (moz) Resources Inventory Total Source: BNP Paribas Cadiz Securities 12.2 The company intends to provide an update on its strategy that will incorporate the above ideas by July 2013.000 1.500 Middlevlei opportunity High grade but below infrastructure Gold Field’s South deep area 1. Management indicates that the only other shaft pillar they could potentially mine is D1.2 10 22. management has indicated there are significant resources 25 and inventory they are busy reviewing to bring back into reserve (EXHIBIT 26). 20 BNP PARIBAS 29 MAY 2013 .000 2.Sibanye Gold Ltd Adrian Hammond Shaft pillars Mining has commenced at K1 shaft pillar at Kloofand D4 shaft pillar at Driefontein. Below we assess some of these ideas that management has discussed in conjunction with the latest mine plans.000 500 Low grade. Kloof Below we assess the Kloof lease area. Other resources and inventory In addition to the above three areas of potential. too far 0 8 shaft Source: Sibanye Gold Source: Sibanye Gold 1 shaft 7 shaft 3 shaft 2 shaft 4 shaft 25 Inventory is a relatively uncommon category of mineral classification.

requires new shaft 800 D5 shaft deeps 600 400 200 0 10 shaft 6 shaft 8 shaft 2 shaft 1 shaft 4 shaft 5 shaft Source: Sibanye Gold Source: Sibanye Gold 26 27 Virgin rock temperatures are of the order of 55°C Derived from the resource/reserve ratio of 4 shaft zone. This has effectively brought mining in the southern part of Kloof’s lease area to an end. This represents significant potential to the lease area although depths would need to be increased beyond 4km below surface. EXHIBIT 29: Driefontein lease area Pillars and secondary reef potential – 1moz 27 EXHIBIT 30: Driefontein reserves per mine shaft (December 2012) (koz) 2. However this project is likely to only offer some replacement to the mine’s falling production profile. Driefontein Below we assess the Driefontein lease area. Extension beyond the boundary into South Deep’s lease area is not possible due to displacement by the West Rand fault.Sibanye Gold Ltd Adrian Hammond Recent changes to Kloof mine include a reduced level of mining at7 shaft. Drilling results indicate grades of between 11g/t and 12g/t. when the project was first planned for. This reef is close to existing infrastructure. Based on a resource/reserve ratio of 36% . 3 and 2 shaft. This higher number is based on extending down three levels.400 1. Management intends on accessing these potential reserves via a spiral decline (46 decline) which would extend 44 level to eventually 48 level.000 9 Shaft difficult to access. 21 BNP PARIBAS 29 MAY 2013 . We therefore expect that reserves at 7 shaft (456koz) will likely be removed. primarily as a result of low grades. This would not come without an increase to real 26 costs (largely due to needed refrigeration ).5b to gain access to 46 level. of which the KEA zone is an extension of. we estimate about 800k oz reserve potential for the KEA zone in the next three to four years.800 1. It also indicated peak production of about 200koz pa. which we discuss below.4b. and a new project called the Kloof Extension Area. There is significant shallow un-mined ground at Venterspost (6 shaft) to the north although grades here are too low (about 2g/t) for economic extraction. Kloof Extension Area (KEA) A 2. What is effectively left for Kloof mine is 4. Mining of the shaft pillar at Main Shaft has begun although this is already in reserves.200 1.000 1.600 D1 shaft pillar 1.26moz resource potential lies below infrastructure on the eastern boundary at Kloof’s 4 shaft. Management estimates that production could begin in no less than three years at a cost of ZAR0. An article by Mining Weekly in October 2006. cited a cost of ZAR1. The Middlevlei Reef offers opportunity in the 8 shaft area.

BNP Paribas Cadiz Securities West North Sources: Sibanye Gold.Sibanye Gold Ltd Adrian Hammond Mining at 2 and 8 shaft has been very successful for Driefontein to date. This includes the Vlakpan ground west of North Section and down-dip opportunities at North shaft: Vlakpan Early development work to access the Kalkoenkrans Reef between 16 level and 22 level west of Beatrix North shaft has begun. Growth or replacement of reserves at Beatrix can only come from below infrastructure within the current lease area. as a joint venture project.500mbs). These pillars would be mined in conjunction with the Middlevlei and Kloof reefs. it is highly fractured and too costly to mine at current prices. The area is relatively shallow (1. This amount has not yet been included in the reserve statement. depths would reach below 3. Management intends on mining 1 Shaft pillar at Driefonteinvia 2 Shaft. Management indicates that there is a potential of 8. Management is considering access via a down-dip decline or a sub-vertical shaft. AngloGold’s Tau Tona mine. We expect that at least two years would be needed to gain access and produce gold from this area. However. The Beisa Reef which lies below the Kalkoenkrans Reef. We expect these ounces to provide about 2 years life extension at the indicated LoM production rates. Mining at 9 shaft remains as a long-term option. Management is considering entering ground below infrastructure at 5 shaft. The company has indicated that there is 560k oz of “mineable reserves” which they expect to mine from 2017 onwards. The project started in 2008 but was then stopped due to power supply concerns and capital commitments for South Deep.5moz in resource. as previously discussed. There is potential to mine the ground at 9 shaft although this would need to be done from its neighbour. However. There is about 1m oz potential from pillars at 10 and 6 shaft. The majority of reserves now remain at 5 and 4 shaft.5km and we would expect this to remain only an option for now at current prices. We therefore exclude production from this shaft in our forecasts.000 Vlakpan Down-dip extension 500 0 South Sources: Sibanye Gold. Each level has a potential of 300koz reserve. Nine shaft had been ideally positioned to access reef from both Driefontein and Tau Tona. holds 7. BNP Paribas Cadiz Securities West section is no longer economic.000 Too deep and far 1. EXHIBIT 31: Beatrix lease area EXHIBIT 32: Beatrix reserves per mine section (koz) 2. This mine however does still hold potential in addition to holding an option on uranium.500 2. South section has about three years life remaining based on current reserves of about 250koz.500 1. Beatrix Below we assess the Beatrix lease area. The project could add 230koz potential reserves. This area has potential for three new levels. 22 BNP PARIBAS 29 MAY 2013 .5m oz resource.

BNP Paribas Cadiz Securities Sources: Sibanye Gold. 9 shaft can only be mined from the neighbouring Tau Tona mine.Bloemhoek has an estimated “probable” reserve of 5. Beatrix:Two options exist. In summary: There are only two capital opportunities the company intends to pursue within the current lease area: the KEA project at Kloof mine and Vlakpan project at Beatrix mine. This ground could be sold to AngloGold although AngloGold management does not intend pursuing this. as shown in EXHIBIT 33 and EXHIBIT 34 below. This area lies north of the down-dip extension from Beatrix North. The resources at these areas lie below infrastructure are not significant enough to either grow or maintain production.Sibanye Gold Ltd Adrian Hammond North Section The down-dip extension at North section would unlikely result in growth but replacement of lower cost with higher cost ounces. Wits Gold is an exploration company at present although it has been pressured by shareholders to execute on existing projects. or reduce unit costs. in our view. The first one concerns Wits Gold’s Bloemhoek lease area.4Moz at a head grade of 5. there are effectively three companies with contiguous ground that offer potential opportunities for corporate action. The second option concerns Joel mine belonging to Harmony Gold. Management however does not expect any corporate action concerning KDC or Beatrix in the short to medium term. This ground lies east of South shaft. Opportunities beyond the lease area There are a number of opportunities adjacent to the current lease areas at Beatrix and Driefontein mine. BNP Paribas Cadiz Securities 23 BNP PARIBAS 29 MAY 2013 . These include: Driefontein: As mentioned previously. At Beatrix however.33g/t. EXHIBIT 33: Beatrix lease area and neighbours EXHIBIT 34: Driefontein lease area and neighbours AngloGold West Wits Wits Gold Harmony’s Joel mine Sources: Sibanye Gold.

We do not account for potential reserves from secondary reefs which could further sustain production or extend life-of-mine.029 13. Management is prepared to mine secondary reefs at cost.028 13. We do know that secondary reefs form part of the resources and inventory shown in EXHIBIT 26.9g/t at North Section 24 BNP PARIBAS 29 MAY 2013 . 28 29 Calculated using reserve over remaining Life of Mine for KDC Calculated based on 400kt pa at an average grade of 10g/t 30 60kt pm(Beatrix CPR Report 2012). BNP Paribas Cadiz Securities 2.030 2015 2017 2017 2021 Start year We estimate there is no less than 3. EXHIBIT 35: Potential reserves Source Potential reserve (koz) Pillars Secondary reefs KEA project D1 pillar Vlakpan Sources: Sibanye Gold. but necessary to de-stress the mining of pillars below.029 9.2 4. We also show the estimated annual production and start year. we summarise the potential reserves that we think are probable.Sibanye Gold Ltd Adrian Hammond Appendix 6: Potential upside Based on our assessment of opportunities within and beyond the lease.3 2. but to sustain it and potentially extend the current life of mine by no more than three years.100 800 560 230 11.7m oz of potential reserves. grade based on reserve grade of 3. assuming all the pillars that were previously removed can be brought back. apart from the current LoM plan. We do not expect mining them will be value accretive to the business. These reserves are not expected to increase production.6 Life (years) Annual production (koz) 19.0 6.

The differences here are largely a function of grade. production volumes and operating costs.129 173 443. while Beatrix is likely to be cash negative from FY13. The SRDs are expected to contribute 23% to group free cash in 2013 and therefore form an important part of the business.000 Beatrix 1. LoM plan and historical quarterly information Additional capacity of 100kt pm is expected to be installed at Kloof by June 2013 and a further 40kt pm in FY14. Operations at Kloof are the most profitable. This is a result of two main reasons. EXHIBIT 36: SRDs key operating data for FY13F Kloof Tonnes Head grade Ounces Cash cost Cash cost ktpa g/t oz/a R/t R/kg 3. followed by Driefontein. The contribution to the group rises y/y in 2013 as a result of higher capital budgeted for the underground operations. SRDs are waste material that has been stockpiled over the years.26 5. Driefontein reserves become fully depleted by 2014. as well as a lower spot gold price. and to a lesser extent. followed by Driefontein (27%) and Beatrix (7%). we show expected production and the outlook for real free cash.Total reserves are 520koz.200 0. 25 BNP PARIBAS 29 MAY 2013 . EXHIBIT 37: LoM production from SRDs (koz) 120 100 80 60 40 20 0 2012 2013E 2014E 2015E 2016E 2017E Kloof Driefontein Beatrix EXHIBIT 38: Real free cash from SRDs (ZAR m) 600 500 400 15 300 10 200 100 0 2012 2013E 2014E 2015E 2016E 2017E 5 0 Real free cash before tax Contribution to group (%) 25 20 Source: BNP Paribas Cadiz Securities Source: BNP Paribas Cadiz Securities Sibanye expects real free cash from SRDs to more than halve by 2015 while the contribution to group free cash is expected to fall from 23% this year to 7% in 2015. 1 2 Grades from Kloof fall from 0.66 47. although we think this is often overlooked by the investor community.4g/t in 2015. Kloof’s SRD reserves are the largest in the group (66%).300 0. estimates based on current reserves.000 Sources: BNP Paribas Cadiz Securities. This material should not be confused with lower grade tailings from processed ore.250 0. Below we forecast key operating information for FY13. The profitability of these three operations all vary as a result of different head grades.305 83 630. rock hardness.000 Driefontein 3. Below. Kloof has the largest reserves.622 79 175. Below we assess the expected life and profitability of the SRDs.60 40.This will boost total capacity by 28%. The resources and reserves for SRDs are typically well defined since they lie on the surface and have recently undergone an intensive drilling campaign.Sibanye Gold Ltd Adrian Hammond Appendix 7: Surface rock dumps All three mines produce gold from surface rock dumps (SRD). largely as a result of a major sampling campaign.66g/t this year to 0. SRDs are expected to become fully depleted by 2017.

We estimate recoveries would be about 35% on average based on recoveries achieved at Ergo.4mt pm processing plant. EXHIBIT 39: Summary of Option 1 and Option 2 tailings project Option 1 Capacity Recoverable reserves Gold Recovery % g/t moz Uranium Recovery % kg/t mkg Capex Opex NPV Breakeven price Gold Uranium Sources: Sibanye Gold. Option 2: A smaller Pre-feasibility Study is being done to assess the viability of producing gold only from KDC’s 13 tailings dumps.3m oz. Recoveries could be enhanced by the use of ultra-fine grinding.65 35 0.500/oz and USD1. if executed.3g/t. Assumptions and results Below we summarise the assumptions for each option. Results from a Scoping Study placed the capital cost between ZAR8b and ZAR14b with a production rate of 4mt pm feed to produce an average of 300koz Au eq. Appendix 8: Tailings project Management is considering two options for processing tailings.Sibanye Gold Ltd Adrian Hammond The company intends replacing the cash flows from these operations with a new project to process surface 31 tailings. Our DCF valuation (at current prices and 10% real discount rate) results in a negative NPV for both options. gold grades begin to decline to below 0. This could reduce our breakeven price from USD1. Current resources are estimated at 372mt at an average grade of 0. belonging to DRDGold. Operating costs are expected to 32 be less than ZAR100/t. Gold would effectively be processed from Sibanye’s dumps and uranium from Gold One’s dumps.600/oz. we don’t think this project will be value accretive .23g/t 26 BNP PARIBAS 29 MAY 2013 . Currently.750/oz gold and USD65/lb U3O8.750/oz to between USD1. Although both options are cash positive in the early years. Our “NPV-neutral” price is USD1.32 1.5g/t and 0.19 12. The Scoping Study has been progressed to a Pre-feasibility Study with a focus to reduce capital costs.7m oz gold. would make it the largest tailings facility in the world. However.4 31 32 Appendix 8: Tailings project Grades vary between 0. Management expects that the capital cost should not exceed ZAR10b. and eventually from run-of-mine material as well. Option 1: Last year Gold Fields and Gold One engaged in a joint venture study for developing a large scale surface reclamation plant to produce gold and uranium.32 1. BNP Paribas Cadiz Securities USD/oz USD/lb 1750 65 1750 ZARbn ZAR/t ZARm 80 0. is the largest with a production rate just over 2mt pm. Hence potential reserves are estimated at about 1.32g/t to give about 3.3 mtpm 4 Option 2 2. This project. per annum over a 20-year life. Management expects the project will cost no more than ZAR6b for a 2. Ergo Mining.6 9 100 <0 5 60 <0 35 0.

0 2. The primary concerns with any mining dump are dust. This will likely receive resistance from lobby groups.0 0. Preventative measures can be taken although often not enough is done. 2 27 BNP PARIBAS 29 MAY 2013 . This could be a net positive impact on the environment as long as the new mega dump is built to a “world-class” standard. which would allow them permission to deposit sulphur rich.0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Kloof Beatrix Driefontein reserve grade Driefontein Kloof reserve grade Beatrix reserve grade Sibanye LoM Plan Source: Sibanye Gold Secondly. material would be re-deposited from 13 dumps scattered around KDC to one mega deposition site at South Deep. grades at Kloof and Beatrix have been forecast to rise above reserve grades. These plans do not include any potential upside from remnant pillars or shaft pillars. In addition. In the case for the tailings project.0 8. Firstly. In EXHIBIT 40 we show the historical and planned head grades relative to the reserve grades. In EXHIBIT 41 we show historical and planned production tonnages. EXHIBIT 40: Head grades and reserve grades (g/tonne) 12. and uranium rich (in the case for Option 2) material on the new mega dump. we make the following observations with respect to grades: 1 2 3 Head grades at all three mines have been trending down in line with reserve grades. This has resulted in less face availability.Sibanye Gold Ltd Adrian Hammond Environmental challenges As with DRDGold. Management will need a revised Record of Decision from government. In EXHIBIT 42 we show historical and planned development. Planned grades however have been forecast to rise at all three mines. Head grades on average have been significantly lower than reserve grades.0 4. uranium and contamination of ground water.0 10. mining surface dumps brings with it many environmental responsibilities and potential resistance from lobby groups. Planned volumes are expected to remain relatively steady. Appendix 9: Current life-of-mine plans To assist in our outlook for production.0 6. we consider the 2012 Competent Person’s Reports prepared by management at each mine. we make the following observations with respect to production tonnes: 1 Volumes have been trending downwards in line with declining development.

28 BNP PARIBAS 29 MAY 2013 . This will likely be difficult to negotiate with the labour unions.000 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Sources: Sibanye Gold. 2) More time being spent on support activities (such as support) instead of stoping activities. we have low confidence in the current LoM plans.000 6. We expect volumes to continue to fall if development continues to fall. In addition to falling development.200 1. We do not expect grades to rise above reserve grades but we do expect them to remain at least steady. This could be possible a few years prior to closure of a mine where only pre-developed ore reserves are mined. tonnages have fallen as a result of a fall in the blast frequency from 1 in 2 days to 1 in 4 days. Although development continues to fall.000 800 600 400 200 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: Sibanye Gold Kloof Driefontein Beatrix Sibanye LoM Plan Thirdly. as previously discussed. although the LoM plans extend beyond 2020.000 14. 33 By flexibility we imply face availability as measured by the number of stopes/panels available to be mined at any time.000 2. Driefontein and Beatrix.000 10. we make the following observations with respect to development metres: Ore reserve development is a significant driver for production volumes and maintaining flexibility .000 4.000 12. EXHIBIT 42: Kloof historical development metres and tonnes (dev metres) 16.200 1. This is largely a result of two factors: 1) less time at the stope face due to longer travelling times. production volumes have been forecast to remain steady at Kloof.000 800 600 400 200 0 Based on the above. Management hopes to improve the blast frequency by extending shift hours and optimising holiday periods. BNP Paribas Cadiz Securities 33 Development metres Underground tonnes (000) Sibanye Forecast (tonnes) 1.Sibanye Gold Ltd Adrian Hammond EXHIBIT 41: Production tonnes (quarterly) (tonnes) 1.000 8.

We take note of the following in our forecasts: New plans have yet to be fully developed and it is likely this will take two to three years to implement.50 1. This was a significant “stress event” and we expect that some areas of the mines suffered a permanent loss of face availability.41 power cuts seismicity 1.90 1. D1 shaft and KEA) can be expected to come online and production should be sustained beyond what the current life-of-mine plan indicates.59 1.22 2006 2007 2008 2009 2010 2011 2012 Appendix 11: Production outlook Management is currently reviewing the life-of-mine plans but intend on maintaining production at current levels of about 1. new projects (namely Vlakpan. making no significant impact to overall production. 29 BNP PARIBAS 29 MAY 2013 . EXHIBIT 43: Historical gold production (moz) 3. This has already been observed at Beatrix West which is now under consideration for closure. Production from SRDs will reduce to one third within two years. New projects within the lease are unlikely to provide any growth but rather replacement. We don’t expect any projects beyond the lease in the short to medium term. The first event occurred in 2008 as a result of power cuts and seismicity issues.86 1.00 1.Sibanye Gold Ltd Adrian Hammond Appendix 10: Historical production Gold production from KDC and Beatrix has been reduced from just over 3.9m oz but did not recover thereafter.1m oz in 2002 to 1.4m oz to 1. falling to 1.44 strikes 1. The mining of pillars will likely result in small volumes over a long period. By 2017.00 2005 Source: Gold Fields 2. We expect production to remain flat y/y in FY13 at about 1.50 0.24m oz.00 0.22m oz in 2012(EXHIBIT 43).50 2.59 2. Production fell from 2. The second event occurred last year as a result of prolonged labour unrest. We do not expect production in 2013 to recover to previous levels.00 2. We expect it will take management at least two years to stabilise production in line with current development rates. During this period there have been two rapid falls in production.22m oz. We illustrate this in the chart below.74 2.0m oz by FY15 (EXHIBIT 44).

normalised for tonnes 35 on a 70% fixed.0 1.5 2. 34 35 On-going capital= stay-in-business capital + ore reserve development capital Although the current fixed:variable split is closer to 80:20 30 BNP PARIBAS 2029E 2007 2008 2009 2010 2011 2012 29 MAY 2013 . EXHIBIT 45: Historical C1 cash costs (ZAR/tonne) 3.500 2.5 0. We also show KDC’s adjusted costs.000 500 0 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Sources: Gold Fields. This compares well to the benchmark of 12% and suggests that the mines at KDC have done well to contain inflation. BNP Paribas Cadiz Securities Appendix 12: Costs and capex In our analysis of unit cash costs. BNP Paribas Cadiz Securities Benchmark inflation CAGR = 12% KDC (unadjusted) CAGR = 14% KDC (normalised) CAGR = 10% The normalised costs increased an average of only 10% pa.0 0.Sibanye Gold Ltd Adrian Hammond EXHIBIT 44: Sibanye Gold Production Outlook (moz pa) 2. 30% variable basis .0 Current LoM plan BNP case 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E Sources: Sibanye Gold. The adjusted costs assume the same level of inflation as Barberton.000 2. BNP Paribas Cadiz use the following terms. We compare this to a steady-state operation (Barberton Gold Mine) as a benchmark measure for inflation.5 1. We show the compounded annual growth rates on EXHIBIT 45. Pan African Resources.000 1.500 1. defined as follows: C1 = mining cash costs C2 = C1 + corporate overheads + royalties C3 = C2 + on-going capex34 C4 = C3 + net interest + social expenditure C5 = C4 + exploration + project capital EXHIBIT 45 shows C1 ZAR/tonne costs at KDC’s underground operations since 2005.

727 413. Redistribution of profits to Gold Fields other operations instead of re-capitalising KDC and Beatrix would have been part of the reason.364 270. EXHIBIT 47: C1 and C3 real cash costs – BNP Best Case Combined underground and surface Kloof C1 C3 Driefontein C1 C3 Beatrix C1 C3 Combined C1 C3 Source: BNP Paribas Cadiz Securities R/kg R/kg 285. The high fixed costs are largely due to pumping of water and maintaining the complex ore transport infrastructure at KDC. we expect no more than ZAR1b in cost reductions over the next 18 months.283 371. We estimate that the following is achievable.461 382. Based on current cash costs of ZAR12b. Overall. This is largely due to falling tonnages which have halved from about 1.000 retrenchments.000 workers.702 327. This includes corporate overheads and services (as a result of the unbundling) as well as at least 4. Our assumptions for inflation rates are based on current actual and expected rates.000 have been achieved.464 260. 31 BNP PARIBAS 29 MAY 2013 . This suggests the mines have not managed their production plans well. broken down as follows: ZAR750m for the retrenchment of 4.Sibanye Gold Ltd Adrian Hammond Actual C1 costs at KDC increased 14% pa.045 285.715 328.567 413.059 285.841 397.8b. this would equate to about ZAR1.266 358.761 376. Other reasons include: A high fixed-cost base which management has indicated has risen to as much as 80%.800kt pa to 900kt pa over the same period. FY14 and FY15.409 363. of which 3. ZAR50m in corporate overheads Total ZAR0.862 369. Employee numbers have remained relatively static. EXHIBIT 46: Cost breakdown and inflation rates inflation rate pa (%) labour + contractors consumables electricity other overall Source: BNP Paribas Cadiz Securities 10 8 8 6 9 % of costs (%) 58 22 18 2 100 Cost savings Management intends cutting fixed costs by 20% in the next 18 months. At most. We do not expect this will fill the shortfall of ZAR1b.8b In addition.849 260. Sibanye management intends removing some middle management employees that they believe are no longer needed. Cost inflation Below we show cost inflation for the main cost components as well as its relative contribution to total costs.612 388.663 362.891 2013E 2014E 2015E Real cash costs are expected to remain steady as a result of the cost savings as well as the mining of pillars in 2015.431 R/kg R/kg 294.973 R/kg R/kg 314.050 413.242 R/kg R/kg 258.558 248. we expect inflation of no less than 9% pa for FY13.

000 1.600 1. C3 cash costs are a lot more similar between the peer group.400 1.600 2.073/oz positions it in the upper quartile of the cost curve alongside Harmony.000 800 600 400 200 0 0 10 20 30 40 oz Au per annum 50 60 70 (m) Harmony Sibanye AngloGold Ashanti Gold Fields Sources: Brook Hunt. BNP Paribas Cadiz Securities 32 BNP PARIBAS 29 MAY 2013 . EXHIBIT 48: Global C1 cash cost curve (current costs) (USD/oz) 2. and less favourably compared to Gold Fields and AngloGold Ashanti.400 2. Sibanye’s current C1 cash costs of USD1.800 1. relative to its peer group.800 1. However.200 2.000 1.200 1.600 1.000 800 600 400 200 0 0 10 20 30 40 oz Au per annum 50 60 70 (m) Harmony Sibanye AngloGold Ashanti Gold Fields Sources: Brook Hunt.300/oz and USD1.200 2.Sibanye Gold Ltd Adrian Hammond Global cash costs Below we show where Sibanye is positioned on the global C1 and C3 cash cost curves.200 1.400/oz. at between USD1.400 1. BNP Paribas Cadiz Securities EXHIBIT 49: Global C3 cash cost curve (current costs) (USD/oz) 2.

equivalent to ZAR5b over three years. We factor in ZAR1b project capital for new projects from 2015 to 2017. We expect current SIB capex numbers to remain steady in-line with maintaining development rates at current levels.2b. Based on the current life-of-mine plan.Sibanye Gold Ltd Adrian Hammond Capex Below we show historical and forecast capex. Capex will likely grow even more to bring new projects into production.0 Tailings project? 4. EXHIBIT 50: Real Capex Outlook (ZAR b) 6. Capex this year has been budgeted at ZAR3.0 0.0 1. We do not factor this into our models.0 2010 2011 2012 2013E 2014E 2015E 2016E 2017E 2018E Current LoM Plan BNP Case Tailings project Sources: Sibanye Gold.0 3. We also include the expected capital outlay for a potential new tailings project. 33 BNP PARIBAS 29 MAY 2013 .0 2. capex is expected to fall to about ZAR1b by 2018 in line with falling development.0 5. BNP Paribas Cadiz Securities If management intends to keep production steady. capex will at least need to remain at about ZAR3b pa.

50/share Beatrix: ZAR0. A starting period of FY13. Model assumptions and inputs We calculate the NAV for Sibanye Gold using the following key assumptions: Spot gold of USD1. Real discount rate of 10%.Sibanye Gold Ltd Adrian Hammond Appendix 13: Valuation We adopt a real DCF method to estimate a 12-month target price. Additional project capital of ZAR1b real (based on Pre-feas estimates for the KEA project). 34 BNP PARIBAS 29 MAY 2013 .3/share Net debt: ZAR3. Management has indicated that all the Environmental Rehabilitation Trusts are fully funded.8/share Our valuation based on the current LoM plan is ZAR11/share.380/oz. Actual net debt of ZAR2.7m oz. This valuation technique lends itself well to gold companies in South Africa due to it being well established amongst the investment community as well as the transparency from company management. We do not include the valuation for the tailings project since the results are NPV negative based on current assumptions and prices. we have taken cognisance of management guidance and conversations with the CFO and MRM manager. Other cost assumptions: Below we show the royalty rates and taxes which we incorporate into our DCF valuation.10/share Kloof: ZAR4. Exchange rate of ZAR9. Life of mine based on stated reserves. In our assessment of life of mine. future expected grades. expected ramp-up time and capital cost.00/share broken down as follows: Driefontein: ZAR6. as well as the potential additional reserves of 3.5)% Tax rate = 34 -170/x. tonnages. as at April 2013.5 + EBIT/(Revenue x 12. Royalties and taxes for South Africa are formula based: Royalty rate= 0.4/USD. where x = taxable income/revenue Results We value Sibanye Gold at ZAR7.8b.

3 3. followed by Kloof (43.000 4.000) 2013F 2014F 2015F 2016F 2017F 2018F 2019F 2020F 2021F Source: BNP Paribas Cadiz Securities estimates BNP CASE Current LoM 35 BNP PARIBAS 29 MAY 2013 .Sibanye Gold Ltd Adrian Hammond EXHIBIT 51: Valuation of Sibanye Gold for BNP Case and based on current life of mine plan (ZAR/share) 12 10 8 6 4 6.000 10.000 6. Driefontein and Beatrix Beatrix 2.0 Source: BNP Paribas Cadiz Securities The majority of our valuation lies with Driefontein (56.3%).9% Kloof 41.8 7.1 2 0 Driefontein Kloof Beatrix Net debt BNP Case Current LoM Case 4. EXHIBIT 52: NPV of Kloof.000 2.5 0.4%).4%) while Beatrix holds no value at all (0.9% Source: BNP Paribas Cadiz Securities Below we show our progressive NPV for each case.2% Driefontein 55.000 8.0 11.000 0 (2. EXHIBIT 53: A forward view of Sibanye's NPV (ZAR m) 12.

29 (0.350 2013E 16.0 4.4 (27.393 0 (339) 2.44) (0.00 - - 0.0 140.1 28.0) (71.2) 0.6) (47.5 - 20.5 - 15.7 16.4 6.0 12.086) 2.0 31.6) (1.371) 0 (318) (478) 0 0 0 (795) 0 (795) 0 0 0 (795) 0 (795) - 4.1) (95. pre-goodwill and fully diluted 2011A - 2012A 16.5 148.7) (4.0 9.2 5.7) (0.WACC (%) ROIC (%) ROIC .1) (5.09) (1.405 (2.874) 5.0 (0.680 0 (403) 5.09 1.554 (10.3 5.3) (138.1) 148.6 20.6) (538.3 0.8) (10.09) 0.15 0.5) (75.979 372 3.8 (14.530 (359) 0 0 0 1.2 (2.813 (12.054 (2.0 2.0) 2.59 4.6 0.08 0.2 0.8) Sources: Sibanye Gold.9 0.074 (12.837) 4.821 (2.291) 0 1.979 0 0 0 2.613 366 2.5 (2.1 13.277 (2.15 1. BNP Paribas estimates 36 BNP PARIBAS 29 MAY 2013 .0) (0.0 0.9 17.00 (1.171 (330) 842 0 0 0 842 0 842 2014E 14.914 (21) 93 0 (373) 2.7) 0.44) 0.2 0.2 0.727 0 (322) 2.3) (0.WACC (%) ROE (%) ROA (%) *Pre exceptional.Sibanye Gold Ltd Adrian Hammond Financial statements Sibanye Gold Ltd Profit and Loss (ZAR m) Year Ending Dec Revenue Cost of sales ex depreciation Gross profit ex depreciation Other operating income Operating costs Operating EBITDA Depreciation Goodwill amortisation Operating EBIT Net financing costs Associates Recurring non operating income Non recurring items Profit before tax Tax Profit after tax Minority interests Preferred dividends Other items Reported net profit Non recurring items & goodwill (net) Recurring net profit Per share (ZAR) Recurring EPS * Reported EPS DPS Growth Revenue (%) Operating EBITDA (%) Operating EBIT (%) Recurring EPS (%) Reported EPS (%) Operating performance Gross margin inc depreciation (%) Operating EBITDA margin (%) Operating EBIT margin (%) Net margin (%) Effective tax rate (%) Dividend payout on recurring profit (%) Interest cover (x) Inventory days Debtor days Creditor days Operating ROIC (%) Operating ROIC .0) (138.0) 1.363) 0 2.0 23.0 4.7 4.9) (37.0 15.333) 0 73 (393) 0 0 0 (320) 0 (320) 0 0 0 (320) 0 (320) 2015E 15.0 14.681) 2.1 25.1 0.623 (11.2 (14.787 0 (966) 3.3) 0.6 (2.

008 761 2.063 3.72 20.11) 2013E 1.7 0.3 4.1 0.8 2013E 6.6) (3.609 26.640 23.25 25.6) 2014E neg neg neg 0.354 21.4 2.654 0 0 0 investment Free cash flow to equity Net acquisitions & disposals Dividends paid Non recurring cash flows Net cash flow Equity finance Debt finance Movement in cash Per share (ZAR) Recurring cash flow per share FCF to equity per share Balance Sheet (ZAR m) Year Ending Dec Working capital assets Working capital liabilities Net working capital Tangible fixed assets Operating invested capital Goodwill Other intangible assets Investments Other assets Invested capital Cash & equivalents Short term debt Long term debt * Net debt Deferred tax Other liabilities Total equity Minority interests Invested capital 2011A 7.9) 0.248 4.5 0.186 0 18.4 0.435 4.207 0 0 0 1.518 16.363 0 0 5.333 0 0 2.516 2.1) 0.0 3.4 22.455 2.6 14.220 2.013 13 (3.3 0.2 1.0 2.89 15.561 2.354 24.561 (565) 2.409) 0 0 0 (1.186 0 15.3 22.6 1.2 1.578) 0 (1.291 0 0 3.9 (12.83 3.305 0 28.8 1.15 (2.13 2011A neg - 32.5 0.083) 0 2.000 5.000 3.971) 0 1.1 6.9 2012A 1.546 2.920 0 (1.8 2.566 19.256 2.28 (0.4 25.350 2.8) 0.000 3.579 23.354 31.248 (512) 2.371 0 0 1.1) (2.186 0 16.435) 0 (1.0) 0.256 4.616 1.761 4.5 (2.13 25.5 1.92) 2014E 1.991) (71) 2013E 842 2.89 20.000 2.075 26.5 3.5 6.63 2012A 1.354 28.651 0 (731) 0 1.6 (4.186 0 11.69) 2015E 1.8 12.184 0 24.75 (1.477 (494) Adrian Hammond * includes convertibles and preferred stock which is being treated as debt Per share (ZAR) Book value per share Tangible book value per share Financial strength Net debt/equity (%) Net debt/total assets (%) Current ratio (x) CF interest cover (x) Valuation Recurring P/E (x) * Recurring P/E @ target price (x) * Reported P/E (x) Dividend yield (%) P/CF (x) P/FCF (x) Price/book (x) Price/tangible book (x) EV/EBITDA (x) ** EV/EBITDA @ target price (x) ** EV/invested capital (x) * Pre exceptional.063 3.1) 2015E neg neg neg 0.25 22.9 1.3 5.000 4.maintenance Capex .598 0 21.008 2. pre-goodwill and fully diluted - 15. BNP Paribas estimates 37 BNP PARIBAS 29 MAY 2013 .576 30 (3.72 22.000 7.4 35.264) 0 (83) 0 (210) 0 (293) 0 346 53 2014E (320) 2.708 4.652 30.7 (66.0 18.2 0.000 3.4 ** EBITDA includes associate income and recurring non-operating income Sources: Sibanye Gold.616 2011A 2012A 3.5 124.7 (3.133 49 (3.971) 0 0 0 (1.Sibanye Gold Ltd Sibanye Gold Ltd Cash Flow (ZAR m) Year Ending Dec Recurring net profit Depreciation Associates & minorities Other non-cash items Recurring cash flow Change in working capital Capex .327) 2015E (795) 2.409) 0 82 (1.9 (33.376 19.0 2.063 3.4 1.4 39.261 0 0 0 1.504 2.3 0.418 0 31.894 0 0 0 1.063 3.8 0.713 21 (3.

BNP Paribas analysts may participate in company events such as site visits and are prohibited from accepting payment by the company of associated expenses unless pre-approved by authorized members of Research management. is regulated by the Securities and Futures Commission for the conduct of dealing in securities. a prospectus.. BNP Paribas Securities (Japan) Limited is a financial instruments firm registered according to the Financial Instruments and Exchange Law of Japan and a member of the Japan Securities Dealers Association and the Financial Futures Association of Japan.18 & 7. and Bombay Stock Exchange Ltd. having its registered office at Menara BCA. financial situations. This publication is being provided to you strictly on the basis that it will remain confidential. formed or created under the laws of Canada or a province or territory of in Canada or any province or territory thereof. to certain financial institutions defined by article 17-3. alternatively. or needs of individual clients.1. stored or reproduced in any form by any means or (ii) redistributed or passed on. Corporations Regulations 2001. By accepting this document you agree to be bound by the foregoing limitations. 1 North Avenue. disposal or holding of securities. BNP Paribas Cadiz Securities (Pty) Ltd. that BNPP may engage in transactions in a manner inconsistent with the views expressed in this document. Mumbai 400 051 (Tel. This report is for the use of intended recipients only and may not be reproduced (in whole or in part) or delivered or transmitted to any other person without our prior written consent. This report does not constitute a personal recommendation or take into account the particular investment objectives. pursuant to an exemption from the dealer registration requirement in the relevant province or territory of Canada in which such offer or sale is made. registered in Australia as ABN 23 000 000 117 at 60 Castlereagh Street Sydney NSW 2000. is made that such information or analysis is accurate. Indonesia: This report is distributed by PT BNP Paribas Securities Indonesia. the recipient agrees to be bound by the terms and limitations set forth herein. (SEBI regn. is. BNP Paribas House. For professional investors in Hong Kong. GENERAL DISCLAIMER This report was produced by BNP Paribas Cadiz Securities (Pty) Ltd. this document is being distributed by BNP Paribas Securities India Pvt. for any purpose 38 BNP PARIBAS 29 MAY 2013 . directly or indirectly.1. M. any trades in such securities must be conducted through a dealer registered in Canada. The analyst(s) or strategist(s) herein each referred to as analyst(s) named in this report certifies that (i) all views expressed in this report accurately reflect the personal view of the analyst(s) with regard to any and all of the subject securities. The analysts’ analysis and models are subject to change based on various other factors. 238043 and therefore subject to regulation by the Australian Securities & Investments Commission in relation to delivery of financial services. Indonesia. an advertisement. Jakarta. To the extent that the information contained herein references securities of an issuer incorporated. BNP Paribas Securities (Japan) Limited accepts responsibility for the content of a report prepared by another non-Japan affiliate only when distributed to Japanese based firms by BNP Paribas Securities (Japan) Limited. Hong Kong: This report is prepared for professional investors and is being distributed in Hong Kong by BNP Paribas Securities (Asia) Limited to persons whose business involves the acquisition. This report is not intended to provide the sole basis of any evaluation of the subject securities and companies mentioned in this report. Malaysia: This report is issued and distributed by BNP Paribas Capital (Malaysia) Sdn Bhd. +91 22 3370 4000 / 6196 4000). Bandra (East). and under no circumstances is to be construed as. BNP Paribas Sydney Branch is licensed under the Banking Act 1959 and the holder of Australian Financial Services Licence no. a public offering. BNP Paribas analyst estimates and models reflect the analysts’ current judgment only. (ii) no part of the compensation of the analyst(s) was. "BNP Paribas” is the marketing name for the global banking and markets business of BNP Paribas Group1. or will be. By accepting this report. Canada: The information contained herein is not. Some of the foreign securities stated on this report are not disclosed according to the Financial Instruments and Exchange Law of Japan. 8 of 1995 and the holder of broker-dealer and underwriter licenses issued by the Capital Market Supervisory Agency. the products mentioned in this report may not be available for sale in certain jurisdictions. and acknowledge that information and opinions in this document relate to financial products or financial services which are delivered solely to wholesale clients (in terms of the Corporations Act 2001.Thamrin No.H. adrian. 10310. whether as principal or agent. Bandra Kurla Complex. PT BNP Paribas Securities Indonesia is a fully subsidiaries company of BNP Paribas SA and is licensed under Capital Market Law No. to any other person in whole or in part. BNP Paribas is not aware of any other actual or material conflicts of interest concerning any of the subject securities. they are neither all-inclusive nor can they be guaranteed. nos. INB/INF011474831). No part of this material may be (i) copied. Valuations are based on internal quantitative models and qualitative interpretation. BNP Paribas analysts prudently perform analysis and create quantitative models and estimates derived from their own review of publicly available data without any assistance from any represented company. ("BNPPSIPL"). INB/INF231474835. companies or issuers referenced herein as of the time of this certification. please contact BNP Paribas Securities (Asia) Limited for all matters and queries relating to this report. BNP Paribas Securities (Asia) Limited. no. photocopied. or taken in substitution for the exercise of judgment by the recipient. reg. and any representation to the contrary is an offence. You should be aware. Additionally. express or implied. BNPPSIPL is registered with the Securities and Exchange Board of India (“SEBI”) as a stockbroker in the Equities and the Futures & Options segments of National Stock Exchange of India Ltd. 7. 35th Floor. duplicated. INDIA: In India. This report does not constitute a prospectus or other offering document or an offer or solicitation to buy or sell any securities or other investments. Analysts' compensation is not linked to investment banking or capital markets transactions performed by BNP Paribas or the profitability or revenues of particular trading desks. No representation or warranty. BNP Paribas Capital (Malaysia) Sdn Bhd has no obligation to update its opinion or the information in this research report. Analysts mentioned in this disclaimer are employed by a non-US affiliate of BNP Paribas Securities Corp. an offer to sell securities described herein. and (iii) is not aware of any other actual or material conflicts of interest concerning any of the subject securities. a member company of the BNP Paribas Group. BNPP may face conflicts of interest. Japan: This report is being distributed to Japanese based firms by BNP Paribas Securities (Japan) Limited or by a subsidiary or affiliate of BNP Paribas not registered as a financial instruments firm in Japan. This publication is strictly confidential and is for private circulation only to clients of BNP Paribas Capital (Malaysia) Sdn Bhd.Sibanye Gold Ltd Adrian Hammond Disclaimers and Disclosures ANALYST(S) CERTIFICATION Adrian Hammond.hammond@bnpparibascadiz.19) and/or professional investors (as defined in section 9 of the Corporations Act 2001). The views and opinions in this research report are our own as of the date hereof and are subject to change. Information and opinions contained in this report are published for reference of the recipients and are not to be relied upon as authoritative or without the recipient’s own independent verification. The information contained herein is under no circumstances to be construed as investment advice in any province or territory of Canada and is not tailored to the needs of the recipient. Australia: This report is being distributed in Australia by BNP Paribas Sydney Branch. Jl. either for its own account or for the account of its clients. No securities commission or similar regulatory authority in Canada has reviewed or in any way passed judgment upon these materials. or solicitation of an offer to buy securities described herein. and are not registered/ qualified pursuant to NYSE and/ or FINRA regulations. Ltd. which are resolved under applicable legal provisions and internal guidelines. Any offer or sale of the securities described herein in Canada will be made only under an exemption from the requirements to file a prospectus with the relevant Canadian securities regulators and only by a dealer properly registered under applicable securities laws or. complete or verified and it should not be relied upon as such. PT BNP Paribas Securities Indonesia is also a member of Indonesia Stock Exchange. advising on securities and providing automated trading services. a subsidiary of BNP Paribas. division 2.1. +27 11 088 2181. As an investment bank with a wide range of activities. relate to the specific recommendation or views expressed herein. sections 761G and 761GA. directly or indirectly. having its registered office at 5th floor. item 1 of the Financial Instruments and Exchange Law Enforcement Order. Maker Maxity. the information contained herein or the merits of the securities described herein. Customers are advised to use the information contained herein as just one of many inputs and considerations prior to engaging in any trading activity. companies or issuers referenced herein as of the time of publication of the research report. Grand Indonesia. companies or issuers mentioned in this report. however.

retail clients (as such terms are defined in the Markets in Financial Instruments Directive 2004/39/EC (“MiFID”)). London NW1 6AA. as amended) and is not intended for the use of any person or entity that is not a “major U. Turkey: This report is being distributed in Turkey by TEB Investment a member company of the BNP Paribas Group. Ltd. NYSE and other principal exchanges. By accepting this report you agree to be bound by the foregoing instructions. BNP Paribas London Branch is registered in England and Wales under No. Taiwan: Information on securities that trade in Taiwan is distributed by BNP Paribas Securities (Taiwan) Co. No: 55 issued by the Capital Markets Board. is otherwise unaffiliated with BNP Paribas. or other jurisdiction where such distribution. any person or entity that is a citizen or resident of or located in any locality. For Institutional and Accredited Investors in Singapore. It makes a market in securities in respect of this company. and should not be circulated to. valuation and risk 39 BNP PARIBAS 29 MAY 2013 . 4. commentary and recommendations contained herein do not constitute investment consultancy services. 75009 Paris. All share prices are as at market close on 28 May 2013 unless otherwise stated. ACL Securities Co. a credit institution licensed as an investment services provider by the Autorité de Contrôle Prudentiel whose head office is 16. For all research available on a particular stock. investment decisions based solely on the information provided herein may fail to produce results in accordance with your expectations. Singapore: This report is distributed in Singapore by BNP Paribas Securities (Singapore) Ptd Ltd ("BNPPSSL") and may be distributed in Singapore only to an Accredited or Institutional Investor. Ltd. Therefore. or certain interests in the acquisition or disposal of. Ltd. 7. and persons into whose possession this report comes should inform themselves about. any such restrictions. Notice Published in accordance with “Communiqué Regarding the Principles on Investment Consultancy Activities and the Investment Consultancy Institutions” Series: V. as amended from time to time. United States: This report may be distributed in the United States only to U. stock price charts. it has managed or co-managed a public offering for this company. for which it received fees. a USregistered broker dealer and member of FINRA. BNP Paribas SA is incorporated in France with limited liability with its registered office at 16 boulevard des Italiens. France. This report is being distributed in Germany either by BNP Paribas London Branch or by BNP Paribas Niederlassung Frankfurt am Main. 1 No portion of this report was prepared by BNP Paribas Securities Corp (US) personnel and it is considered Third-Party Affiliate research under NASD Rule 2711. This document will have been approved for publication and distribution in the United Kingdom by BNP Paribas London Branch. This report is being distributed outside Thailand by members of BNP Paribas. BNP Paribas may receive or seek compensation in connection with an investment banking relationship with one or more of the companies referenced herein. The analyst(s) or an individual who assisted in the preparation of this report (or a member of his/her household) has a financial interest position in securities issued by this company or derivatives thereof. France. please contact the relevant BNP Paribas research team or the author(s) of this report. or you can contact the analyst named on the front of this note or your BNP Paribas representative. Thailand: Research relating to Thailand and Thailand based issuers are produced pursuant to an arrangement between BNP Paribas Securities (Asia) Ltd and ACL Securities Co.S. 3.Sibanye Gold Ltd Adrian Hammond without the prior written consent of BNP Paribas Capital (Malaysia) Sdn Bhd. The reader should independently evaluate the investment risks and is solely responsible for their investment decision. state. Registered Office: 10 Harewood Avenue. All research reports are disseminated and available to all clients simultaneously through our internal client websites. a branch of BNP Paribas SA whose head office is in Paris. country. The commentary and recommendations contained herein are based on the personal views of the persons who have made such commentary and recommendations.S. or advisory board member of this company. Ltd. In relation to the distribution to such categories of investors. institutional investor”. Certain countries within the European Economic Area: This document may only be distributed in the United Kingdom to eligible counterparties and professional clients and is not intended for. SIPC. Such information is for your reference only. U. Additional Disclosures Within the next three months. may not execute transactions for clients in these securities.. IMPORTANT DISCLOSURES The disclosure column in the following table lists the important disclosures applicable to each company that has been rated and/or recommended in this report: Company Disclosure (as applicable) - BNP Paribas represents that: 1..S persons who wish to effect transactions in securities discussed herein must do so through BNP Paribas Securities Corp. each as defined under the Financial Advisers Regulations ("FAR") and the Securities and Futures Act (Chapter 289) of Singapore. These views may not conform to your financial standing or to your risk and return preferences.. This report is not directed to. This publication may not be distributed to the public media or quoted or used by the public media without the express written consent of BNP Paribas. South Africa: In South Africa. publication. This report has been approved for publication in France by BNP Paribas. director. regarding the disclosure of certain interests in. Boulevard des Italiens 75009 Paris. Information on securities that do not trade in Taiwan is for informational purposes only and is not to be construed as a recommendation or a solicitation to trade in such securities. Other Jurisdictions: The distribution of this report in other jurisdictions or to residents of other jurisdictions may also be restricted by law. Persons who are “major U. BNP Paribas Securities (Taiwan) Co. BNP Paribas London Branch is authorised and supervised by the Autorité de Contrôle Prudentiel and is authorised and subject to limited regulation by the Financial Services Authority ("FSA") for the conduct of its designated investment business in the United Kingdom. regulated by the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin). availability or use would be contrary to law or regulation. 6. 5. 2. and equity rating histories applicable to each company rated in this report is available in our most recently published reports available on our website: http://eqresearch. The analyst (or a member of his/her household) is an officer. Investment consultancy services are provided in accordance with investment consultancy agreements executed between investors and brokerage companies or portfolio management companies or non-deposit accepting banks. It beneficially owns 1% or more or the market capitalization of this company. It had an investment banking relationship with this company in the last 12 months. institutional investors” (as such term is defined in Rule 15a-6 under the Securities Exchange Act of 1934. Target price history. please contact BNP Paribas Securities (Singapore) Ptd Ltd for all matters and queries relating to this report.S. It received compensation for investment banking services from this company in the last 12 months. BNPPSSL and its representatives are exempted under Regulation 35 of the FAR from the requirements in Section 36 of the Financial Advisers Act of Singapore. securities referred to in this report. or intended for distribution to or use by. FC13447. Within the past The investment related information. Details of the extent of its authorisation and regulation by the Financial Services Authority are available upon request. NFA. BNP Paribas Cadiz Securities (Pty) Ltd and BNP Paribas Cadiz Stock Broking (Pty) Ltd are licensed members of Johannesburg Stock Exchange and are authorised Financial Services Providers and subject to regulation by the Financial Services Board. and observe.

index sharpe ratio relative to the regional benchmark and index returns relative to the market cost of equity. BUY (B). Deteriorating ( ): The analyst expects the fundamental conditions of the sector to be negative over the next 12 months. the analyst expects the market to score positively on one of the criteria used to determine market recommendations: index returns relative to the regional benchmark. Adrian Hammond Unless otherwise specified. Neutral ( ): The analyst expects the fundamental conditions of the sector to be maintained over the next 12 months. index sharpe ratio relative to the regional benchmark and index returns relative to the market cost of equity. Industry Recommendations Improving ( ): The analyst expects the fundamental conditions of the sector to be positive over the next 12 months. Underweight (U). © 2013 BNP Paribas Group 40 BNP PARIBAS 29 MAY 2013 . The upside or downside is less than 10%. However. these recommendations are set with a 12-month horizon. which we define as (target price* . Over the next 12 months. Country (Strategy) Recommendations Overweight (O).1 2. REDUCE (R). then the target price may differ from fair value. our recommendation is an assessment of the mismatch between current market price and our assessment of current fair value. Over the next 12 months. RATING DISTRIBUTION (as at 28 May 2013) Total BNP Paribas coverage universe Buy Hold Reduce 654 346 208 100 Investment Banking Relationship Buy Hold Reduce (%) 8. The upside is 10% or more.4 4. if the analyst doesn't think the market will reassess the stock over the specified time horizon due to a lack of events or catalysts. the analyst does not expect the market to score positively on any of the criteria used to determine market recommendations: index returns relative to the regional benchmark. Over the next 12 months. the target price will equal the analyst's assessment of the current fair value of the stock.Sibanye Gold Ltd RECOMMENDATION STRUCTURE Stock Ratings Stock ratings are based on absolute upside or downside. * In most cases. In most cases. therefore. index sharpe ratio relative to the regional benchmark and index returns relative to the market cost of equity. it is possible that future price volatility may cause a temporary mismatch between upside/downside for a stock based on market price and the formal recommendation. Neutral (N). The downside is 10% or more. Thus. HOLD (H).current price) / current price.0 Should you require additional information concerning this report please contact the relevant BNP Paribas research team or the author(s) of this report. the analyst expects the market to score positively on two or more of the criteria used to determine market recommendations: index returns relative to the regional benchmark.