Company Quick10K Filing
Sibanye Gold
20-F 2018-12-31 Filed 2019-04-09
20-F 2017-12-31 Filed 2018-04-02
20-F 2016-12-31 Filed 2017-04-07
20-F 2015-12-31 Filed 2016-03-21
20-F 2014-12-31 Filed 2015-03-24
20-F 2013-12-31 Filed 2014-04-29
20-F 2012-12-31 Filed 2013-04-26

SBGL 20F Annual Report

EX-4.7 d688942dex47.htm
EX-4.8 d688942dex48.htm
EX-4.9 d688942dex49.htm
EX-4.10 d688942dex410.htm
EX-4.11 d688942dex411.htm
EX-4.12 d688942dex412.htm
EX-4.13 d688942dex413.htm
EX-4.14 d688942dex414.htm
EX-4.15 d688942dex415.htm
EX-4.16 d688942dex416.htm
EX-4.17 d688942dex417.htm
EX-4.18 d688942dex418.htm
EX-4.19 d688942dex419.htm
EX-8.1 d688942dex81.htm
EX-12.1 d688942dex121.htm
EX-12.2 d688942dex122.htm
EX-13.1 d688942dex131.htm
EX-13.2 d688942dex132.htm

Sibanye Gold Earnings 2013-12-31

Balance SheetIncome StatementCash Flow

20-F 1 d688942d20f.htm FORM 20-F Form 20-F
Table of Contents

As filed with the Securities and Exchange Commission on April 29, 2014

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Form 20-F

 

 

(Mark One)

 

¨ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934

or

 

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2013

or

 

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

or

 

¨ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report                     

For the transition period from                      to                     

Commission file number: 001-35785

 

 

Sibanye Gold Limited

(Exact name of registrant as specified in its charter)

 

 

Republic of South Africa

(Jurisdiction of incorporation or organization)

Libanon Business Park

1 Hospital Street (off Cedar Avenue)

Libanon, Westonaria, 1780

South Africa.

011-27-11-278-9600

(Address of principal executive offices)

With copies to:

Charl Keyter

Chief Financial Officer

Sibanye Gold Limited

Tel: 011-27-11-278-9700

Fax: 011-27-11-278-9863

Libanon Business Park

1 Hospital Street (off Cedar Avenue)

Libanon, Westonaria, 1780

South Africa

(Name, Telephone, E-mail and/or Facsimile number and Address of  Company Contact Person)

and

Thomas B. Shropshire, Jr.

Linklaters LLP

Tel: 011-44-20-7456-3223

Fax: 011-44-20-7456-2222

One Silk Street

London EC2Y 8HQ

United Kingdom

 

 

Securities registered or to be registered pursuant to Section 12(b) of the Act

 

Title of Each Class

 

Name of Each Exchange on Which Registered

Ordinary shares of no par value each American Depositary Shares, each representing four ordinary shares  

New York Stock Exchange*

New York Stock Exchange

 

* Not for trading, but only in connection with the registration of the American Depositary Shares pursuant to the requirements of the Securities and Exchange Commission.

Securities registered or to be registered pursuant to Section 12(g) of the Act

None

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act

None

(Title of Class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock

as of the close of the period covered by the Annual Report 735,079,031 ordinary shares of no par value each

 

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act:    Yes  ¨    No  x

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.    Yes  ¨    No  x

Note—Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ¨    No  x

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer   x                 Accelerated filer   ¨                 Non-accelerated filer   ¨

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

 

U.S. GAAP  x

    

International Financial Reporting Standards as issued

by the International Accounting Standards Board  ¨

   Other  ¨

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow:    Item 17  ¨    Item 18  ¨

If this is a annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  ¨

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities

 

 

 


Table of Contents

FORM 20-F CROSS REFERENCE GUIDE

 

Item

 

Form 20-F Caption

 

Location in this document

  Page  

1

  Identity of directors, senior management and advisers   NA     NA   

2

  Offer statistics and expected timetable   NA     NA   

3

  Key information    
  (a) Selected Financial Data   Further Information—Key Information     80-82   
  (b) Capitalisation and indebtedness   NA     NA   
  (d) Risk factors   Further Information—Risk Factors     83-98   

4

  Information on the Company    
  (a) History and Development of the Company   Explanatory Note     vi   
   

Reporting Parameters

    2   
    Overview of the Organisation—Group Overview     4   
    Strategic Accountable Leadership—Chief Executive’s Report     15   
    Strategic Accountable Leadership—Corporate Governance Report     39   
    Reports—Directors’ Report—Profile     62   
    Reports—Directors’ Report—Significant Announcements     62-63   
    Administrative Details—Administrative and Corporate Information     78   
    Further Information—Operating Financial Review and Prospects—Capital Expenditures     104   
  (b) Business Overview   Overview of the Organisation—Group Overview     4-7   
    Overview of the Organisation—Business Model     8-9   
    Strategic Accountable Leadership—Chief Executive’s Report     15-21   
    Strategic Accountable Leadership—Engaging with Stakeholders     22-25   
    Strategic Accountable Leadership—Opportunities and Risks     33-37   
    Sustainability—Social Capital     50-51   
    Sustainability—Natural Capital     52-53   

 

i


Table of Contents

Item

 

Form 20-F Caption

 

Location in this document

  Page  
    Reports—Directors’ Report—Profile     62   
    Reports—Directors’ Report—Review of Operations     62   
    Further Information—Key Information     80-82   
    Further Information—Environmental and Regulatory Matters     141-149   
    Further Information—Additional Information—Acquisitions     175-177   
  (c) Organizational structure  

Further Information—Operating and Financial Review and Prospects—Organizational Chart

    134   
  (d) Property, plant and equipment   Organizational Overview—Group Overview—Sibanye’s Operations     5   
    Sustainability—Sustainability Summary     44-45   
    Sustainability—Natural Capital—Land Management     53   
    Sustainability—Operational Review     54-59   
    Further Information—Operating and Financial Review and Prospects—Capital Expenditure     104   
    Further Information—Operating and Financial Review and Prospects—Depreciation and Amortization     110   
    Further Information—Environmental and Regulatory Matters     141-149   
    Consolidated Financial Statements—Note 8: Property, Plant and Equipment     F-25   

4A

  Unresolved staff comments   None  

5

  Operating and financial review and prospects    
  (a) Operating results   Further Information—Operating and Financial Review and Prospects—Results of Operations     105-121   
  (b) Liquidity and capital resources   Further Information—Operating and Financial Review and Prospects—Liquidity and Capital Resources     121-124   
    Further Information—Operating and Financial Review and Prospects—Credit Facilities and other Capital Resources     124-128   
  (c) Research and development, patents and licences, etc  

NA

    NA   
  (d) Trend information   Further Information—Operating and Financial Review and Prospects—Trend and Outlook     134   

 

ii


Table of Contents

Item

 

Form 20-F Caption

 

Location in this document

  Page  
  (e) Off-balance sheet arrangements   Further Information—Operating and Financial Review and Prospects—Off Balance Sheet Items     130   
  (f) Tabular disclosure of contractual obligations   Further Information—Operating and Financial Review and Prospects—Contractual Obligations and Commitments as of December 31, 2013     129   
  (g) Safe harbour   Forward-Looking Statements     x   

6

  Directors, senior management and employees    
  (a) Directors and senior management   Strategic Accountable Leadership—Directors and Management     26-32   
  (b) Compensation   Reports—Remuneration Report     68-73   
  (c) Board practices  

Strategic Accountable Leadership—Corporate Governance Report

    39-43   
    Reports—Audit Committee Report     60-61   
    Reports—Remuneration Report     68-73   
  (d) Employees   Organizational Review—Group Overview     6   
    Strategic Accountable Leadership—Chief Executive’s Report—A Volatile Labour Relations Environement     20-21   
    Sustainability—Sustainability Summary     44   
    Sustainability—Human Capital     46-49   
  (e) Share ownership   Reports—Remuneration Report—Share Ownership of Directors and Prescribed officers     72   
    Consolidated Financial Statements—Note 15: Employee Benefit Plans     F-34-F-42   

7

  Major Shareholders and Related Party Transactions    
  (a) Major shareholders   Further Information—Major Shareholders and Related Party Transactions—Major Shareholders     150   
    Administrative Details—Shareholders’ Information—Beneficial Shareholders Holding of 3% or more     75   
  (b) Related party transactions   Further Information—Major Shareholders and Related Party Transactions—Related Party Transactions     151-153   
  (c) Interests of experts and counsel   NA     NA   

 

iii


Table of Contents

Item

 

Form 20-F Caption

 

Location in this document

  Page  

8

  Financial information    
  (a) Consolidated statements and other financial information   Further Information—Financial Information—Dividend Policy and Dividend Distributions    

 

154

 

  

 

    Reports—Directors’ Report—Litigation     66   
  (b) Significant Changes   NA     NA   

9

  The Offer and Listing    
  (a) Offer and listing details   Further Information—The Offer and Listing     155-156   
  (b) Plan of distribution   NA     NA   
  (c) Markets   Further Information—The Offer and Listing     155-156   
  (d) Selling shareholders   NA     NA   
  (e) Dilution   NA     NA   
  (f) Expenses of the issue   NA     NA   

10

  Additional information    
  (a) Share capital   NA     NA   
  (b) Memorandum and articles of association   Further Information—Additional Information—Memorandum of Incorporation     157   
  (c) Material contracts   Further Information—Additional Information—Material Contracts     157-160   
  (d) Exchange controls   Further Information—Additional Information—South African Exchange Control Limitations Affecting Security Holders     168-169   
    Further Information—Environmental and Regulatory Matters—Exchange Controls     148-149   
  (e) Taxation   Further Information—Additional Information—Taxation     169-175   
  (f) Dividends and paying agents   NA     NA   
  (g) Statement by experts   NA     NA   
  (h) Documents on display   Further Information—Additional Information—Documents on display     175   
  (i) Subsidiary information   NA     NA   

11

  Quantitative and qualitative disclosures about market risk   Further Information—Quantitative and qualitative disclosures about market risk     178-180   

12

  Description of securities other than equity securities    

 

iv


Table of Contents

Item

 

Form 20-F Caption

 

Location in this document

  Page  
  (a) Debt securities   NA     NA   
  (b) Warrants and rights   NA     NA   
  (c) Other securities   NA     NA   
  (d) American depositary shares   Further Information—Additional Information—American Depositary Shares     160-168   

13

  Defaults, dividend arrearages and delinquencies   NA     NA   

14

  Material modifications to the rights of security holders and use of proceeds   NA     NA   

15

  Controls and procedures   Further Information—Controls and Procedures     181-182   

16A

  Audit Committee Financial Expert  

Further Information—Audit Committee Financial Expert

    183   

16B

  Code of ethics   Strategic Accountable Leadership—Corporate Governance Report     39   

16C

  Principal accountant fees and services   Further Information—Principal Accountant Fees and Services     184   

16D

  Exemptions from the listing standards for audit committees   NA     NA   

16E

  Purchase of equity securities by the issuer and affiliated purchasers   None  

16F

  Change in registrant’s certifying accountant   NA     NA   

16G

  Corporate governance   Further Information—Corporate Governance     185   

16H

  Mine safety disclosure   NA     NA   

17

  Financial statements   NA     NA   

18

  Financial statements   Consolidated Financial Statements     F-1-F-58   

19

  Exhibits   Exhibits     II-1-II-2   

 

v


Table of Contents

EXPLANATORY NOTE

On February 18, 2013, the board of directors of Gold Fields Limited, or Gold Fields, completed the separation of its wholly-owned subsidiary, Sibanye Gold Limited, or Sibanye (formerly known as GFI Mining South Africa, or GFIMSA), into an independent, publicly traded company, or the Spin-off. The Spin-off was achieved by way of Gold Fields making a distribution on a pro rata basis of one Sibanye ordinary share for every one Gold Fields share (whether held in the form of shares, American depositary receipts, or ADRs, or international depositary receipts) to Gold Fields shareholders, registered as such in Gold Fields’ register at close of business on February 15, 2013, in terms of section 46 of the South African Companies Act No. 71 of 2008, or the Companies Act and section 46 of the Income Tax Act. The board of directors of Gold Fields passed the resolution necessary to implement the Spin-off on December 12, 2012, Sibanye shares listed on the JSE Limited, or JSE, and on the New York Stock Exchange, or NYSE, on February 11, 2013. As of February 18, 2013, or the Spin-off date, Gold Fields and Sibanye were independent, publicly traded companies and with separate public ownership, boards of directors and management.

Notwithstanding the foregoing, one member of the Sibanye board of directors, or the Board, also sits on the board of directors of Gold Fields. GFIMSA (now Sibanye) was incorporated in South Africa as a wholly-owned subsidiary of Gold Fields on December 12, 2002.

 

vi


Table of Contents

PRESENTATION OF FINANCIAL AND OTHER INFORMATION

Historical Consolidated Financial Statements

Sibanye is a South African company and all of our operations are located in South Africa. Accordingly, our books of account are maintained in South African Rand and our annual financial statements will be prepared in accordance with International Financial Reporting Standards, or IFRS, as prescribed by law. We also prepare annual financial statements in accordance with United States Generally Accepted Accounting Principles, or U.S. GAAP, which are translated into U.S. dollars. Except as otherwise noted, the financial information included in this annual report has been prepared in accordance with U.S. GAAP, and descriptions of critical accounting policies refer to accounting policies under U.S. GAAP.

For Sibanye’s financial statements, unless otherwise stated, balance sheet item amounts are translated from Rand to U.S. dollars at the exchange rate prevailing on the date that it closed its accounts for the fiscal year ended December 31, 2013 (Rand 10.34 per $1.00 as of December 31, 2013), except for specific items included within shareholder’s equity and the statements of cash flows that are translated at the rate prevailing on the date the relevant transaction was entered into, and statements of operation item amounts are translated from Rand to U.S. dollars at the weighted average exchange rate for each period (Rand 9.60 per $1.00 for the fiscal year ended December 31, 2013).

In this annual report, we present the financial items “total cash costs”, “total cash costs per ounce” and “total cash cost per kilogram” which have been determined using industry standards promulgated by the Gold Institute and are not U.S. GAAP measures. The Gold Institute was a non-profit international industry association of miners, refiners, bullion suppliers and manufacturers of gold products that ceased operation in 2002, which developed a uniform format for reporting production costs on a per ounce basis. The Gold Institute has now been incorporated into the National Mining Association. The guidance was first adopted in 1996 and revised in November 1999. An investor should not consider these items in isolation or as alternatives to production costs, income before tax, net income, operating cash flows or any other measure of financial performance presented in accordance with U.S. GAAP. While the Gold Institute provided definitions for the calculation of total cash costs, the calculation of total cash costs per ounce and the calculation of total cash cost per kilogram may vary significantly among gold mining companies, and by themselves do not necessarily provide a basis for comparison with other gold mining companies. See “Key Information—Selected Historical Consolidated Financial Data—Footnote 1”.

In this annual report, we also present the financial items “operating costs”, “total All-in sustaining cost” and “total All-in cost”.

The operating costs metric has been determined by Sibanye on the basis of internally developed definitions and is not a U.S. GAAP measure. We define operating costs as production costs (exclusive of depreciation and amortization) plus corporate expenditure and employment termination costs.

New cost measures, namely “All-in sustaining cost”, “All-in cost”, “All-in sustaining cost per ounce”, “All-in cost per ounce” and “All-in cost per kilogram”, were introduced mid-year by the World Gold Council, or the Council. Despite not being a current member of the Council, Sibanye adopted the principles prescribed by the Council. The Council is a non-profit association of the world’s leading gold mining companies established in 1987 to promote the use of gold from industry, consumers and investors and is not a regulatory organization. The

 

vii


Table of Contents

Council has worked with its member companies to develop a metric that expands on U.S. GAAP measures such as cost of goods sold and currently accepted non-U.S. GAAP measures to provide relevant information to investors, governments, local communities and other stakeholders in understanding the economics of gold mining operations related to expenditures, operating performance and the ability to generate cash flow from operations. This is especially true with reference to capital expenditure associated with developing and maintaining gold mines, which has increased significantly in recent years and is reflected in this new metric.

All-in sustaining cost, All-in cost, All-in sustaining cost per ounce, All-in cost per ounce and All-in cost per kilogram metrics are intended to provide additional information only and do not have any standardized meaning prescribed by U.S. GAAP and should not be considered in isolation or as alternatives to production costs, income before tax, net income, operating cash flows or any other measure of financial performance presented in accordance with U.S. GAAP. Operating costs, total All-in sustaining cost, total All-in cost, All-in sustaining cost per ounce, All-in cost per ounce and All-in cost per kilogram as presented in this annual report may not be comparable to other similarly titled measures of performance of other companies. Other companies may calculate these measures differently as a result of differences in the underlying accounting principles, policies applied and in accounting frameworks such as in IFRS. Differences may also arise related to definitional differences of sustaining versus development capital activities based upon each company’s internal policies. See “Key Information—Selected Historical Consolidated Financial Data—Footnote 2.”

The audited consolidated financial statements of Sibanye as at and for the fiscal years ended December 31, 2013 and 2012, or the Audited Consolidated Financial Statements have been prepared using the historical results of operations, assets and liabilities attributable to Sibanye and all of its subsidiaries, or the Sibanye Gold Group. For the fiscal years ended December 31, 2012 and 2011, this information was consolidated by Gold Fields. In addition, the Audited Consolidated Financial Statements include historical charges from Gold Fields. The Audited Consolidated Financial Statements have been prepared on a historical cost basis, except for available-for-sale financial assets and derivative financial instruments, which are measured at fair value, and inventories, which are measured at the lower of net realizable value or cost.

Market Information

This annual report includes industry data about Sibanye’s markets obtained from industry surveys, industry publications, market research and other publicly available third-party information. Industry surveys and industry publications generally state that the information they contain has been obtained from sources believed to be reliable but that the accuracy and completeness of such information is not guaranteed. Sibanye and its advisors have not independently verified this data.

In addition, in many cases statements in this annual report regarding the gold mining industry and Sibanye’s position in that industry have been made based on internal surveys, industry forecasts, market research, as well as Sibanye’s own experiences. While these statements are believed by Sibanye to be reliable, they have not been independently verified.

 

viii


Table of Contents

DEFINED TERMS AND CONVENTIONS

In this annual report, all references to “we”, “us” and “our” refer to Sibanye and the Sibanye Gold Group, as applicable.

In this annual report, all references to “fiscal 2014” are to the fiscal year ending December 31, 2014, all references to “fiscal 2013” are to the audited fiscal year ended December 31, 2013, all references to “fiscal 2012” are to the audited fiscal year ended December 31, 2012 and all references to “fiscal 2011” are to the audited fiscal year ended December 31, 2011.

In this annual report, all references to “South Africa” are to the Republic of South Africa, all references to the “United States” and “U.S.” are to the United States of America, its territories and possessions and any state of the United States and the District of Columbia and all references to the “United Kingdom” and “U.K.” are to the United Kingdom of Great Britain and Northern Ireland.

In this annual report, all references to the “DMR” are references to the South African Department of Mineral Resources, the government body responsible for regulating the mining industry in South Africa, or to its predecessor entity, the Department of Minerals and Energy which was split into the Department of Mineral Resources and the Department of Energy in July 2009, as applicable.

This annual report contains descriptions of gold mining and the gold mining industry, including descriptions of geological formations and mining proceeds. In order to facilitate a better understanding of these descriptions, this annual report contains a glossary defining a number of technical and geological terms.

In this annual report, gold production figures are provided in troy ounces, which are referred to as “ounces” or “oz”, or in kilograms, which are referred as “kg”. Ore grades are provided in grams per metric ton, which are referred to as “grams per ton” or “g/t.” All references to “tons”, “tonnes” or “t” in this annual report are to metric tons.

This annual report contains references to the “lost time injury frequency rate” at each Sibanye operation. The lost time injury frequency rate at each operation includes any injury occurring in the workplace where, at any subsequent time, the injured employee is unable to attend a full shift due to the injury.

In this annual report, “R”, “Rand” and “rand” refer to the South African Rand and “Rand cents” refers to subunits of the South African Rand, “$”, “U.S.$”, “U.S. dollars” and “dollars” refer to United States dollars and “U.S. cents” refers to subunits of the U.S. dollar.

Conversion Rates

Certain information in this annual report presented in Rand has been translated into U.S. dollars. Unless otherwise stated, the conversion rate for these translations is R10.34 per $1.00 which was the closing rate on December 31, 2013. By including the U.S. dollar equivalents, Sibanye is not representing that the Rand amounts actually represent the U.S. dollar amounts shown or that these amounts could be converted into U.S. dollars at the rates indicated.

 

ix


Table of Contents

FORWARD-LOOKING STATEMENTS

This annual report contains forward-looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended, or the Exchange Act, with respect to our financial condition, results of operations, business strategies, operating efficiencies, competitive position, growth opportIunities for existing services, plans and objectives of management, markets for stock and other matters.

These forward-looking statements, including, among others, those relating to our future business prospects, revenues and income, wherever they may occur in this annual report and the exhibits to this annual report, are necessarily estimates reflecting the best judgment of our senior management and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. As a consequence, these forward-looking statements should be considered in light of various important factors, including those set forth in this annual report. Important factors that could cause actual results to differ materially from estimates or projections contained in the forward-looking statements include, without limitation:

 

    overall economic and business conditions in South Africa;

 

    the ability to achieve anticipated cost savings at existing operations;

 

    the occurrence of labor disruptions and industrial actions;

 

    changes in the market price of gold and uranium;

 

    the occurrence of hazards associated with underground and surface gold and uranium mining;

 

    the occurrence of work stoppages related to health and safety incidents;

 

    changes in relevant government regulations, particularly environmental, tax, health and safety regulations and potential new legislation affecting mining and mineral rights;

 

    our ability to realize the benefits of the Spin-off;

 

    unforeseen costs and expenses related to the separation and our operation as an independent entity;

 

    the ability to manage and maintain access to current and future sources of liquidity, capital and credit, including the terms and conditions of our facilities and overall cost of funding;

 

    the manner, amount and timing of capital expenditures made by us on existing mines, or other initiatives;

 

    fluctuations in exchange rates, currency devaluations and other macroeconomic monetary policies;

 

    political or social instability affecting South Africa;

 

    the ability to achieve anticipated efficiencies and other cost savings in connection with past and future acquisitions;

 

    the success of exploration and development activities;

 

    the outcome and consequence of any potential or pending litigation or regulatory proceedings or other environmental health and safety issues; and

 

    power disruption and cost increases.

We undertake no obligation to update publicly or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this annual report or to reflect the occurrence of unanticipated events.

 

x


Table of Contents

TABLE OF CONTENTS

 

INTEGRATED REPORT

     1   

OVERVIEW OF THE ORGANIZATION

     4   

STRATEGIC ACCOUNTABLE LEADERSHIP

     12   

SUSTAINABILITY

     44   

REPORTS

     60   

ADMINISTRATIVE DETAIL

     74   

FURTHER INFORMATION

     79   

KEY INFORMATION

     80   

RISK FACTORS

     83   

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

     99   

RESERVES OF SIBANYE AS OF DECEMBER 31, 2013

     135   

ENVIRONMENTAL AND REGULATORY MATTERS

     141   

MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

     150   

FINANCIAL INFORMATION

     154   

THE OFFER AND LISTING

     155   

ADDITIONAL INFORMATION

     157   

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     178   

CONTROLS AND PROCEDURES

     181   

AUDIT COMMITTEE FINANCIAL EXPERT

     183   

PRINCIPAL ACCOUNTANT FEES AND SERVICES

     184   

CORPORATE GOVERNANCE

     185   

FINANCIAL STATEMENTS

     186   

EXHIBITS

     II-1   

SIGNATURES

     II-3   

 

xi


Table of Contents
LOGO   
   Integrated Report 2013

 

LOGO

 

Sibanye Gold Integrated Report  1


Table of Contents

 

2  Sibanye Gold Integrated Report

reporting parameters

 

SCOPE OF REPORT

This report provides shareholders with an overview of the context, performance and objectives of its business; the resources and capacity it has at its disposal and how these are used to deliver value for a broad range of stakeholders. In determining what to report, Sibanye has identified those financial and non-financial issues that are most important to the sustainability of the Group and its stakeholders.

The Group has its ordinary shares listed on the Main Board of the JSE Limited (JSE) in terms of its stock exchange licence and its American Depositary Receipts (ADRs) on the New York Stock Exchange (NYSE). The Group reports in compliance with the JSE Listing Requirements, the reporting requirements of the U.S. Exchange Act of 1934 (Exchange Act), the International Financial Reporting Standards (IFRS), the South African Institute of Chartered Accountants (SAICA) Financial Reporting Guides, the South African Companies Act, 2008 (Act No 71 of 2008) (the Companies Act), the Code of and Report on Governance Principles for South Africa (King III) and in terms of Industry Guide number 7 promulgated by the Securities and Exchange Commission, (SEC). For the purposes of reporting on Form 20-F, the Group also prepares financial statements in accordance with U.S. GAAP. See “Presentation of Financial and Other Information.”

The financial information included in this annual report has been prepared in accordance with U.S. GAAP.

 

 


Table of Contents

LOGO

 

 

     contents

 

    
2    REPORTING PARAMETERS    Scope of report
4    OVERVIEW OF    Group overview
8    ORGANISATION    Business model
10         Performance against objectives
12    STRATEGIC ACCOUNTABLE    A perspective from the Chair
15    LEADERSHIP    Chief Executive’s report
22       Engaging with stakeholders
26       Directors and management
33       Opportunities and risks
38       Report of the Social and Ethics Committee
39         Corporate Governance Report
44    SUSTAINABILITY    Sustainability summary
46       Human capital: people-related matters, safety and health performance
50       Social capital: SLPs and CSI/LED
52       Natural capital: environmental performance
54         Operational review
60    REPORTS    Audit Committee Report
62       Directors’ Report
67       Share capital statement
68         Remuneration Report
74    ADMINISTRATIVE DETAILS    Shareholders information
75       Shareholders’ diary
76       Glossary of terms and acronyms
78         Administrative and corporate information
 

 

Overview of the organisation

   

Strategic accountable leadership

   

Sustainability

   

Reports

   

Administrative details

  

 

Sibanye Gold Integrated Report  3


Table of Contents

OVERVIEW OF THE ORGANISATION GROUP OVERVIEW

 

group overview

 

WHY SIBANYE?

The word ‘Sibanye’ means ‘we are one’ in the isiXhosa language.

Sibanye owns and operates high quality gold operations in South Africa – consolidated into one Group with one vision and strategy. People are its most important asset and its workforce is skilled and experienced. The long-term success of Sibanye as a business and as a responsible corporate citizen is dependent on all stakeholders working together as one.

 

OVERVIEW OF THE ORGANISATION

Sibanye is an independent, South African domiciled and focused mining Group, which currently owns and operates three underground and surface gold operations, namely the Driefontein Operation (Driefontein) and the Kloof Operation (Kloof) in the West Witwatersrand region and the Beatrix Operation (Beatrix) in the southern Free State. In addition to its mining activities, the Group owns and manages significant extraction and processing facilities at its operations, which beneficiate the gold bearing ore mined.

Sibanye is the largest individual producer of gold from South Africa and is one of the world’s 10 largest gold producers. In 2013, the Group produced 44,474kg or 1.43Moz of gold at an average all-in cost of R355,320/kg (US$1,151/oz) and invested R2.9 billion in capital at its operations. At 31 December 2013, Sibanye held gold reserves of 19.7Moz, 46% higher than in 2012. Uranium reserves of 43.2Mlb were also declared.

In 2013, the Group entered into an agreement with Gold One International Limited (Gold One) to acquire its West Witwatersrand Cooke underground and surface operations (Cooke) and made an offer to acquire 100% of Witwatersrand Consolidated Resources Limited (Wits Gold), a JSE and Toronto Stock Exchange (TSX) listed gold and uranium exploration company with significant gold resources in South Africa. These acquisitions will increase Sibanye’s annual gold production, enhance existing operational flexibility and provide Sibanye with the potential to significantly extend its operating life.

SHAREHOLDERS

Sibanye is headquartered close to Westonaria, in the Gauteng province, near its West Wits operations. The Group’s primary listing is on the JSE, trading under the share code SGL, where it has been included as a member of the JSE’s Socially Responsible Investment (SRI) index in 2013. The Group also has a secondary listing of American Depositary Receipts (ADRs) on the New York Stock Exchange (NYSE), which trade under the ticker code SBGL. Each ADR is equivalent to four ordinary shares.

At 31 December 2013, Sibanye had an issued share capital of 735,079,031 shares (1,000,000,000 authorised) and a market capitalisation of approximately R9.0 billion (US$874 million). On 22 April 2014, Sibanye’s market capitalisation had risen to R19.2 billion (US$1,877 million).

The Group has a diverse shareholder base, which at 31 December 2013 predominantly comprised institutional investors located in South Africa (45%) and the United States of America (36%).

The Group has a 100% free float and its three largest institutional shareholders (holding 34.8% of the Group) at 31 December 2013 were Allan Gray Proprietary Limited (14.7%), Investec Asset Management Holdings Proprietary Limited (14.2%) and Van Eck Associates Corporation (5.9%). The successful acquisition of the Cooke operations from Gold One will result in Gold One holding a 17% interest in Sibanye after the conclusion of the transaction.

 

 

4  Sibanye Gold Integrated Report


Table of Contents

PRODUCTS AND MARKETS

Sibanye mines, extracts and processes gold ore to produce a beneficiated product, doré. The doré is then further refined at Rand Refinery Proprietary Limited (Rand Refinery) into gold bars with a purity of at least 99.5%, in accordance with the Good Delivery standards as determined by the London Bullion Market Association (LBMA). The refined gold is then sold on international markets. Sibanye holds a 33% interest in Rand Refinery, one of the largest global refiners of gold, and the largest in Africa. Rand Refinery markets gold to customers around the world.

Sibanye’s primary direct customers are bullion banks acting as intermediaries in the gold market.

Sibanye’s gold sales are predominantly in US dollars. Although this exposes the Group to transaction and translation exposure from fluctuations in foreign-currency exchange rates, Sibanye does not generally hedge this exposure. It may do so in specific circumstances, such as to protect cash flows at times of significant capital expenditure, for financing projects or to safeguard the viability of higher-cost operations.

 

 

SIBANYE’S OPERATIONS

 

LOGO

 

Overview of the organisation

                  

 

Sibanye Gold Integrated Report  5


Table of Contents

OVERVIEW OF THE ORGANISATION GROUP OVERVIEW

 

group overview continued

 

OWNERSHIP STRUCTURE

 

LOGO

 

 

LOGO

PEOPLE

At the end of 2013, Sibanye employed 36,274 people; 33,773 of whom were permanent employees (93% permanent employees) and 2,501 (7%) contractors. Employees are drawn from local communities in the regions in which the Group operates (25.0%), from other regions in South Africa (44.4%) and from other southern African countries (30.6%).

Sibanye’s experienced Board is largely comprised of independent non-executive directors, and is chaired by an independent non-executive Chairman. The highly experienced management team has more than 150 years’ combined experience in the South African mining industry.

Sibanye is committed to becoming a fully transformed South African mining Group and its approach is guided by the Broad Based Socio-economic Empowerment Charter for the South African Mining and Minerals Industry (Mining Charter). In 2004, Gold Fields Limited (Gold Fields) undertook a black economic empowerment (BEE) transaction, transferring an amount equivalent to 15% of its equity from Sibanye, formerly GFI Mining South

Africa Proprietary Limited, to Mvelaphanda Gold Proprietary Limited (Mvelaphanda Gold). In 2010, effective interest of 10% was allocated to an Employee Share Ownership Plan (ESOP) and another 1% in an empowerment deal. At the end of 2013, 32,219 employees were participants in the ESOP.

Sibanye recognises that it has a diverse workforce. It is committed to meeting the targets required by the Mineral and Petroleum Resources Development Act, 2002 (Act No 28 of 2002) (MPRDA) and its associated Mining Charter, including the appointment of historically disadvantaged South Africans (HDSAs) in management positions and employing women in core mining positions in the Group. Sibanye has invested significantly in empowering HDSAs and women at all levels, particularly in leadership roles.

 

 

6  Sibanye Gold Integrated Report


Table of Contents

SUSTAINABILITY LEADERSHIP

Pursuant to the separation of the Group from Gold Fields in February 2013, Sibanye is developing and finalising specific policies and procedures relating to its sustainability practices. These policies and practices will form an integral part of the management of the Group.

Sibanye is guided by the spirit of transformation as defined in the MPRDA and Mining Charter.

All transactions relating to BEE, finalised under Gold Fields, are still applicable to Sibanye. In this regard, Sibanye believes it has transferred equity equivalent to 26% to BEE entities, constituting 15% Mvelaphanda Gold, 10% ESOP and 1% transformation shares.

The Board is responsible for sustainability but has delegated specific responsibility for oversight of various sustainability issues to the Audit Committee, the Safety, Health and Sustainable Development Committee, and the Social and Ethics Committee.

Apart from the Safety, Health and Sustainable Development Committee where the Chief Executive Officer (CEO) is also a member, all the Board committees are composed exclusively of independent non-executive directors.

 

LOGO

 

 

LOGO

‘Sibanye provides jobs for 36,274 people.’

 

Overview of the organisation

                  

 

Sibanye Gold Integrated Report  7


Table of Contents

OVERVIEW OF THE ORGANISATION BUSINESS MODEL

 

business model

 

LOGO

 

8  Sibanye Gold Integrated Report


Table of Contents

LOGO

 

Overview of the organisation

                  

 

Sibanye Gold Integrated Report  9


Table of Contents

OVERVIEW OF THE ORGANISATION PERFORMANCE AGAINST OBJECTIVES

 

performance against objectives

 

SCORECARD 2013: PERFORMANCE AGAINST OBJECTIVES

 

Objective   KPIs   Performance in 2013
Safe, profitable
production
 

Ÿ    FIFR

 

Ÿ    LTIFR

 

Ÿ    Productivity

 

Ÿ    Margin

 

Safety performance improved – fatal injury frequency rate (FIFR) reduced by 41% and lost-time injury frequency rate (LTIFR) by 11%

 

Safety statistics approaching global benchmarks

    Sibanye won most South African industry safety awards on offer in 2013
    Initial productivity gains from organisational restructuring support sustainable production levels in long-term
      Total headcount reduced by 14%; contractors reduced by 37%; contractors comprised only 7% of workforce
Arrest declining
production profile
 

Ÿ    Production

 

Ÿ    Tons (t) mined and milled

 

Ÿ    Gold produced

  Turnaround successful; ore milled increased by 12% and gold production by 17%
    Increased focus on operational perfomance and quality of mining
    Gradual shift to shallower mining and extended life of mine (LoM) facilitated by acquisitions

Reverse increasing

cost trends, reduce

paylimits and increase margins

 

Ÿ    All-in cost

 

Ÿ    Total cash cost

 

 

Ÿ    Margin

  Combined corporate and regional structures
    Removed layers of management at the operations
    Reduced spans of control by separating KDC into Kloof and Driefontein
    Introduced new operating model – multi-disciplinary,
empowered teams
    Flattened organisational structures to ensure more experience and higher levels of skill closer to the face
    Rightsized the support services function
      All-in cost reduced by 21% to US$1,151/oz

Optimise capital and

increase flexibility

 

Ÿ    Debt

  Reduced gross debt by over 50%
 

Ÿ    Capex

  Restructured debt on more favourable terms and without restrictions
 

Ÿ    Reserves and Resources

  Optimised allocation of capital – increased development rates
    Reinvesting in ore reserve development (ORD)
    Ongoing assessment of potential to safely mine secondary reef resources, remnant areas and pillars
    Gold reserves increased by 6Moz – maintain higher production levels for longer
    4Moz gold and 43Mlb uranium unlocked in West Wits tailings storage facilities (TSFs) as a result of the proposed acquisition of the Cooke Operations
        Future of Beatrix secured by acquisition of Wits Gold
Improve and embed relationships, as well as management focus  

Ÿ    Employee turnover

  Implement service level contracts
 

Ÿ    Maintain mining licences

  Win the hearts and minds of employees by re-establishing direct communication channels
    Invest in skills development and transformation
        Deliver on Mining Charter requirements
Deliver value-accretive consolidation opportunities  

Ÿ    Added value extends the life of operations

 

Enhancing acquisitions with cash flow and earnings

 

Strategic acquisitions are consistent with strategy to extend operational life

 

10  Sibanye Gold Integrated Report


Table of Contents

 

LOGO

 

Overview of the organisation

                  

 

Sibanye Gold Integrated Report  11


Table of Contents

STRATEGIC ACCOUNTABLE LEADERSHIP A PERSPECTIVE FROM THE CHAIR

 

a perspective from the chair

 

LOGO

 

I am extremely proud to report back to our stakeholders on a very successful period since the listing of Sibanye in February 2013. In our maiden year of operation as an independent company, Sibanye has delivered an operating and financial performance which has exceeded the expectations of many market observers.

The company has undergone radical change and it is heartening to see how the Sibanye workforce has embraced the new strategy and outlook for the Group. The enthusiasm and commitment to this new future is apparent in the relatively seamless manner in which the new operating model and organisational structures have been implemented. This is

reflected in the first-rate operating results the Group has produced. Sibanye has achieved and, in many instances, exceeded the targets it set at the beginning of the year and delivered on a number of its longer-term goals earlier than expected. The fact that this has been achieved in a year of considerable change, against a backdrop of global economic uncertainty and a volatile labour environment in South Africa, is remarkable.

Importantly, these results have not been achieved at the expense of safety, which is a key priority for Sibanye. All of the safety indicators Sibanye measures continued to improve in 2013 and Sibanye will

 

continue to strive towards its goal of zero harm.

The gold-mining industry experienced one of the most challenging years in over a decade in 2013. Indications of economic recovery in developed markets, most notably in the US in the early part of the year, and suggestions that the US Fed would begin tapering its quantitative easing programme, sparked significant liquidation of professional gold holdings in exchange traded funds (ETFs) and other more speculative gold investment vehicles. The impact on the gold price of this sudden and unprecedented liquidation of professional holdings was exacerbated by weak demand for gold at the time. The Indian government, historically the largest global consumer imposed import tariffs on gold and significantly reduced demand from that market. While a total free fall was avoided due to increasing demand for bullion and jewellery in China as the price declined, this was insufficient to absorb the level of sales from professional holdings. As a result, over the course of 2013, the dollar gold price declined by approximately 27% from US$1,655/oz at 31 December 2012 to US$1,205/oz at 31 December 2013.

Sales of gold from professional holdings appear to have moderated in 2014 while the gold price has stabilised, supported by continued strength in bullion and jewellery demand, largely from China. The outlook, however, remains uncertain and the dollar price of gold will continue to be driven by a number of exogenous factors in 2014. The most probable scenario is one of continued price volatility within a defined trading range, most likely lower on average than that which prevailed in 2013.

 

 

12  Sibanye Gold Integrated Report


Table of Contents

In South Africa, the gold mining industry was shielded from the full impact of the lower dollar gold price by the weak rand, which depreciated by 20% relative to the US dollar during the year. As a result the average gold price received was flat year-on-year at approximately R435,000/kg. While this provided welcome relief for the South African gold producers, there remains a longer-term risk of increased inflationary cost pressures linked to the weaker currency.

The positive currency effect aside, the South African gold industry has, however, had to contend with a number of country-specific issues, most notably the uncertain and volatile labour environment, which continues to pose a significant risk to the future sustainability of the industry.

The tragic events at Marikana in August 2012 resulted in the rapid rise to prominence of the Association of Mineworkers and Construction Union (AMCU) and a fundamental change to the organised labour dynamic in the South African mining industry. With the emergence of AMCU came the inter-union rivalry with the historically dominant National Union of Mineworkers (NUM), which fuelled uncertainty and complicated the biennial wage negotiations between the gold industry and the representative unions in 2013. The rivalry prolonged the negotiations for close to a year before they drew to an uneasy conclusion in March 2014.

Fortunately operational disruptions during the wage-negotiation period were minimal and, while many issues remain unresolved, relative stability has returned to the sector.

It is clear that the South African mining sector has to adjust to working with multiple stakeholders going forward. The current hostile industrial-relations climate is not sustainable. This means that constructive dialogue between industry and labour must continue in the interests of the sustainability and growth of the sector.

It is also vital that all stakeholders, including government and affected communities, use the time between

wage discussions to engage with industry – outside of and decoupled from emotive wage negotiations – to address other crucial issues of importance to the industry and all South Africans. These include, inter alia, issues such as the declining productivity and profitability of the industry and social issues related to the historic migrant-labour system, including employee indebtedness and living conditions in the communities close to our mines.

Sibanye is a proudly South African gold-mining company, and its future success is intimately associated with that of the broader South African economy. We are optimistic that, in

 

 

LOGO

 

‘Constructive dialogue between industry and labour must continue in the interests of sustainability and growth of the sector.’

 

   

Strategic accountable leadership

              

 

Sibanye Gold Integrated Report  13


Table of Contents

STRATEGIC ACCOUNTABLE LEADERSHIP A PERSPECTIVE FROM THE CHAIR

 

a perspective from the chair continued

 

an accommodative environment, this industry can prosper and continue to play an important role in the future of South Africa. The South African gold industry provides meaningful employment, is a critical consumer of goods and services that support a significant number of enterprises which supply the mining industry and, increasingly is being required to shoulder a greater socio-economic and developmental burden in the country.

In this regard, it has been pleasing to note the intervention of the Minister of Finance and the Department of Mineral Resources (DMR) in wage negotiations in 2013. It is also important to highlight the leadership role the Deputy President played in the establishment of the Peace Accord, which suggests that the South African government acknowledges the important role of the gold industry in our economy.

The industry and country require stability and certainty in order to attract capital investment necessary for development and long-term growth, which is essential if the industry is to sustain and create employment and assist government in addressing some of the broader socio-economic problems facing the country. A more cooperative and collaborative approach from all stakeholders will be crucial in achieving this.

The year 2014 marks the 10th anniversary of the promulgation of the South African Mineral and Petroleum Resources Development Act (MPRDA) – the legislation that defines and regulates the transformation of the South African mining industry. This anniversary brings with it a review of industry compliance with the transformational requirements of the Mining Charter. There is still significant uncertainty, which has not been adequately addressed by the recent amendments to the MPRDA, and Sibanye and the industry look forward

to receiving further guidance from the DMR on how the sector should continue to grow and transform. From our side, we are optimistic that we have met all our obligations by ensuring that all our operations are properly empowered and our workforce and management sufficiently representative.

Other areas of concern include the continued inability of Eskom, the state power utility, to ensure consistent or sufficient power for the needs of the country. The gold-mining industry is an energy-intensive industry and sub-optimal power delivery is of grave concern to all operators of deep-level mines – not only because of the potential impact on the profitability and longer-term sustainability of the mines but also because of the significant risk that power outages pose to its employees. Sibanye is pro-actively exploring alternative sources of energy in order to mitigate the risk and reduce the demand load on Eskom.

As the Chief Executive Officer (CEO), Neal Froneman has stated publicly, on many occasions, our employees are our most important asset, and Sibanye recognises the importance of its employees as key stakeholders in the business and their important role in ensuring its profitability and longevity. The Company embraced transformation as a business imperative. The Company has defined and adopted as its core values: commitment, accountability, respect and enabling (or a CARE) culture. Sibanye has begun to roll out the CARE model and will embed these values as part of a new, more holistic safety health and wellness strategy in 2014. We expect this strategy to deliver further safety improvements in future as the Group works towards its goal of zero harm in the workplace.

I would like to congratulate Neal, his management team and their colleagues at Sibanye on achieving

such stellar operating results and managing to convincingly and sustainably turn around operations that many industry commentators had written off. I am confident that Neal and his team will continue to build on the solid base of 2013 for the benefit of all stakeholders and develop Sibanye into a globally competitive and admired, proudly South African mining company.

Lastly, I am fortunate to have the support of a diverse and vastly experienced Board. While this Board has only been incorporated relatively recently, it has been pleasing to see the level of commitment, genuine interest in the business and valuable contribution that my fellow directors have already made. Following the listing, we welcomed Zola Skweyiya, Barry Davison, Nkosemntu Nika, Tim Cumming and Sue van der Merwe as independent non-executive directors of Sibanye. We expect that Chris Chadwick and Robert Chan, representing Gold One, will also join the Board once the acquisition of Cooke has been concluded. The mix of operational, technical, financial and commercial knowledge and experience is a distinct advantage for a young and dynamic company like Sibanye.

In the year ahead, we will continue to develop Sibanye into a model mining company. We believe Sibanye’s solid governance principles and operational expertise lay a solid foundation for this Company to deliver superior returns to shareholders, while holding significant attraction for a host of other stakeholders too.

Sibanye: We are one!

Sello Moloko

Chairman

29 April 2014

 

 

14  Sibanye Gold Integrated Report


Table of Contents

STRATEGIC ACCOUNTABLE LEADERSHIP CHIEF EXECUTIVE’S REPORT

 

chief executive’s report

 

LOGO

 

INTRODUCTION

The purpose of this Integrated Report is to provide stakeholders with relevant information about Sibanye, including a review of its operational and financial performance during the period; its governance and values; its prospects and the challenges it faces; and its business strategy, which is focused on maintaining strong operational performance and value-accretive growth in order to deliver and sustain long-term, superior value creation for our shareholders in the form of dividends and appreciation in the share price.

On listing in February 2013, the primary strategic objectives contemplated for Sibanye’s first year as an independent company were:

Ÿ   to restore operational credibility to its mature mines;
Ÿ   to unlock the value contained in the West Wits Tailings Storage Facilities;
Ÿ   to secure the longer-term future of Beatrix; and
Ÿ   to deliver on our strategic intent to be the benchmark dividend yield vehicle in the gold sector globally.

These objectives have substantially been achieved in 2013 and a strong platform has been laid as the basis for continuing high performance and business growth in 2014.

The operational turnaround delivered in Sibanye’s first 11 months as an independent company has proven the quality and potential of its operations and largely restored its operational credibility.

We are confident that the solid operational base delivered in 2013 is sustainable and that the Group is well positioned to deliver on its strategic goals, not only in the short-term, but over a significantly longer period than envisaged in the LoM that we inherited at the beginning of 2013.

 

Notable highlights during the period include:

 

Ÿ   Successfully implementing a new operating model and flatter, more efficient operating structures. This has already had a positive impact on costs and production at the operations. As we anticipated at the beginning of the year, I can confidently say that we have arrested the declining-production and increasing-cost trends that have plagued these assets for many years.

 

Ÿ   Strong free cash flow generation, despite a declining dollar gold price and rising costs, has enabled repayment of R2.2bn of debt, which was inherited on unbundling. This allowed Sibanye to pay a robust dividend to shareholders, positioning us as a benchmark dividend yield company in the sector.

 

Ÿ   Successfully extending the lives of our assets through quality and disciplined mining and cost control. This is evident in our new Reserve declaration and has been incorporated into our new, longer LoM operating plans. We expect to improve the LoM profile further as we continue with our assessment of the sizeable Resources still contained in secondary reefs and other remnant areas at the operations.

 

Ÿ   Making strategic acquisitions, which are consistent with Sibanye’s strategy to extend the operating lives of its current mines and assets and maintain higher production levels for longer in order to sustain dividend payments to shareholders.

BECOMING THE ‘GO TO’ GOLD EQUITY INVESTMENT

Prior to Sibanye’s unbundling and listing, a number of key strategic drivers and criteria were identified, which we believed would result in Sibanye becoming the investment of choice in the global gold sector. The strategic drivers that we identified and communicated at the outset remain valid. These are:

Ÿ   ensuring leverage to the gold price by remaining unhedged and

 

 
   

Strategic accountable leadership

              

 

Sibanye Gold Integrated Report  15


Table of Contents

STRATEGIC ACCOUNTABLE LEADERSHIP CHIEF EXECUTIVE’S REPORT

 

chief executive’s report continued

 

   

implementing operating strategies which ensure that any increase in revenue flows through to the bottom line;

Ÿ   optimising free cash flow (after all costs, capital expenditure and taxes) and using this as a key measure of performance;
Ÿ   maintaining capital expedience and discipline by ensuring that capital invested generates appropriate returns and that the balance sheet is optimally geared;
Ÿ   not pursuing growth for the sake of size but only if that growth enhances cash flow and returns per share; and, most importantly,
Ÿ   rewarding shareholders by means of regular, sustainable and meaningful dividends and, when appropriate, returning excess cash to shareholders through the declaration of special dividends.

Sibanye’s strategy considers the interests of all its stakeholders and we believe that all stakeholders will benefit from the successful delivery of our strategic goals. In this regard, we recognise that we have a meaningful presence in South Africa and its

economy, and are confident that, in a supportive environment, the Group will continue to operate profitably and sustainably for the benefit of all of its stakeholders.

IMPLEMENTING OUR STRATEGY

Notwithstanding challenging market conditions in 2013, the vigorous implementation of Sibanye’s operating strategy, comprising the six key elements (depicted in the diagram on this page) has already delivered results.

Some of the measures that have been implemented have already yielded returns while we expect further cost and productivity benefits from more recent interventions. Critical elements have included:

Ÿ   Efforts to right size and restructure the company are ongoing, although substantial progress has been made. Wages make up over 50% of production costs and, while production had declined significantly in recent years, the labour complement had stayed relatively stable. Restructuring the business to align the labour
   

complement with longer-term sustainable production levels resulted in a reduction in the total number of employees by 5,810 people (14% of employees), largely through voluntary separations and natural attrition. In doing this, we focused firstly on rationalising the higher levels of management, and removing two layers of operational management while introducing more effective structures and capacity, with strong operating experience.

 

Ÿ   The use of contractors has been significantly reduced in order to minimise the impact of the restructuring on our own employees and contractors have been replaced by Sibanye employees where possible. Contractors now represent around 7% of the total workforce from around 9% a year ago. The corporate and regional functions, which were previously separate, have been combined and the corporate office has been established at Sibanye-owned premises at the old Libanon Mine, close to the key Driefontein and Kloof operations.
 

 

LOGO

 

16  Sibanye Gold Integrated Report


Table of Contents
Ÿ   Service level contracts between the group services and our mines ensure that the functions and services provided by the Group are effective and address real needs at the operations.
Ÿ   The organisational structure has been flattened, ensuring that there is more experience and a higher level of skill closer to the face where it is most needed. The separation of the KDC entity into Kloof and Driefontein has reduced the spans of control in order to ensure that our management was not too-thinly spread.
Ÿ   The operational focus has been intensified by introducing multi-disciplined and empowered operating team structures. By improving the operating focus and flexibility, we increased gold production by about 17% year-on-year. A focus on quality of mining factors is reflected in lower R/t operating costs and increased grades. A detailed monthly, technical and financial operational review process has been introduced in order to measure progress on a regular and frequent basis, and immediately address any operational issues that may arise.
Ÿ   Plant utilisation has been optimised by filling excess capacity with low-grade surface rock and dump material.

OPERATING AND FINANCIAL OVERVIEW

Our focus on improving productivity and reducing costs is coupled with a dedicated health, safety and wellbeing strategy. Continuous initiatives to engineer out risk, as we strive towards our goal of zero harm, delivered further safety improvements in 2013. The FIFR at the end of the year was 0.10 per million man hours worked, which is a 41% improvement over the previous year and the lowest ever rate achieved over a year at these deep level gold mines. The LTIFR was 6.13, which represents an 11% year-on-year improvement. Despite the depth and labour-intensive nature of our operations, our safety indicators are

starting to approach global mining safety benchmarks, a remarkable statistic.

Following a thorough review of all aspects of the business in the first half of 2013, the new operating model was introduced and flatter, team-based management teams rolled out across the operations. Significant restructuring and an increased operational focus resulted in continuous delivery of productivity and cost improvements throughout the year with the second half of the year better reflecting the sustainable performance of the operations. The first half of 2013 was also disrupted by a fire at Beatrix West Section and a power outage when the main Eskom transformer supplying electricity to Driefontein was severely damaged by a fire resulting from a lightning strike. As a result, gold production of 24,061kg (773,600oz) for the six months ended 31 December 2013 was 18% higher than in the first six months.

Gold production for the year ended 31 December 2013 was 17% higher than that achieved in 2012 and All-in cost was 7% lower, both as a result of the severe strikes in 2012 and the re-focus on mining and cost-saving

initiatives after unbundling early in 2013. Sibanye is now positioned in the lowest quartile of the global All-in cost curve and is capable of generating solid cash flow under lower gold prices than currently prevail.

Net cash generated for the year ended 31 December 2013, before net financing activities and dividends, was R3.2 billion (US$336 million), which was equivalent to approximately 40% of Sibanye’s market capitalisation as at 31 December 2013. Debt repayments during the year totalled R2.2 billion (US$231 million), reducing gross debt to R2.0 billion (US$193 million) and net debt (total borrowings and bank overdraft less cash and cash equivalents) to R499 million (US$48 million) at year end. Debt repayments were structured to accommodate the payment of the interim and final dividend, to allow funding to cover payments on acquisitions, and to provide cash flow coverage against the possibility of industrial action during the biennial gold-sector wage negotiations. The bridge loan facilities were also restructured to provide for a borrowing facility of R4.5 billion, R2 billion of which has been drawn.

 

 

 

 

LOGO

 

   

Strategic accountable leadership

              

 

Sibanye Gold Integrated Report  17


Table of Contents

STRATEGIC ACCOUNTABLE LEADERSHIP CHIEF EXECUTIVE’S REPORT

 

chief executive’s report continued

 

Sibanye’s dividend policy is to return 25% to 35% of normalised earnings to shareholders. The Group declared a total dividend of 112 Rand cents per share for 2013 at the upper end of the range defined in its dividend policy. This represented a 9% dividend yield at 31 December 2013.

SHARE PRICE PERFORMANCE

Sibanye listed at a price of R13.05 per share on 11 February 2013 and initially traded in a relatively tight price range until April 2013, when the sharp decline in the gold price led to a sell-off in gold equities globally. The FTSE/JSE Gold Mining Index declined by approximately 40% and Sibanye’s share price fell to a low of R6.73 per share on 22 May 2013, about 50% below its listing price.

 

Evidence of improving operational performance, reported at the interim results in August 2013, a relatively short strike followed by agreement on wage increases with the unions representing the majority of the gold-industry workforce in September 2013 and the declaration of Sibanye’s maiden interim dividend, resulted in Sibanye’s share price recovering strongly through the second half of the year. By 31 December 2013, the share price had recovered to a closing price of R12.30 per share, 83% higher than the bottom reached in May 2013 but still 6% lower than the listing price. This is in contrast to a 54% decline in the FTSE/JSE Gold Mining Index and represented significant outperformance over the same period against the dollar gold price and rand gold price, which ended the year 27% and 14% lower respectively.

 

 

 

LOGO

 

LOGO

Level 1 – Approved LoM plan with capital fully budgeted; Level 2 – Projects where provision has been made for capital and only minor technical work is required; Level 3 – Concept studies, pre-feasibility studies and feasibility studies, with no provision made for capital

 

 
 

 

18  Sibanye Gold Integrated Report


Table of Contents

SIBANYE RELATIVE SHARE PRICE PERFORMANCE

Sibanye’s share price has continued to appreciate in 2014, increasing by approximately 100% to R24.73 per share on 10 March 2014, driven by strong results reported for the six months ended 31 December 2013, the declaration of a 75 cents per share final dividend for 2013, a more stable dollar gold price and a weak rand relative to the US dollar.

GROWTH

Sustaining and growing our operations

Lower overhead costs and an improvement in mining quality factors has resulted in lower paylimits being applied to LoM planning, and Reserve and Resource calculations at 31 December 2013, compared with those used in 2012. This, together with the ongoing assessment of the economic viability of mining, the large resources contained in secondary reefs and remnant areas, which had not previously been exploited, has resulted in Sibanye’s gold Mineral Reserves at 31 December 2013 increasing by 46% to 19.7Moz (including 1.5Moz of Reserves depleted through mining during 2013), from 13.5Moz at 31 December 2012.

Underground gold Reserves increased by 2.4Moz (net of depletion) and surface gold Reserves, mainly in TSF, included following the completion of a pre-feasibility study, increased by 4.0Moz.

SIBANYE LoM PROFILE AT 31 DECEMBER 2013

Inclusion of these additional Reserves in Sibanye’s revised 2014 LoM plan has

resulted in gold production from Beatrix, Driefontein and Kloof being forecast to be maintained at over 1.2Moz per annum until 2021, four years longer than in the 2013 LoM plan, which had gold production declining below 1.2Moz per annum by 2017. Importantly, in the 2014 LoM plan, gold production is forecast at approximately 1.4Moz until 2019 compared with the 2013 LoM plan, which had peak gold production of approximately 1.3Moz being maintained for only a single year. The total forecast LoM has also been extended by approximately two years to 2030 in the 2014 LoM plan. With most of the additional underground reserves being from remnant or white areas and secondary reefs, which require minimal ORD, capital expenditure to achieve this improved LoM profile is forecast to remain relatively constant in real terms at approximately R3.0 billion.

Inclusion of Sibanye’s TSF reserves in the LoM plan at this stage extends production of over 1.2Moz per annum by a further three years until approximately 2024 and extends the LoM to 2035. This project will in future form part of the West Rand Tailings Treatment Project (WRTTP) once the acquisition of the Cooke assets from Gold One has been completed.

The strategy to extend the lives and secure the future of our existing operations and assets includes growth or life extension from value-accretive and strategic acquisitions. As a proudly South African, independent mining company, Sibanye’s strong cash flows and regional presence position it competitively for growth, particularly in South Africa. With our

 

benchmark yield strategy in mind, we will only pursue acquisitions that are ultimately value-enhancing on a per-share basis or provide sustainability to our yield profile. In 2013, the following transactions were entered into:

Ÿ   In August 2013, an agreement was reached with Gold One to acquire its Cooke underground and surface assets for such number of shares as represent 17% of Sibanye’s issued share capital, on a fully diluted basis on the closing of the transaction. This transaction is expected to be earnings and cash flow- accretive and will add average annual production of approximately 250,000oz of gold and over 500,000lb of uranium over the next five years, and unlock regional operational and infrastructural synergies. Importantly, the transaction secures the Cooke surface tailings Resources and the Cooke 4 gold and uranium plant, which are critical to unlocking the significant gold and uranium Resources contained in the surface TSF across our West Rand operations.
Ÿ   The second transaction signals greater co-operation between the gold producers in South Africa in order to unlock value in the industry. In August 2013, Sibanye agreed to exchange two mining-right portions at its Beatrix Operation, which are not included in its current life of mine, for two mining-right portions at Harmony’s Joel Operation. These acquired mining rights are more readily accessible from the Beatrix North and South sections. Two further mining-right portions have been exchanged with Harmony for a royalty of 3% of net revenue derived from mining these portions.
 

 

   

Strategic accountable leadership

              

 

Sibanye Gold Integrated Report  19


Table of Contents

STRATEGIC ACCOUNTABLE LEADERSHIP CHIEF EXECUTIVE’S REPORT

 

chief executive’s report continued

 

Ÿ   Finally, in December 2013, Sibanye agreed to acquire the entire issued ordinary share capital of Wits Gold for a cash consideration of approximately R410 million, thereby securing substantial gold and uranium resources. The majority of these resources are adjacent to our Beatrix Operation and, through synergy with existing operations and infrastructure, will secure the long-term future of Beatrix. Wits Gold also held a binding offer to acquire Southgold Exploration Proprietary Limited (Southgold) – being the sole owner of the Burnstone gold mine. Following the successful conclusion of a detailed due diligence, a decision was taken to proceed with the option to acquire the Burnstone mine. The offer to acquire Southgold is still subject to certain conditions precedent, including amongst others, the approval of the Minister of Mineral Resources, and Wits Gold confirming that the acquisition of Southgold does not give rise to any adverse tax consequences for Wits Gold and/or Southgold. The decision to acquire Southgold was based on the already significant investment in mine development and infrastructure and the favorable terms on which this acquisition can be concluded. The acquisition of Burnstone will contribute positively to free cash flow and enhance the
   

Company’s long term value, consistent with our strategy to extend the operating life of the Company in support of our dividend yield strategy.

Sibanye expects to conclude all of these transactions early in 2014. Based on the solid progress towards restoring operational credibility in 2014 at our existing operations and the implementation of an effective operating strategy, we are well positioned to seamlessly integrate these acquisitions into Sibanye and deliver on synergies with our current operations.

A VOLATILE LABOUR RELATIONS ENVIRONMENT

The industry approached the biennial wage negotiations in 2013 with significant unease and uncertainty after the fractious and volatile labour environment of 2012. In anticipation of a disruptive negotiation process, we prepared ourselves for extended strikes: strike plans designed to limit production losses and minimise costs were developed, and we ensured that we had sufficient cash leading into the negotiations to sustain the Group through a prolonged strike.

We also worked very hard at winning the hearts and the minds of our employees through direct, forthright

but honest communication and I believe we have much greater alignment than we have had in the past. We took a very conscious decision to communicate directly with our employees, something which has often been abdicated to the unions in our industry.

The wage settlement achieved is indicative of a greater understanding. Yes, it was possibly higher than we would have liked and we still believe that including a profit share in the increase would have better aligned the workforce with management and shareholders, but it was a reasonable settlement which – in comparison with other sectors – ensures that our employees remain among the best paid in South Africa. In the end, the process was conducted with a great deal of maturity and respect for the law, resulting in minimal disruption for the industry or the country.

The final two-year agreement was concluded with the NUM, the United Association of South Africa (UASA) and Solidarity, which collectively represented 72% of employees within this sectoral bargaining unit, and was extended to all employees, in line with past practice. It was disappointing that AMCU declined to accept the agreement and waited until 20 January 2014 before issuing strike

 

 

20  Sibanye Gold Integrated Report


Table of Contents

notices at all the gold-mining operations where it is the recognised majority union (this covered our Driefontein operations, two Harmony mines and the majority of AngloGold Ashanti Limited operations).

An application for an interdict against the strike was lodged at the Labour Court by the Chamber of Mines on behalf of the gold companies, on the basis that the collective wage agreement signed by the other unions in the gold sector had legitimately been extended to AMCU members. Due to the complexity of the issues, the Court reserved judgment, and issued an interim order restraining AMCU from initiating strike action. An order was issued on 30 January 2014 declaring any potential strike action by AMCU unprotected. Unless AMCU can show cause why this order should not become final prior to 5 June 2014, the ruling will be made final.

2014 AND BEYOND

Based on the platform created in 2013 and a healthy balance sheet, Sibanye is well positioned to continue delivering strong operating and financial results in 2014.

Maintaining strong positive cash flows from current operations is the primary goal that is a pre-requisite for our business success. The most critical challenge facing the company in 2014 is to maintain its strong operational focus, while successfully integrating the new operations it is acquiring.

We anticipate further cost reductions to flow from restructuring completed late in 2013 and other initiatives which

will be implemented in 2014, although these will be relatively modest in comparison to those achieved in 2013. From an operational perspective, the focus will be on improving productivity particularly looking at the potential of revising working arrangements to ensure that more time can be spent at the face. We are supportive of the Sindisa agreement, a collaborative productivity enhancement initiative between the Chamber of Mines and the NUM, UASA and Solidarity. The initiative arose out of the 2011 wage agreement and we will be seeking to involve AMCU going forward. Not only does the Sindisa initiative seek to increase the number of shifts in the yearly production calendar and enhance face time through better working arrangements but it is also likely to involve shift arrangements, which will enable employees – especially migrant employees – greater flexibility to spend more time with their families.

With continuing management focus, increases in pay mineable face length and productivity improvement initiatives, the goal is to maintain the December 2013 quarter run rate as a sustainable base level subject to potential production interruptions that may be experienced.

As such, for the year ending 31 December 2014, gold production in the normal course of business from the Beatrix, Driefontein and Kloof Operations is forecast at 44,000kg (1.4Moz). For a discussion of Sibanye’s trend and outlook, please see “Operating and Financial Review and Prospects—Trend and Outlook”.

Should the rand gold price remain at around current levels, cash generation will be meaningful, enabling Sibanye to reduce debt further and invest in its future, while remaining true to its dividend policy, maintaining a strong dividend yield and continuing with its strategy to deliver superior value for all stakeholders.

MY THANKS

The successes we have already achieved at Sibanye in a limited period of time have been remarkable. I must thank my executive colleagues, my fellow Board members and our operational teams at the workface. You all have a lot to be proud of as we conclude the first financial reporting period for Sibanye and have already made strides in realising a number of the strategic objectives we have set for ourselves.

Neal Froneman

Chief Executive Officer

29 April 2014

 

 

 

   

Strategic accountable leadership

              

 

Sibanye Gold Integrated Report  21


Table of Contents

STRATEGIC ACCOUNTABLE LEADERSHIP ENGAGING WITH STAKEHOLDERS

 

engaging with stakeholders

 

COMMUNICATION AND ENGAGEMENT

In line with its Corporate Communications and Engagement Strategy, Sibanye communicates with key stakeholders on a regular basis to keep them informed of developments.

The development of the Corporate Communications and Engagement Strategy entailed:

 

Ÿ   a review of the existing communications framework and practices;

 

Ÿ   an external environmental scan;

 

Ÿ   the development of communications and engagement objectives and guiding principles; and

 

Ÿ   the establishment of monitoring, evaluation and performance management arrangements.

The strategy developed in 2013 will remain under review and is a dynamic document to be updated from time to time.

‘Our stakeholder engagement is dynamic.’

Sibanye’s engagement strategy is based on six objectives, supporting the delivery of its corporate objectives, which are to:

 

1.   Promote the Sibanye brand

u     Position and strengthen the brand among key stakeholders

 

u     Inculcate the Group pay-off line – ‘We are one’ – as a philosophy to engender a sense of ownership and accountability necessary to realise its vision

 

u    Build brand awareness and legitimacy

 

u     Achieve sustainable brand value

2.   Build credibility and trust in Sibanye

u     Influence and work alongside stakeholders to deliver on its vision

 

u     Deliver on its promises

3.   Build a new corporate culture for Sibanye by increasing awareness of its vision, mission, aims, objectives and values

u     Employees are aligned with the Group’s purpose, vision and values and understand what is needed of them to make a meaningful contribution

 

u     Employee engagement and achievement of organisational effectiveness

4.   Improve communications and engagement capability and capacity of staff across the organisation and ensure resources are used to maximum effect

u     Building capability among the communications staff is central to achieving the objectives of the Communications and Engagement Strategy

 

u     Achievement of vision hinges on every manager becoming a communicating leader

5.   Establish two-way internal communication across the Group

u     Checking that messages reach internal target audiences and employees, and closing the loop to ensure that messages are understood and internalised

 

u     Providing an opportunity for employee contribution

 

u     Ensuring clarity on management’s role in communication

6.   Provide high-quality, efficient and effective communication and engagement between Sibanye and external communities

u     Influence and work alongside key stakeholders

 

u     Ensure understanding of the Sibanye portfolio of projects and impacts on communities

 

u     Consistent messaging to stakeholders

 

 

22  Sibanye Gold Integrated Report


Table of Contents

 

LOGO

 

   

Strategic accountable leadership

              

 

Sibanye Gold Integrated Report  23


Table of Contents

STRATEGIC ACCOUNTABLE LEADERSHIP ENGAGING WITH STAKEHOLDERS

 

engaging with stakeholders continued

 

SIBANYE’S PRIMARY STAKEHOLDERS

 

Stakeholder group    Some specific stakeholders
     West Rand District Municipality

LOGO

  Local and provincial government    Westonaria Local Municipality
     Merafong Local Municipality
     Matjhabeng Local Municipality
     Masilonyana Local Municipality
     Lejweleputswa District Municipality
     Gauteng Provincial Government
         Free State Provincial Government

LOGO

 

National government

   Department of Mineral Resources (DMR)
     Department of Labour (DoL)
     Department of Education (DoE)
     Department of Higher Education
     Department of Environmental Affairs (DEA)
     Department of Water Affairs (DWA)
     Department of Health (DoH)
     Department of Rural Development and Land Reform
     Portfolio Committee on Mineral Resources
     National Treasury
LOGO  

Non-governmental organisations (NGOs)

   Wildlife and Environment Society of South Africa
     Earthlife Africa
     Federation for a Sustainable Environment
     Groundwork South Africa
LOGO  

Forums/key institutions

   Chamber of Mines of South Africa
     Suppliers/contractors
     West Rand District Mining Forum
     Merafong Community Mining Forum
     Far West Rand Dolomitic Water Association

LOGO

 

Organised labour

   NUM
     Solidarity
     UASA
     AMCU
     Sibanye Group Leadership Forum
LOGO  

Regulators

   DMR
     DWA
     DEA
     National Nuclear Regulator (NNR)
     National Energy Regulator of South Africa
     JSE
     NYSE/US Securities and Exhange Commission (SEC)

 

 

24  Sibanye Gold Integrated Report


Table of Contents
Stakeholder group    Some specific stakeholders

 

LOGO   Communities    Tin City
     Kokosi
     Theunissen
     Welkom
     Virginia
     Blybank
     Hillshaven
     Glenharvie
     Fochville
     Bekkersdal
     Simunye
     Farmers/landowners
LOGO   Media    National media
     Regional newspapers and broadcasters
     Local newspapers and broadcasters
     Specialist trade media
     Information websites
     Community media
LOGO   Other    Sibanye Board of directors
     Employees
     Sibanye Executive Committee (Exco)
     Investors/providers of capital (shareholders and banks)
     Retired employees
     Families of employees
     Mining units
     Board committees (particularly Safety, Health and Sustainable Development, Social and Ethics,Audit and Risk)
    

‘We interact regularly with a broad range of stakeholders.’

 

   

Strategic accountable leadership

              

 

Sibanye Gold Integrated Report  25


Table of Contents

STRATEGIC ACCOUNTABLE LEADERSHIP DIRECTORS AND MANAGEMENT

 

directors and management

 

 

LOGO

Sello Moloko

 

LOGO

Neal Froneman

 

LOGO

Charl Keyter

DIRECTORS

Sello Moloko (48)

Chairman

BSc (Honours) and Postgraduate Certificate in Education, University of Leicester Advanced Management Programme, Wharton

Sello Moloko was appointed non-executive Chairman of the Board on 1 January 2013. Prior to this, he served as a director of Gold Fields from 25 February 2011 to 31 December 2012. Sello is the Executive Chairman and founder of the Thesele Group and Chairman of the Alexander Forbes Group. He has an extensive career in financial services, including periods at Brait Asset Managers and Old Mutual, where he was CEO of Old Mutual Asset Managers until 2004. Sello’s other directorships are Sycom Property Fund and Acucap Limited. He is a trustee of the Nelson Mandela Foundation Investment Committee.

Neal Froneman (54)

Chief Executive Officer

Executive Director and Chairman of the Executive Committee

BSc Mech Eng (Ind Opt), University of the Witwatersrand BCompt, University of South Africa Pr Eng

Neal Froneman was appointed an executive director and CEO of Sibanye on 1 January 2013. He has over 30 years of relevant operational, corporate development and mining industry experience. He was appointed CEO of Aflease Gold Limited (Aflease Gold) in April 2003. Aflease Gold, through a series of reverse takeovers, became Gold One in May 2009. Neal was primarily responsible for the creation of Uranium One Inc. (Uranium One) from the

Aflease Gold uranium assets. During this period, he was CEO of both Aflease Gold and Uranium One until his resignation from Uranium One in February 2008. Prior to joining Aflease Gold, Neal held executive and senior management positions at Gold Fields of South Africa Limited, Harmony Gold Mining Company Limited (Harmony) and JCI Limited. He is also a non-executive director of Delview Three Proprietary Limited, Hi-Zone Traders 116 Proprietary Limited, 17 Perissa Proprietary Limited and Forestry Services Proprietary Limited.

Charl Keyter (40)

Chief Financial Officer

Executive Director

BCom, University of Johannesburg MBA, North-West University ACMA and CGMA

Charl Keyter was appointed a director on 9 November 2012 and was appointed an executive director and CFO of Sibanye on 1 January 2013. Previously, he was Vice President and Group Head of International Finance for Gold Fields. Charl has more than 18 years’ mining experience having begun his career in February 1995 with Gold Fields. He is also a non-executive director of Oil Recovery and Maintenance Services Proprietary Limited.

Timothy Cumming (56)

Non-executive director

BSc (Honours) (Engineering), University of Cape Town BA (PPE), MA (Oxon)

Timothy Cumming was appointed a non-executive director on 21 February 2013. He is the founder and partner of Scatterlinks, a South African-based company offering mentoring and coaching to senior business executives

 

 

26  Sibanye Gold Integrated Report


Table of Contents

as well as strategic advisory services to financial services businesses. He was previously involved with the Old Mutual Group in various capacities: CEO of the Old Mutual Investment Group SA; Executive Vice President – Director of Global Business Development of Old Mutual Asset Management (USA); Managing Director – Head of Corporate Segment of Old Mutual (South Africa); Strategy Director of Old Mutual (Emerging Markets); and Interim CEO of Old Mutual Investment Group (South Africa). He was also executive director and Head of Investment Research (Africa) for HSBC Securities. Timothy started his career as a management trainee at the Anglo American Corporation of South Africa Limited. He worked on a number of diamond mines and was Resident Engineer at Anglo’s gold mines in Welkom.

Barry Davison (68)

Non-executive director

BA (Law and Economics), University of the Witwatersrand

Graduate Commerce Diploma, Birmingham University

CIS Diploma in Advanced Financial Management and Advanced Executive Programme, University of South Africa

Barry Davison was appointed a non-executive director on 21 February 2013. He has more than 40 years’ experience in the mining industry and served as executive Chairman of Anglo American Platinum Limited (Anglo Platinum), Chairman of Anglo American plc’s Platinum Division and Ferrous Metals and Industries Division and executive director of Anglo American plc. He was a director of a number of listed companies including Nedbank Group Limited, Kumba

Resources Limited, Samancor Limited and the Tongaat-Hulett Group Limited.

Richard Menell (58)

Non-executive director

MA (Natural Sciences, Geology), Trinity College, Cambridge MSc (Mineral Exploration and Management), Stanford University

Richard (Rick) Menell was appointed a non-executive director on 1 January 2013. He has over 30 years’ experience in the mining industry and has been a director of Gold Fields since 8 October 2008. Previously, he has occupied the positions of President and Member of the Chamber of Mines of South Africa, President and CEO of TEAL Exploration & Mining Inc., Chairman of Anglovaal Mining Limited and Avgold Limited, Chairman of Bateman Engineering, Deputy Chairman of Harmony and African Rainbow Minerals Limited. He has also been a Director of Telkom SA Limited, Standard Bank Group Limited and Mutual and Federal Insurance Company Limited. He is currently a non-executive director and Chairman of Credit Suisse Securities Johannesburg, non-executive director of Weir Group plc, Rockwell Diamonds Inc. and the Tourism Enterprise Partnership. Rick is a Trustee of Brand South Africa and the Carrick Foundation. He is Co-Chairman of the City Year South Africa Citizen Service Organisation, and Chairman and trustee of the Palaeontological Scientific Trust.

 

LOGO

Timothy Cumming

 

 

LOGO

Barry Davison

 

 

LOGO

Richard Menell

 

 

   

Strategic accountable leadership

              

 

Sibanye Gold Integrated Report  27


Table of Contents

STRATEGIC ACCOUNTABLE LEADERSHIP DIRECTORS AND MANAGEMENT

 

directors and management continued

 

 

LOGO

Nkosemntu Nika

 

LOGO

Keith Rayner

 

 

LOGO

Zola Skweyiya

Nkosemntu Nika (56)

Non-executive director

BCom, University of Fort Hare BCompt (Honours), Unisa

Advanced Management Programme, INSEAD

CA(SA)

Nkosemntu Nika was appointed a non-executive director on 21 February 2013. He is currently an independent non-executive director of Scaw South Africa Proprietary Limited, ConvergeNet Holdings Limited and Chairman of the Audit and Risk Committee of Foskor Proprietary Limited. He was previously CFO and Finance Director of PetroSA (SOC) Limited and Executive Manager: Finance at the Development Bank of Southern Africa. He has held various internal auditing positions at Eskom, Shell and Anglo American Corporation of South Africa Limited. He was also a non-executive board member of the Industrial Development Corporation and chaired their Audit and Risk Committee and the Governance and Ethics Committee.

Keith Rayner (57)

Non-executive director

BCom, Rhodes University

CTA, CA(SA)

Keith Rayner was appointed a non-executive director on 1 January 2013. He is a Chartered Accountant with experience in corporate finance and is CEO of KAR Presentations which specialises in corporate finance and regulatory advice. He is an independent non-executive director of Goliath Gold Limited, Sabie Gold Proprietary Limited, John Daniel

Holdings Limited, Keidav Properties Proprietary Limited and Appropriate Process Technologies Proprietary Limited. He is a member of the JSE’s Issuer Regulation Advisory Committee. He was a member of the committee that wrote the Takeover Regulations in the Companies Act. He is a non-practising member of the South African Institute of Stockbrokers, a Fellow of the Institute of Directors, and a current and previous member of various SAMREC and SAMVAL working groups and a previous member of the Accounting Practices Committee.

Zola Skweyiya (72)

Non-executive director

LLD, University of Leipzig

Zola Skweyiya was appointed a non-executive director on 1 October 2013. He was Minister of Public Service and Administration from 1994 to 1999 and Minister of Social Development from 1999 to 2008. He was a founding member of the Centre for Development Studies at the University of the Western Cape. Zola also served on the board of trustees of the National Commission for the Rights of Children. He was previously the Chairman of the United Nations Commission for Social Development and the founder and chairman of the African National Congress Constitution Committee. In August 2013 he returned to South Africa after serving as the South African High Commissioner to the United Kingdom. He is also a director of Umsimbithi Holdings.

 

 

28  Sibanye Gold Integrated Report


Table of Contents

Susan van der Merwe (59)

Non-executive director

BA, University of Cape Town

Susan van der Merwe was appointed as a non-executive director on 21 February 2013. She served as a member of parliament for 18 years until October 2013, and held various positions, including that of Deputy Minister of Foreign Affairs for the period 2004 to 2010. She is currently a member of the National Executive Committee of the African National Congress. She has participated in various civil society organisations and currently serves as a Trustee and Chair of the Kay Mason Foundation, which is a non-profit organisation assisting disadvantaged scholars in Cape Town.

Jerry Vilakazi (53)

Non-executive director

BA, University of South Africa

MA, Thames Valley, MA, London

MBA, California Coast University

Jerry Vilakazi was appointed a non-executive director on 1 January 2013. He is Chairman of Palama, which he co-founded to facilitate investment in a diversified portfolio. He is the past CEO of Business Unity South Africa (BUSA). Prior to this he was Managing Director of the Black Management Forum. In 2009 Jerry was appointed to the Presidential Broad-Based Black Economic Empowerment Advisory Council and in 2010 he was appointed as a Commissioner of the National Planning Commission. He was appointed Public Service Commissioner in 1999 and has played

a critical role in shaping major public service policies in post 1994 South Africa. Jerry is the chairman of the Mpumalanga Gambling Board, Mpumalanga Economic Growth Agency and the State Information and Technology Agency, or SITA. He is the non-executive Chairman of Netcare Limited and holds non-executive directorships in Goliath Gold Limited, Blue Label Telecoms, General Health Group (UK) and Palama Investments.

TERM OF OFFICE

Sello Moloko, Neal Froneman, Charl Keyter, Keith Rayner and Zola Skweyiya retire by rotation at the upcoming Annual General Meeting and are eligible and offer themselves for re-election. Timothy Cumming, Barry Davison, Richard Menell, Nkosemntu Nika, Susan van der Merwe and Jerry Vilakazi retire by rotation in 2015.

 

LOGO

Susan van der Merwe

 

LOGO

Jerry Vilakazi

 

 

‘The board comprises nine independent non-executive directors, the CEO and CFO.’

 

 

   

Strategic accountable leadership

              

 

Sibanye Gold Integrated Report  29


Table of Contents

STRATEGIC ACCOUNTABLE LEADERSHIP DIRECTORS AND MANAGEMENT

 

directors and management continued

 

EXECUTIVE MANAGEMENT

Shadwick Bessit (51)

Senior Vice President: Technical Services

National Higher Diploma, Wits Technikon Executive Development Programme, GIBS Mine Manager’s Certificate of Competency

Prior to joining Gold Fields on 6 July 2012, Shadwick Bessit was the Executive Director – Operations at Impala Platinum Holdings Limited (Implats). He occupied this position from 2005 to 2010 after joining Implats in November 2002 as General Manager. Previously he was employed at AngloGold Ashanti Limited (AngloGold Ashanti) from 1986 to 2002 where he moved through the ranks to General Manager level at Deelkraal, Elandsrand and Savuka mines.

Hartley Dikgale (53)

Vice-President: General Counsel and Sustainable Development

BIuris, University of the North LLB, HDip (Company Law), University of the Witwatersrand LLM, Vista

Hartley Dikgale is an admitted advocate of the High Court of South Africa and has more than 30 years of corporate experience as a business executive. He has served on more than 20 boards of directors of both listed and unlisted companies. He was initiated in the mining sector in 2004 when he served in the JSE listed Pamodzi Gold Limited as a Non-executive Director.

He has worked for the following companies and institutions, among others: Sanlam, Old Mutual, Independent Communications Authority of South Africa (ICASA), Rand Water and Pamodzi Investment Holdings Proprietary Limited. In recent years, Hartley has worked for Rand Uranium Proprietary Limited (Rand Uranium) in an executive capacity as a General Counsel.

When Gold One acquired Rand Uranium, Hartley joined and served Gold One in the capacity of a Senior Vice President: General Counsel and Sustainable Development. He is now serving Sibanye in a similar capacity.

Cain Farrel (64)

Company Secretary

MBA, Southern Cross University, Australia FCIS

Cain Farrel was appointed to his position on 1 January 2013. Before then, and from 1 May 2003, he was Company Secretary of Gold Fields. Previously, Cain served as Senior Divisional Secretary – Anglo American Corporation of South Africa Limited. He is a Past President and former director of the Southern African Institute of Chartered Secretaries and Administrators.

Nash Lutchman (51)

Senior Vice President: Protection Services

BA (Honours) Criminology, University of KwaZulu-Natal

Nash has more than 25 years experience in the policing and security environments. He enlisted in the SA Police in 1987 and rose through the ranks from a Constable in 1988, to a Brigadier in 1999. During his time with the SAP, Nash served in various divisions at senior levels. In 2004 he joined De Beers as a Security Manager at the De Beers Kimberley mines, and subsequently held key positions within the group as Group Crime and Intelligence Manager, Regional Security Manager, Group Investigations and Crime Information Manager, before being appointed to head the Security Division at De Beers consolidated mines.

In 2008 Nash joined Gold Fields as Manager Special Investigations and was appointed to Senior Manager and Head of Gold Fields Protection Services in July 2009. During March 2012, Nash was appointed as Vice President and Group Head of Protection Services for the Gold Fields Group. In March 2014 Nash was promoted to Senior Vice President responsible for developing and delivering a holistic protection strategy for Sibanye.

Dawie Mostert (44)

Senior Vice President: Organisational Effectiveness

MDP (Adv Labour Law), MBA, University of South Africa

Dawie Mostert, who has more than 16 years’ experience in the mining industry, was appointed to his position on 1 January 2013. Prior to joining Sibanye, he served as Vice President Commercial Services at Gold One and previously as Vice President Human Capital at Great Basin Gold Limited. Prior to joining Great Basin Gold in 2006, he was an Executive for Organisational Development and Employee Relations at Harmony from 2002 to 2006. Dawie joined Harmony in 1996 as part of the acquisition transformational team and was appointed Mine Manager at Elandsrand mine from 2001 to 2002.

Adam Mutshinya (50)

Senior Vice President: Human Capital

BAdmin (Honours) (Industrial Psychology), University of Venda

Adam Mutshinya was appointed to his position on 1 March 2013. Prior to his appointment to Sibanye, and from 1 December 2012, he was Vice President and Head of Human Resources – SA Region of Gold Fields. Before that he was Vice President and Head of Group Talent Management at Gold Fields. Prior to joining Gold Fields in November 2011, Adam was with the South African Forestry Company (SAFCOL). Here – between September 2006 and June 2011 – he held the senior positions of Group Executive: Human Resources and Senior Group Executive: Human Capital. Prior to this, Adam held various positions at Anglo Platinum. Between October 2003 and August 2006 he was Human Resource (HR) Manager: Platinum Expansion Programme, HR Manager: Smelter Operations and the Group HR Manager Transformation.

 

 

30  Sibanye Gold Integrated Report


Table of Contents

Dick Plaistowe (64)

Senior Vice President: Surface Operations and Processing

BSc (Hons) Mining Engineering (University of Nottingham), Mine Manager’s Certificate of Competency, Programme for Management Development (Harvard Business School).

Dick has more than 40 years’ experience in the mining industry, with extensive strategic, operations and project management experience. Dick also has 20 years’ experience in the surface retreatment business and was the Chief Executive Officer responsible for the listing of Crown Consolidated Gold Recoveries (now incorporated within DRD Limited) on the Johannesburg Stock Exchange in 1997 and for the formation of Mine Waste Solutions (Pty) Limited in 2000. Dick was recruited by Gold One International to develop a surface retreatment business following Gold One’s acquisition of Rand Uranium in 2011, where he was Senior Vice President of Surface Operations.

Wayne Robinson (51)

Senior Vice President: Cooke Mining Operations

BSc Mech Eng (University of Natal), BSc Mining Eng (University of Witwatersrand), PrEng

Wayne has worked in the South Africa gold and platinum mining industry and has over 25 years of underground mine management experience. Prior to joining Sibanye Gold, Wayne was the Executive Vice President of Cooke Operations and served on the Gold One Executive Committee. He has held senior management positions at Eastern Platinum, Richards Bay Minerals and Gold Fields.

Marius Saaiman (42)

Senior Vice President: Business Development

BCom (Honours) (Accounting), University of Johannesburg

A member of the South African Institute of Chartered Accountants, Marius Saaiman was appointed to his position in February 2014. Prior to joining Sibanye, Marius was the joint CEO at Village Main Reef Limited. Before this, he was the acting CEO of Simmer and Jack Mines Limited. Prior to this, Marius was Managing Director at Macquarie, responsible for coverage of the resources sector as well as advising on mergers and acquisitions within the sector. Previous positions include investment advisor at African Global Capital, a resources focused private equity fund, head of corporate finance at Kumba Iron Ore Limited and Vice President Corporate Finance at Anglo American plc. Marius has had a long association with the mining industry, both within large corporates, as well as in the investment banking arena.

Richard Stewart (38)

Senior Vice President: Business Development

BSc (Hons), PHD (Geology) (University of Witwatersrand)

Richard has over 15 years’ experience in South Africa’s geological and mining industries and is a professional natural scientist registered with South African Council for Natural Scientific Professions (SACNASP). Prior to joining Sibanye Gold, Richard served as the Executive Vice President of Technical services for Gold One and was also the CEO for Goliath Gold. He was an investment consultant for African Global Capital SA, and has held management positions at Uranium One, Shango Solutions Consultancy and CSIR Mining Technology.

 

Peter Turner (57)

Chief Operating Officer

National Higher Diploma (Mechanical Engineering), Vaal Triangle Technikon South African Mine Manager’s Certificate of Competency (Metalliferous) South Africa Mechanical Engineers Certificate of Competency

Peter Turner was appointed to his position on 1 January 2013. Prior to his appointment to Sibanye, he was Executive Vice President, Head of the South Africa region of Gold Fields. Between August 2009 and August 2011 he served as Executive Vice President, Head of West Africa. He moved to Ghana in 2008 when he was appointed Vice President of Operations. In 2005 he was the head of the Kloof mine in South Africa and later the Driefontein mine. Between 2002 and 2005 he was Managing Director of Geita Gold Mining Limited in Tanzania. Before that, Peter was General Manager of East and West Africa Region for AngloGold Ashanti which is where he spent the majority of his career. He progressed through the ranks, starting as an Engineering Trainee at Vaal Reefs in 1975, later spending time in various managerial positions at a number of gold mining operations. Peter has more than 34 years’ experience in the mining industry.

 

 

   

Strategic accountable leadership

              

 

Sibanye Gold Integrated Report  31


Table of Contents

STRATEGIC ACCOUNTABLE LEADERSHIP DIRECTORS AND MANAGEMENT

 

directors and management continued

 

Robert van Niekerk (49)

Senior Vice President: Organisational Effectiveness

National Higher Diploma (Metalliferous Mining), Witwatersrand Technikon BSc (Mining Engineering), University of the Witwatersrand South African Mine Manager’s Certificate of Competency

Robert van Niekerk was appointed to the position in February 2013. Prior to joining Sibanye, he was the Senior Vice President and Group Head of Mining at Gold Fields. Before that he occupied several senior management positions at Gold Fields and Anglo Platinum, management positions at Uranium One and Gold One. Robert began his mining career in 1982 as a Barlow’s Learner Official and progressed through the mining ranks at East Rand Proprietary Mines, Harmony, Anglo Platinum, Gold One, Uranium One and Gold Fields, where he gained extensive South African and international mining experience.

James Wellsted (44)

Senior Vice President: Corporate Affairs

BSc (Honours) (Geology), University of the Witwatersrand (Wits) PDM, Wits Business School

James Wellsted was appointed to his position on 1 January 2013. Prior to joining Sibanye, and from 2011, he was a mining analyst at JP Morgan covering the South African diversified mining sector. Previously, James spent seven years as the Executive Head of Investor and Media Relations at Mvelaphanda Resources, until its unbundling in 2011. Between 1998 and 2004, James was an analyst at JP Morgan, covering the South African and African gold mining companies and contributing to JP Morgan’s supply and demand and gold price forecasts.

 

 

‘Our management team has more than 150 years’ combined experience.’

 

 

32  Sibanye Gold Integrated Report


Table of Contents

opportunities and risks

 

Oversight, responsibility and governance

The Board is responsible for overseeing the entire risk-management process. The Board delegates this authority to the Audit and Risk Committee to implement and ensure compliance with appropriate risk-management protocols and processes.

In terms of its Risk-Management Policy, Sibanye strives to manage risk effectively to protect the Group’s assets, stakeholders, environment and reputation to ensure achievement of the business objectives.

The Board believes that Sibanye’s risk-management policies, practices and management systems are sound, and are well-established and entrenched at the operations. The Group has implemented an Enterprise Risk Management guideline, which is aligned with the ISO 31000 international risk-management standard and the governance principles enshrined in King III.

Objectives:

Ÿ   to identify, assess and manage risks in an effective and efficient manner;
Ÿ   to make decisions based on a
   

comprehensive review of the reward to risk balance;

Ÿ   to provide greater certainty on the delivery of objectives; and
Ÿ   to fulfil corporate governance requirements.

Underpinning these objectives, the Group has implemented the following actions:

Ÿ   introduction of a comprehensive and systematic risk-assessment and reporting process across the organisation;
Ÿ   creation of an environment where risks are controlled and mitigated within the accepted and approved Sibanye risk-tolerance levels accepted and approved by Sibanye;
Ÿ   integration of the outputs of specialist risk functions to provide an informed view of the risks associated with the business activities;
Ÿ   raising awareness of risks and outcomes in business processes, and the potential impact on stakeholders;
Ÿ   fostering a culture of continuous improvement in risk management through audit and review processes; and
Ÿ   creation of an appropriate risk-financing programme based on the
   

risk profiles developed in the assessment process.

Process and systems

Risk registers, maintained at operational and corporate level, are reviewed twice a year by the Audit & Risk Committee. In addition, the operations have a formal quarterly risk-review process, which follows a formalised responsibility structure and includes support services, engineering, health and safety and environmental staff – where the risk registers are discussed and updated. Should any additional risks be identified, plans to address them are implemented. At the operations, risk assessment is a daily activity and work areas are assessed daily in terms of their compliance with the requirements.

At operational level, the risk owner is someone who is represented on Exco. The responsibility of mitigating risks is given to representatives in relevant departments. The emphasis lies on the business taking ownership of risk.

The Internal Audit Department is responsible for conducting annual audits on mitigation actions, and reports four times annually to the Audit and Risk Committee.

 

 

RISK-MANAGEMENT REVIEW PROCESS AND REPORTING STRUCTURE

 

LOGO

 

   

Strategic accountable leadership

              

 

Sibanye Gold Integrated Report  33


Table of Contents

STRATEGIC ACCOUNTABLE LEADERSHIP OPPORTUNITIES AND RISK

 

opportunities and risks continued

 

KEY OBJECTIVES OF THE COMBINED ASSURANCE APPROACH

 

Optimising assurance coverage   Co-ordinating the efforts of management, internal and external assurance providers
Systematic assessment of key risks associated with strategic objectives   Extent to which risks have been fully identified and responded to based on organisational objectives
Support the Audit and Risk Committee in assessing the effectiveness of internal financial controls   Assurance to the Board in making its statements on internal control in the Integrated Report
Provide context of the impact of inadequate and ineffective controls   Quantitative and qualitative impact of control breakdown on the overall control environment and areas for improvement

COMBINED ASSURANCE

The combined assurance process is embedded within the Sibanye operations. The approach is based on the application of three levels of assurance on all our significant risks:

 

Ÿ   Level 1: Management self-assurance
Ÿ   Level 2: Internal unbiased-person assurance
Ÿ   Level 3: Independent assurance

Sibanye uses the Three Lines of Defence Model:

 

Level 1:

Management self-assurance

  Line management function   Primarily responsible for risk management. The process of assessing, evaluating and measuring risk is ongoing and is integrated into the day-to-day activities of the business. This process includes implementing the risk-management framework, identifying issues and taking remedial action where required. Business-unit management is also responsible for reporting to the governance bodies within the group.

Level 2:

Internal unbiased-person assurance

  “Oversight” management functions appropriately independent of line management function   Assurance provided by employees within the company who are employed in “oversight” positions in central services and corporate departments.

Level 3:

Independent assurance

  Internal audit function, external auditors or independent external parties   It provides an independent assessment of the adequacy and effectiveness of the overall risk-management systems

 

34  Sibanye Gold Integrated Report


Table of Contents

RISK HEAT MAP (NOVEMBER 2013)

 

LOGO

PRIMARY RISKS AND MANAGEMENT SYSTEMS IN PLACE

 

  1.    Labour and wage negotiations  

Ÿ    Emergency preparedness and procedures

Ÿ    Legal compliance

Ÿ    Strike action plan

Ÿ    Strike action risk assessment

Ÿ    Union and stakeholder engagement process

  2.    Financial risk resulting from failure to deliver on operational and financial business plans  

Ÿ    Balanced Scorecard (BSC) and performance review process

Ÿ    Daily monitoring and managing of results

Ÿ    Robust operational plans

Ÿ    Increase geological supervision

Ÿ    Monthly reviews

Ÿ    Stakeholder engagement (Eskom management)

  3.    Workplace safety and health: dust exposure and litigation  

Ÿ    Full compliance safety management

Ÿ    Mandatory Codes of Practice (COP) – airborne pollutants

Ÿ    Mandatory COP – noise

Ÿ    Medical surveillance and risk-based medical evaluation

Ÿ    Mine standards and procedures

Ÿ    Review research outcomes (Safety in Mines Research and Advisory Committees (SIMRAC))

Ÿ    Ventilation distribution control

  4.    Financial risk due to reduced investor confidence  

Ÿ    SGL operations growth strategy

Ÿ    SGL strategic and operations planning

Ÿ    SGL sustainable development framework and strategies

Ÿ    Debt policy

Ÿ    Dividend policy

  5.    Non-delivery of the MPRDA, the Mining Charter and SLPs  

Ÿ    Mining Charter

    

Ÿ    Social and labour plans

    

Ÿ    3rd Party DMR audits

 

   

Strategic accountable leadership

              

 

Sibanye Gold Integrated Report  35


Table of Contents

STRATEGIC ACCOUNTABLE LEADERSHIP OPPORTUNITIES AND RISK

 

opportunities and risks continued

 

    
     
  6.    Gold price and exchange-rate volatility causing financial risk  

Ÿ    Monthly performance reviews

    

Ÿ    Operational planning process

    

Ÿ    Productivity management

    

Ÿ    Strategic planning process

  7.    Political risk  

Ÿ    Business and strategic planning process

    

Ÿ    Good corporate governance

    

Ÿ    Investor relations and community strategy

    

Ÿ    Membership of industry associations interaction

    

Ÿ    Stakeholder engagement

  8.    Financial risk as a result of rising mining input costs  

Ÿ    Cost management and control systems

    

Ÿ    Ore reserves management

    

Ÿ    Procurement strategies

    

Ÿ    Productivity management

    

Ÿ    Proper planning and sequencing

    

Ÿ    Realistic plans and creating realistic market expectations

    

Ÿ    Understanding fixed/variable cost relationship

    

Ÿ    Business restructuring though Organisational Effectiveness department

  9.    Competition for skills  

Ÿ    Competitive remuneration

    

Ÿ    Continuous review of remuneration

    

Ÿ    Balance score card and individual development plan

    

Ÿ    Mentorship and coaching programmes

    

Ÿ    Salary surveys and benchmarking

        

Ÿ    Retention measures-incentive schemes

  10.    Safety and health risk largely due to mine accidents and seismicity related incidents  

Ÿ    Behaviour based safety initiatives

    

Ÿ    Health and safety agreements with labour

    

Ÿ    Health and safety strategy

    

Ÿ    Integrated Visible Felt Leadership (VFL)

    

Ÿ    Mandatory COP issued by DMR

    

Ÿ    Mine COP for rock fall and rock bursts

    

Ÿ    Mine COP and standard operating procedures

    

Ÿ    Safe production rules

  11.   

Operational risk posed by power constraints and

cost increases

 

Ÿ    Communication with Eskom

    

Ÿ    Emergency preparedness

    

Ÿ    Power control and measurement

    

Ÿ    Standards and procedures

 

36  Sibanye Gold Integrated Report


Table of Contents

MITIGATION STRATEGIES FOR TOP RISKS

Risks Mitigation strategies

 

  1.

 

Ÿ   Information gathering and contingency planning for safety and security of employees and protection of company assets

 

Ÿ   Contingency strike plan

 

Ÿ   Improved communications with workforce

   

Ÿ   Update risk assessment and emergency procedure for 2014

  2.

 

Ÿ   Eskom quality-of-supply contract in place

 

Ÿ   Improve rates of development

   

Ÿ   Power-saving initiatives

  3.

 

Ÿ   Awareness-training programmes

 

Ÿ   Monitoring of progress and feedback through Safety Health & Sustainable Development Committee policy

 

Ÿ   Preparation for possible legal action

   

Ÿ   Roll-out of noise- and dust-management strategy

  4.

 

Ÿ   Develop a strategy to enhance the Sibanye brand and market Sibanye within the community

 

Ÿ   Implement new operating model – cash generation and investor payback

 

Ÿ   Improved engagement with government and other external stakeholders

 

Ÿ   Introduce a tool to measure the impact of interventions

 

Ÿ   Manage debt

   

Ÿ   Manage media relations proactively

  5.

 

Ÿ   Community and labour-sending areas strategy

 

Ÿ   Development of a transformation strategy

 

Ÿ   Establishment of Community Development Steering Committee

   

Ÿ   Submission and implementation of SLPs

  6.

 

Ÿ   Continuous business re-engineering

 

Ÿ   High-grade mining and low-gold price scenario

 

Ÿ   Implement operating strategy

   

Ÿ   Section 189 of the Labour Relations Act, 1995 (Act No 66 of 1995) process for structural alignment

  7.

 

Ÿ   Ongoing high-level stakeholder engagement

   

Ÿ   Representative seating on industry bodies (influence)

  8.

 

Ÿ   Cost reductions identified on an ongoing basis

   

Ÿ   Energy-conservation strategy and initiatives

  9.

 

Ÿ   Development of training facilities

   

Ÿ   Remuneration and rewards

  10.

 

Ÿ   Characterising the time distribution of seismicity to minimise exposure

 

Ÿ   Engineering out the risk initiatives

 

Ÿ   Expedite Mining Industry Occupational Safety and Health (MOSH) training

   

Ÿ   Integrated focus on Safety and Health strategy

  11.

 

Ÿ   Initiatives to achieve target of 10% reduction in electricity consumption over three years

 

Ÿ   Focus on power-savings initiatives

 

Ÿ   Quality-of-supply contract in place

 

Ÿ   Reduce use of compressed air and water at all operations

 

   

Strategic accountable leadership

              

 

Sibanye Gold Integrated Report  37


Table of Contents

STRATEGIC ACCOUNTABLE LEADERSHIP REPORT OF THE SOCIAL AND ETHICS COMMITTEE

 

report of the social and ethics committee

 

The Group by virtue of the Companies Act established a Social and Ethics Committee (Committee).

THE ROLE OF THE COMMITTEE

As prescribed by the Companies Act the role of the Committee is to monitor the Group’s activities in respect of:

 

Ÿ   Social and economic development including the Group’s compliance with the 10 Principles of the United Nations Global Compact Principles, the Organisation for Economic Co-operation and Development (OECD) recommendations regarding corruption, the Broad Based Black Economic Empowerment Act and the Employment Equity Act;
Ÿ   Good corporate citizenship, including the Group’s promotion of equality, prevention of unfair discrimination and reduction of corruption, contribution to development of the communities in which the Group operates and its record of sponsorships, donations and charitable givings;
Ÿ   The environment, health and public safety and the impact thereon of the Group’s activities;
Ÿ   Consumer relations and the Group’s compliance with consumer protection laws; and
Ÿ   The Group’s standing in terms of the International Labour Organisation Protocol on decent work and working conditions, the Group’s employment relationships and its contribution to the educational development of its employees.

In addition, the Group also subscribes to the 10 Principles of the International Council on Mining and Metals and the Committee is responsible for monitoring the Group’s activities in respect of this protocol.

THE STRUCTURE OF THE COMMITTEE

On 8 February 2013 the Board approved the terms of reference of the Committee to reflect the aforementioned duties and the membership, which consists of the respective chairmen of the Audit, Remuneration, Nominating and Governance and the Safety, Health and Sustainable Development Committees. The Board also appointed Jerry Vilakazi as Chairman of the Committee.

DISCHARGING ITS DUTIES DURING THE YEAR

At its first meeting at the beginning of the year the Committee approved its annual workplan for 2013. The Committee met three times during the year. Areas discussed with Management included: the 10 Principles of the International Council on Mining and Minerals; 10 Principles of the United Nations Global Compact; Community Development; Broad Based Black Economic Empowerment (BBBEE) and Employment Equity requirements; and Mining Charter compliance requirements. The Committee had noted that the Group complied with the statutory duties save for more work being done by Management in building up the Historically Disadvantaged South Africans pipeline in the middle-management levels and more work being done in certain areas with regard to the Mining Charter and the Social Labour Plans requirements.

Jerry Vilakazi

Chairman of the Social and Ethics Committee

29 April 2014

 

 

38  Sibanye Gold Integrated Report


Table of Contents

corporate governance report

 

KEY STANDARDS AND PRINCIPLES

This governance report is Sibanye’s second following its separation from Gold Fields in February 2013.

The Company listed for the first time on 11 February 2013, with its primary listing on the JSE. It is registered with the US Securities and Exchange Commission (SEC) in the USA and its ordinary shares are listed on the NYSE in the form of an ADR programme administered by The Bank of New York.

As a result, the Group is subject to compliance with the JSE Listings Requirements and to the disclosure and corporate governance requirements of the NYSE. The Group’s compliance with the terms of the Sarbanes-Oxley Act, 2002 (SOX) is documented elsewhere in this annual report. The Group complied with all the applicable governance requirements.

The Group has adopted high standards of accountability, transparency and integrity in the running of the business and reporting to shareholders and other stakeholders.

The approach to corporate governance is guided by the principles of fairness, accountability, responsibility and transparency. Special attention has been given to providing stakeholders and the financial investment community with clear, concise, accurate and timely information about the Group’s operations and results; reporting to shareholders on an integrated basis on Sibanye’s financial and sustainable performance; ensuring appropriate business and financial risk management; ensuring that no director, management official or other employee of the Sibanye Group deals directly or indirectly in Sibanye shares on the basis of unpublished price-sensitive information regarding the Sibanye Group, or otherwise during any prohibited period; and

recognition of the Group’s social responsibility to provide assistance and development support to the communities in which it operates and to deserving institutions at large.

The Company implemented a new Memorandum of Incorporation (MOI) which was approved at a shareholder meeting in 2012. The MOI of its subsidiaries was regularised before the deadline date of 1 May 2013.

In 2013, the Group applied the principles contained in King III and implemented the King III principles and recommendations across the Group.

Sibanye complies with the principle that companies should remunerate directors and executives fairly and responsibly. The Remuneration Committee develops a remuneration policy aligned with the strategy of Sibanye and linked to individual performances. This policy addresses the base pay, bonuses, employee contracts, severance and retirement benefits and share-based and other long-term incentive schemes.

The one exception is the King III recommendation that employment contracts should not compensate executives for severance because of change of control (although this does not preclude payments for retaining key executives during a period of uncertainty).

All 75 King III principles are recorded in the compliance schedule on Sibanye’s website, detailing the principles and the corresponding explanations.

Sibanye complied with all of the mandatory specific governance requirements contained in paragraph 4.84 of the JSE listing requirements during the 2013 financial year.

The Group’s Code of Ethics requires its directors, officers and employees to conduct business in an ethical and fair manner and it promotes a socially-and

environmentally-responsible culture. The Audit and Risk Committee is responsible for ensuring compliance with the Code of Ethics.

In addition to meeting the requirements of King III and SOX, the Group also meets the relevant requirements of the Dodd-Frank Act (2010), the Foreign Corrupt Practices Act (1977), the UK Bribery Act (2010), the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (1997), the UN Convention against Corruption (2003) and South Africa’s Prevention and Combating of Corrupt Activities Act (2004).

Employees, suppliers and customers are encouraged to report irregularities and misconduct without fear of victimisation using an independently managed, anonymous, toll-free line.

Sibanye has established policies and procedures dealing with HIV/AIDS in the workplace and has a voluntary testing programme that has resulted in a significant number of employees taking ownership of their HIV/AIDS status. With the help of management and using independent service providers, those in need are able to get counselling and antiretroviral (ARV) treatment.

In 2013 the Group remained committed to its corporate social investment (CSI) and local economic development (LED) initiatives. These cover a broad range of programmes and activities including promoting home ownership and developing human capital through education. Sibanye’s support of educational initiatives includes portable skills, bursaries, learnerships, adult basic education and training (ABET) courses and maths/science programmes. A brick-making project, waste-management centres, community centres, a library and a number of agricultural development projects are among the other projects that receive Group support.

 

 

   

Strategic accountable leadership

              

 

Sibanye Gold Integrated Report  39


Table of Contents

STRATEGIC ACCOUNTABLE LEADERSHIP CORPORATE GOVERNANCE REPORT

 

corporate governance report continued

 

BOARD OF DIRECTORS

The Company’s MOI requires no fewer than four and no more than 15 members on the Board of Directors. The Board currently comprises 11 members. Nine of these are independent, non-executive directors and the two executive directors hold the positions of CEO and CFO. Zola Skweyiya was appointed as the eleventh member and as an independent, non-executive director on 1 October 2013. He is eligible and available for election.

The roles of the Chairman of the Board and the CEO are separate.

The Board, advised by the Nominating and Governance Committee, ensures that the candidates for election as independent, non-executive directors are reputable, competent and experienced and are willing to devote the necessary time to the role.

The Board of Directors’ Charter outlines the objectives and responsibilities of the Board (see pages 40 and 41) and all Board sub-committees operate in accordance with written terms of reference, which are regularly reviewed by the Board. The Board takes ultimate responsibility for the Group’s adherence to sound corporate governance standards and sees to it that all business judgements are made with reasonable care, skill and diligence.

The executive directors and the Company Secretary keep the Board informed of all developments in the Group.

The current membership of all the Board sub-committees is disclosed on pages 41 to 43.

The Board is required to meet at least four times a year and held its first Board meeting on 8 February 2013 with all Board members attending.

Remuneration

The Board obtains independent advice before making

recommendations to shareholders for the remuneration of non-executive directors. The remuneration is paid only in accordance with a special resolution approved by the shareholders within the previous two years.

Non-executive directors only receive remuneration due to them as members of the Board. Directors serving on Board sub-committees receive additional remuneration. Details of the directors’ remuneration packages as well as those of the prescribed officers are disclosed in the Remuneration Report on pages 68 to 73.

Monitoring performance

In 2013, and in line with recommendations of King III, the Board carried out a rigorous evaluation of the independence of directors.

The Chairman is appointed annually by the Board which, with the assistance of the Nominating and Governance Committee, carried out a rigorous review of the Chairman’s performance and independence during 2013. The Board concluded that there were no factors that impaired his independence and appointed the Chairman for another year. The corporate secretary conducted a detailed assessment of the performance of the Board and its committees.

The assessments found the structures and processes governing the Board and its committees were well established and functioning satisfactorily. It also found that the Board had fulfilled its role and responsibilities, and had discharged its duties to Sibanye and its responsibilities to shareholders and stakeholders in an exemplary manner.

The performance of the Company Secretary was evaluated by the Board. The Board was satisfied with his competence, qualifications and experience and maintaining an arms-length relationship with the Board.

Rotation and retirement from the Board

In accordance with the MOI, one third of the directors shall retire from office at each AGM. The first to retire are those directors appointed as additional members of the Board, followed by the longest-serving members. The Board, assisted by the Nominating and Governance Committee, can recommend the eligibility of retiring directors (subject to availability and their contribution to the business) for re-appointment. Retiring directors can be immediately re-elected by the shareholders at the AGM.

Board of Directors’ Charter

The Board reviewed and re-assessed the adequacy of the Board of Directors’ Charter (Charter). This document compels directors to promote the vision of the Group, while upholding sound principles of corporate governance. Directors’ responsibilities under the Charter include:

Ÿ   determining the Group’s Code of Ethics and conducting the Group’s affairs in a professional manner, upholding the core values of integrity, transparency and enterprise;
Ÿ   evaluating, determining and ensuring the implementation of corporate strategy and policy;
Ÿ   determining compensation, development, skills development and other relevant policies for employees;
Ÿ   developing and setting best-practice disclosure and reporting practices that meet the needs of all stakeholders;
Ÿ   authorising and controlling capital expenditure and reviewing investment capital and funding proposals;
Ÿ   constantly updating the risk management systems, including setting management expenditure authorisation levels and exposure limit guidelines; and
Ÿ   reviewing executive succession planning and endorsing senior executive appointments, organisational changes and general remuneration policies.
 

 

40  Sibanye Gold Integrated Report


Table of Contents

In this regard the Board is guided by the Remuneration Committee, the Audit and Risk Committee as well as by the Nominating and Governance Committee.

The Board considers that this Integrated Report and associated reports comply in all material respects with the relevant statutory requirements of the various regulations governing disclosure and reporting by Sibanye; and that the consolidated financial statements comply in all material respects with U.S. GAAP. As such, the Board has approved the content of the Integrated Report 2013, including the consolidated financial statements on 29 April 2014.

BOARD COMMITTEES

The Board has formed the following committees in compliance with good corporate governance:

Ÿ   Audit and Risk Committee
Ÿ   Remuneration Committee
Ÿ   Nominating and Governance Committee
Ÿ   Safety, Health and Sustainable Development Committee
Ÿ   Social and Ethics Committee (to comply with the statutory requirements of the Companies Act).

All these committees are composed exclusively of independent non-executive directors except for the Safety, Health and Sustainable Development Committee of which the CEO is also a member. The committees are all chaired by an independent non-executive director and operate in accordance with written terms of reference which have been approved by the Board.

Board meetings and attendance

     Date  
Director    8/2      13/5      15/5      6/8      5/11      6/12  

Moloko, Sello

     Ö         Ö         Ö         Ö         Ö         Ö   

Cumming,Timothy

             Ö         Ö         Ö         Ö         Ö   

Davison, Barry

             Ö         Ö         Ö         Ö         Ö   

Froneman, Neal

     Ö         Ö         Ö         Ö         Ö         Ö   

Keyter, Charl

     Ö         Ö         Ö         Ö         Ö         Ö   

Menell, Richard

     Ö         Ö         Ö         Ö         Ö         Ö   

Nika, Nkosemntu

             Ö         Ö         Ö         Ö         Ö   

Rayner, Keith

     Ö         Ö         Ö         Ö         Ö         Ö   

Skweyiya, Zola

                                     Ö         Ö   

van der Merwe, Susan

             Ö         Ö         Ö         Ö         Ö   

Vilakazi, Jerry

     Ö         Ö         Ö         Ö         Ö         Ö   

 

1  Messrs Cumming, Davison, Nika and van der Merwe were appointed to the Board on 21 February 2013.

 

2  Dr Skweyiya was appointed to the Board on 1 October 2013.

 

THE AUDIT AND RISK COMMITTEE

Keith Rayner (Chairman)

Richard Menell

Nkosemntu Nika

Susan van der Merwe

This committee monitors and reviews Sibanye’s accounting controls and procedures, including the effectiveness of its information systems and other systems of internal control; the effectiveness of the internal audit function; reports of both external and internal auditors; half-yearly reports, the Form 20-F; the consolidated annual financial statements; the accounting policies of Sibanye and any proposed revisions thereto; external audit findings and reports, and the approval thereof; and compliance with applicable legislation and requirements of regulatory authorities and Sibanye’s Code of Ethics.

The CFO’s expertise was evaluated by the Audit and Risk Committee. The committee is satisfied that the incumbent has the appropriate expertise and experience to carry out his duties as the financial director of the Group and that he is supported by qualified competent senior staff.

 

The committee reviewed and assessed the independence of the external auditors, including their confirmation in writing that the criteria for independence as set out in the rules of the Independent Regulatory Board for Auditors and international bodies have been followed. The committee is satisfied that KPMG Inc. is independent of the Group.

Sibanye’s CFO and internal and external auditors as well as management attend all the Audit and Risk Committee meetings and have unrestricted access to the chairman of this committee. The Audit and Risk Committee, in turn, communicates freely with other members of the Board not serving as members of the Audit and Risk Committee. To effectively perform its functions, the Audit and Risk Committee meets at least quarterly, but more frequently if required.

The Sarbanes-Oxley Act requires the Board to identify a financial expert from within its ranks. The Board has resolved that the committee’s Chairman, Keith Rayner, is the Audit Committee’s financial expert.

 

 

Membership and attendance of the Audit and Risk Committee

 

     Date  
Director    27/2      14/3      28/3      14/5      5/8      4/11  

Rayner, Keith

     Ö         Ö         Ö         Ö         Ö         Ö   

Menell, Richard

     Ö         Ö         Ö         Ö         Ö         Ö   

Nika, Nkosemntu

     Ö         Ö         Ö         Ö         Ö         Ö   

van der Merwe, Susan

     Ö         Ö         Ö         Ö         Ö         Ö   
 

 

   

Strategic accountable leadership

              

 

Sibanye Gold Integrated Report  41


Table of Contents

STRATEGIC ACCOUNTABLE LEADERSHIP CORPORATE GOVERNANCE REPORT

 

corporate governance report continued

 

AUDIT AND RISK COMMITTEE STATEMENT

Based on information from the discussions with management and external auditors, the Audit and Risk Committee has no reason to believe that there were any material breakdowns in the design and operating effectiveness of internal financial controls during the year and that the financial records can be relied upon as the basis for preparation of the consolidated financial statements.

The Audit and Risk Committee considered and discussed this Integrated Report with both management and the internal and external auditors. During this process, the committee:

Ÿ   evaluated significant judgements and reporting decisions;
Ÿ   determined that the going concern basis of reporting is appropriate;
Ÿ   evaluated the material factors and risks that could impact on the Integrated Report;
Ÿ   evaluated the completeness of the financial and sustainability discussion and disclosures; and
Ÿ   discussed the treatment of significant and unusual transactions with management and the internal and external auditors.

The Audit and Risk Committee considers that this Integrated Report complies in all material respects with the statutory requirements of the various regulations governing disclosure and reporting of the consolidated financial statements. The consolidated financial statements comply in all material respects with U.S. GAAP. The Audit and Risk Committee has recommended to the Board that the consolidated annual financial statements be adopted and approved by the Board.

THE NOMINATING AND GOVERNANCE COMMITTEE

Sello Moloko (Chairman)

Richard Menell

Jerry Vilakazi

This committee is responsible for ensuring that new directors undergo an appropriate induction process; recommending to the Board the need for Board participation in continuing-education programmes; identifying and recommending to the Board successors to the Chairman and CEO; developing the approach of Sibanye to matters of corporate governance; and making recommendations to the Board concerning such matters.

 

 

Membership and attendance of the Nominating and Governance Committee

 

     Date  
Director    14/5      5/8      4/11  

Moloko, Sello

   Ö         Ö         Ö     

Vilakazi, Jerry

   Ö         Ö         Ö     

Menell, Richard

   Ö         Ö         Ö     

 

THE REMUNERATION COMMITTEE

Timothy Cumming (Chairman)

Barry Davison

Sello Moloko

Nkosemntu Nika

This committee is responsible for determining Sibanye’s remuneration policy and the practices needed to attract, retain and motivate high-performing executives who are demonstrably aligned with Sibanye’s corporate objectives and business strategy; and for ensuring that remuneration levels relative to other comparable companies are pitched at the desired level taking relative performance into account.

 

The Remuneration Committee also reviews, on behalf of the Board, both the remuneration levels of senior executives and management share-incentive schemes and the related performance criteria and measurements. To perform these functions the Remuneration Committee meets quarterly, or more frequently if required.

 

 

Membership and attendance of the Remuneration Committee

 

     Date  
Director    14/5      5/8      4/11  

Cumming,Timothy

   Ö         Ö         Ö     

Davison, Barry

   Ö         Ö         Ö     

Moloko, Sello

   Ö         Ö         Ö     

Nika, Nkosemntu

   Ö         Ö         Ö     
 

 

42  Sibanye Gold Integrated Report


Table of Contents

THE SAFETY, HEALTH AND SUSTAINABLE DEVELOPMENT COMMITTEE

Barry Davison (Chairman)

Neal Froneman

Sello Moloko

Susan van der Merwe

Richard Menell

This committee reviews adherence to occupational health, safety and

environmental standards by Sibanye. The committee seeks to minimise mining-related accidents, to ensure that Sibanye’s operations are in compliance with all environmental regulations and to establish policy in respect of HIV/AIDS and health matters.

 

 

Membership and attendance of the Safety, Health and Sustainable Development Committee

 

     Date  

Director

     13/5         5/8         4/11   

Davison, Barry

     Ö         Ö         Ö   

Froneman, Neal

     Ö         Ö         Ö   

Moloko, Sello

     Ö         Ö         Ö   

Menell, Richard

     Ö         Ö         Ö   

van der Merwe, Susan

     Ö         Ö         Ö   

 

THE SOCIAL AND ETHICS COMMITTEE

Jerry Vilakazi (Chairman)

Timothy Cumming

Barry Davison

Sello Moloko

Keith Rayner

This committee is responsible for discharging its statutorily imposed duties as outlined in section 72 of the Companies Act and the applicable regulations, which include monitoring Sibanye’s activities in relation to relevant legislation, other legal requirements and prevailing codes of best practice regarding:

(i) the social and economic development;
(ii) good corporate citizenship;
(iii) the environment, health and public safety and the impact on Sibanye’s activities, products and services;
(iv) consumer relations; and
(v) labour and employment legislation.

The Social and Ethics Committee must bring any matters relating to this monitoring to the attention of the Board and report to shareholders at the AGM. The Board seeks the assistance of the Social and Ethics Committee in ensuring that Sibanye complies with best practice recommendations in respect of social and ethical management.

 

 

Membership and attendance of the Social and Ethics Committee

 

     Date  

Director

     14/5         5/8         4/11   

Vilakazi, Jerry

     Ö         Ö         Ö   

Cumming,Timothy

     Ö         Ö         Ö   

Davison, Barry

     Ö         Ö         Ö   

Moloko, Sello

     Ö         Ö         Ö   

Rayner, Keith

     Ö         Ö         Ö   

EXECUTIVE DIRECTORS AND EXECUTIVE COMMITTEE

Neal Froneman (CEO)

Charl Keyter (CFO)

Peter Turner (COO)

Cain Farrel (Company Secretary)

Shadwick Bessit

Hartley Dikgale

Nash Lutchman §

Dawie Mostert

Adam Mutshinya

Dick Plaistowe**

Wayne Robinson**

Marius Saaiman*

Richard Stewart**

Robert van Niekerk

James Wellsted

Sibanye’s Executive Committee meets on a regular basis to discuss and make decisions on the strategic and operating issues facing Sibanye.

 

§  appointed 1 March 2014
* appointed 1 February 2014
** appointed 1 March 2014, in terms of the Cooke Interim Management Agreement

RISK MANAGEMENT

The total process of risk management, which includes the related systems of internal control, is the responsibility of the Board. Management is accountable to the Board for designing, implementing and monitoring an integrated process of risk management into the daily activities of Sibanye. The Board, through the Audit and Risk Committee, ensures that management implements appropriate risk management processes and controls.

 

 

   

Strategic accountable leadership

              

 

Sibanye Gold Integrated Report  43


Table of Contents

SUSTAINABILITY SUSTAINABILITY SUMMARY

 

sustainability summary

 

 

LOGO

LOGO

 

44  Sibanye Gold Integrated Report


Table of Contents

LOGO

 

Kloof comprises five shaft systems mining intermediate to ultra-deep-level gold bearing reef at depths of between 1,300m and 3,500m below surface. The shaft systems include five operational sub-vertical shafts and one tertiary shaft. Underground ore and low-grade surface rock dumps are processed through three metallurgical plants with a combined mill throughput capacity of approximately 5.6Mtpa.

Driefontein comprises seven shaft systems mining shallow to ultra-deep-level gold bearing reef at depths of between 700m and 3,420m below surface. The shaft systems include five sub-vertical shafts and two tertiary shafts. Underground ore and low-grade surface rock dumps are processed through three metallurgical plants with a combined mill throughput capacity of approximately 5.9Mtpa.

Beatrix comprises three shaft systems where gold-bearing reef is mined at depths varying from 700m to 2,200m below surface. Underground ore and low-grade surface rock dumps are processed through two metallurgical plants with a combined mill throughput capacity of approximately 4.4Mtpa.

 

 

LOGO   LOGO   LOGO

 

       

Sustainability

          

 

Sibanye Gold Integrated Report  45


Table of Contents

SUSTAINABILITY HUMAN CAPITAL

 

human capital

 

The health, knowledge, skills, intellectual outputs, motivation and capacity for relationships of the individual are important as organisations depend on individuals to function – a healthy, motivated and skilled workforce is necessary. Damage to human capital by abuse of human or labour rights, or by compromising health and safety, has direct as well as reputational costs.

 

LOGO

 

LOGO

Sibanye recognises its employees as its most important asset. Efforts to develop and empower employees form part of a drive to continuously improve the quality of life of those who sustain the Group’s business.

The safety, health and wellbeing of employees takes precedence over production at all times.

As people are the mainstay of Sibanye, it is essential that the Group invests in its employees to ensure the sustainability of the business. The Sibanye Academy provides human capital development services to the Group. The skills and knowledge acquired by employees, through training or experience, increase their value not only to Sibanye but in the marketplace.

Sibanye’s operations are located adjacent to formal and informal communities. Training and development of community members who are not employees are also part of human-capital development (as they may become employees) but also form part of the Group’s role and obligations in respect of socioeconomic development.

Sibanye upholds the labour rights of employees and its policies ensure fair and equitable treatment consistent with South Africa’s employment equity requirements.

EMPLOYMENT AT SIBANYE

At the end of 2013, Sibanye employed 36,274 people (33,773 full-time, permanent employees and 2,501 contractors). This represents a decrease in permanent employees of 13% and a decrease in contractors of 37%. Refocusing the business and restructuring operations to align with longer-term sustainable production

 

levels resulted in a reduction of the total number of employees by 5,810 people. This reduction was largely achieved through voluntary separations, voluntary early retirement, redeployment and natural attrition, with only 39 employees retrenched from the Group. Removing layers of management was an important focus of the restructuring, bringing expertise and experience as close to the rock face as possible.

As far as possible, Sibanye seeks to employ local people at its operations. At the end of 2013, 25% of its employees could be defined as local (drawn from within the province of operation). A large percentage of employees with core skills, experience and many years of loyal service are however still drawn from other provinces in South Africa and neighbouring countries (labour-sending areas).

SAFETY AND HEALTH

Gold mining by its nature involves risk and the process must be effectively managed in the quest for zero harm. Sibanye’s vision is that every employee has the right to a healthy and safe working environment. The Group’s safety strategy seeks compliance as a minimum while engineering out safety risks and collaborating with stakeholders, including employee representatives and the DMR, to improve performance.

Awareness and behaviour-based safety programmes are in place to reduce incidents that cause injuries. Similarly, programmes are in place to equip employees with the information they need to reduce hazards and eliminate risks so that they may enjoy a safe and healthy workplace.

Employees are actively encouraged to exercise their right to refuse to work if they believe that conditions are unsafe.

Engineering out safety risks at Sibanye’s operations remains a key priority for the Group, and a number of

 

 

46  Sibanye Gold Integrated Report


Table of Contents

ongoing and extensive safety risk-management initiatives have contributed significantly towards a reduction in the severity of safety incidents. In particular, these initiatives relate to reducing falls of ground, seismic and tramming incidents, which accounted for approximately 37% of injuries in 2013. Sibanye has measures in place to manage seismic risk.

Tramming entails moving people, material and ore using railbound equipment, including locomotives, hoppers and other rail cars. The rolling out of a fail-safe command system has continued and is expected to be completed on target by mid-2014.

It is pleasing to report a significant reduction – of some 41% – in the fatal injury frequency rate (FIFR) to 0.10 per million hours worked (2012: 0.17). Other safety indicators also improved during the year.

A total of 55 work stoppages were imposed by the DMR (Section 54 notices) in 2013 (2012: 49).

OCCUPATIONAL HEALTH

Sibanye aims to create a working environment that is conducive to the long-term, holistic wellbeing of employees and contractors.

The Group’s health programme addresses general health management, individual safety behaviour, lifestyle management, education and development.

Noise induced hearing loss (NIHL), chronic obstructive airways disease (COAD), cardio-respiratory tuberculosis (CRTB) and silicosis are the most significant occupational diseases, while HIV/AIDS, hypertension and diabetes mellitus are the most challenging overall health concerns.

All employees undergo initial and annual medical surveillance, the scope and practice of which are aligned to legal requirements and regional health and safety risks. These assessments are aimed at prevention, early detection and treatment of occupational diseases.

As with safety risks, Sibanye reduces occupational health risks by proactive engineering aimed at reducing noise and dust levels. A number of key environmental management measures are in place to reduce noise and dust.

NIHL is a preventable disorder, even in noisy environments, and is mostly caused by repeated exposure to sound at or above 85 decibels (dBA) over a prolonged period of time. Sibanye seeks to reduce employee exposure to noise by minimising noise at source, and making employees aware of the importance of wearing hearing protection devices.

COAD is characterised by chronically poor airflow, resulting in shortness of breath, coughing and sputum production. A number of different causes can contribute to this inflammatory response in the lungs. It results in a narrowing of the small airways and breakdown of lung tissue known as emphysema or chronic bronchitis. Various measures have been implemented to reduce employee exposure to air polution at work.

Silicosis is caused by dust particles, which are small enough to reach the small airways of the lung. Free silica (SiO2), also known as crystalline quartz, is found across a broad range of industries, including mining.

TB is recognised as an important health hazard in the industry with silica exposure and silicosis as causes. CRTB is a common and, in certain cases, lethal infectious disease, which typically attacks the lungs, pleura and heart. It is a significant health risk in southern Africa, due to the symbiotic relationship between TB, HIV and silica-dust exposure.

Sibanye has designed a comprehensive strategy to raise awareness and reduce the burden of disease, including annual TB screening for all employees, voluntary HIV testing, freely available Highly Active Anti-Retroviral Treatment (HAART) and TB

 

 

LOGO

 

LOGO

 

 

       

Sustainability

          

 

Sibanye Gold Integrated Report  47


Table of Contents

SUSTAINABILITY HUMAN CAPITAL

 

human capital continued

 

 

LOGO

 

LOGO

 

drugs, as well as post-employment TB management.

TRANSFORMATION

Employment equity legislation in South Africa is aimed at redressing the imbalances of the past by promoting equal opportunity, eliminating discrimination and implementing affirmative-action measures.

The attraction and retention of HDSAs and women in management continues to be a significant challenge for the mining sector and Incentive schemes are in place to address this issue.

Sibanye’s employment-equity programme complies with applicable legislative requirements.

HOUSING AND LIVING CONDITIONS

Sibanye recognises that decent accommodation is important for employee wellbeing and morale and is guided by the MPRDA and the Mining Charter in respect of housing and accommodation for employees and contractors.

The majority of Sibanye’s workforce come from labour-sending areas – 29.9% of employees have their primary homes and families in other countries, other provinces or other regions.

Of the 36,274 people employed by Sibanye at the end of 2013, 13,469 employees (37.1%) lived in hostels provided by the Group; 6,495 employees (17.9%) live in family accommodation provided by the Group; and 12,686 people (35%) opted to receive living out allowances (LOAs).

Meals served at Group-provided accommodation are prepared according to a meal plan drawn up by clinical dieticians with the energy, macro- and micro-nutrient content rigorously monitored. On average, more than 40,000 meals are served to employees each day.

Sibanye’s housing programme, which was first initiated by Gold Fields in 2006, is continuing. To date R607.6 million has been spent on building new houses and on hostel upgrades. A total of 644 new homes have been provided to employees, with 100 handed over in 2013.

COLLECTIVE BARGAINING

Sibanye upholds the right of employees, contractors and suppliers to exercise freedom of association and collective bargaining and to participate in industrial action. Wages and other conditions of service for the majority of employees are negotiated biennially at a centralised level under the auspices of the Chamber of Mines. Agreement in respect of wages and conditions of service was reached with the NUM, Solidarity and UASA in September 2013. Three production days were lost as a result of protected strike action called by the NUM.

While AMCU was not party to the final agreement, the agreement was applied to all Sibanye employees as the NUM, Solidarity and UASA collectively represented more than 72% of employees employed by the gold companies represented by the Chamber of Mines at the time.

The agreement reached has seen the cost of labour increase by between 7.5% and 8%. While this is below the double-digit increases demanded by organised labour, it exceeds the country’s inflation target of up to 6%. Labour makes up a significant portion (55%) of on-mine costs. In contrast with the events of 2012, the 2013 period was not marred by violence.

TRAINING AND DEVELOPMENT

Enhancing human capital through education and training is central to a sustainable business. Sibanye is committed to developing knowledge, skills, attitudes and behaviours of employees to achieve the desired levels of performance for organisational, personal and broader social objectives.

 
 

 

48  Sibanye Gold Integrated Report


Table of Contents

Sibanye provides human capital development opportunities in a number of ways. these include ABET, portable skills training, learnership programmes, bursaries and study assistance.

The Sibanye Academy provides human capital services to the group. The academy is fully accredited by the Mining Qualifications Authority and has programme approval from a number of other Sector Education and Training Authorities. Satellite campuses are located at the operations and are managed by the Academy.

Training and development interventions are based on business needs and are focused on developing employees and communities. During 2013, Sibanye reviewed its SLP targets to ensure that these are in line with business needs. Where business needs are lower than the targets outlined in the Group’s SLPs, communities are afforded training and development opportunities. Opportunities for recruitment are advertised within the organisation, within communities (local and labour-sending areas) and at learning institutions.

In 2013, the Group spent R316 million on human capital development (2012: R315 million).

A total of 7.86 million training hours were provided.

 

LOGO

 

 

‘Sibanye has 45% HDSAs in management.’

 

LOGO

 

LOGO

 

 

       

Sustainability

          

 

Sibanye Gold Integrated Report  49


Table of Contents

SUSTAINABILITY SOCIAL CAPITAL

 

social capital

 

 

LOGO

Organisations rely on social relationships and interactions to achieve their objectives. Value added to the activities and economic outputs of an organisation by human relationships, partnerships and co-operation are, therefore, important. Internally, social capital takes the form of shared values, trust, communications and shared cultural norms, which enable people to work cohesively and thus enable the organisation to operate effectively. Externally, social structures help create a climate of consent, or a social licence to operate, in which trade and the wider functions of society are possible. Organisations also rely on wider socio-political structures to create a stable society in which to operate (such as government and public services, effective legal systems, trade unions and other organisations).

 

Sibanye is committed to the objectives and spirit of the Mining Charter. The Group understands, that it takes more than compliance to earn its licence to operate. Its efforts and programmes are therefore aimed at making a lasting and meaningful difference in the communities in which it operates and from which its labour is drawn.

Sibanye holds new order mining rights for the Beatrix, Driefontein and Kloof operations which allow it to mine gold and associated minerals. The Group was required to submit SLPs as part of the documentation, detailing its compliance with the provisions of the Mining Charter. An account of its performance against the SLP targets developed for the period from 2012 was also submitted.

The SLP for the Beatrix Operation for the period 2012 to 2016 was approved in April 2013 and implementation is underway; SLPs for Driefontein and Kloof for the same time period have not yet been approved although they were both submitted in January 2012. Despite the delay in approval, the Gauteng office of the DMR subjected Driefontein to a compliance inspection on 20 September 2013. The inspection resulted in the issuing of a directive to rectify shortcomings that were identified during the audit. Areas of concern were related to transformation, qualitative aspects of SLP implementation, impact assessments, and alignment of housing programmes with local and national governments’ human settlements

programmes. Corrective action was taken by various departments and a high-level team presented the report to the DMR on 15 November 2013. The DMR was satisfied with the presentation and reports submitted.

The Group engages with all its stakeholders in terms of the Sibanye Corporate Communications and Engagement Strategy, which has been developed to set out the principles and approach the Group follows in its internal and external communications and engagement in the short to medium term. This process reflects the Group’s corporate aims and objectives, and is critical to the development of key initiatives and projects to improve efficiencies and effectiveness. The strategy is evolving and is supplemented by regular departmental plans which set out individual communications plans in detail.

In 2013 Sibanye undertook an evaluation, of its activities and the effects on the community, and defined these under the banner of socio-economic development (SED), rather than the more-narrowly focused definition of corporate social investment (CSI). SED activity and expenditure relates to all projects that are:

Ÿ   external to the core business needs;
Ÿ   influential in uplifting communities;
Ÿ   guided by a strong development approach; and
Ÿ   linked to infrastructure investment that benefits communities beyond the closure of the mine.
 
 

 

50  Sibanye Gold Integrated Report


Table of Contents

Components of SED, include local economic development (LED) (including enterprise development, procurement and infrastructure development), education, training, conservation and the environment, as well as arts and culture.

LED is a significant component of SLPs. The Sustainable Development Department engages with local municipalities to ensure alignment of community development projects with Integrated Development Plans (IDPs). Sibanye undertakes LED projects for host communities in the vicinity of mining operations and others in labour-sending areas. Communities in rural areas of South Africa, while geographically removed from mining operations in Gauteng and the Free State, are important providers of labour to the Group.

The LED sections of the Group’s SLPs are currently being reviewed to ensure implementation success and greater levels of impact. Interim findings indicate that the projects that have been implemented to date, while aligned with the local municipalities’ IDPs and approved by the DMR, do not necessarily have the desired impacts on host and labour-sending areas. The lessons learned have prompted Sibanye to consider a different approach towards LED projects. To this end, the Group has decided to:

 

Ÿ   focus on fewer projects with greater impact;
Ÿ   focus on community development, education, agriculture/environment, and health;
Ÿ   consider options in this regard ranging from CSI to infrastructure and enterprise development;
Ÿ   ensure that all role players have had an opportunity to influence the decision on how best to invest the money that is made available for LED in terms of the Group’s budgeting process;
Ÿ   enable this through the creation of a tripartite engagement platform that will assist in making appropriate
   

decisions about LED projects, and will include DMR and municipality representation; and

Ÿ   provide ongoing feedback on the projects that have been approved for implementation.

The magnitude of issues in communities interested in and affected by Sibanye’s activities is so large that LED projects alone cannot adequately address major community issues such as unemployment and poverty. The responsibility for finding solutions for these larger issues cannot reside with Sibanye alone, and will require co-operation between all stakeholders.

In light of recent developments in the industry, and increased community needs, Sibanye’s approach to LED and community development is under revision. Initially Sibanye will focus on identifying connections between the needs of the community and its own strategic imperatives. An example of this is the plan to construct critical infrastructure such as clinics and aligning efforts to eradicate TB with DoH community programmes. These are good examples of the kind of linkages that can be achieved.

 

 

LOGO

 

 

       

Sustainability

          

 

Sibanye Gold Integrated Report  51


Table of Contents

SUSTAINABILITY NATURAL CAPITAL

 

natural capital

 

Natural resources (energy and matter) and processes are needed to produce products and deliver services, including sinks that absorb, neutralise or recycle waste (such as forests), resources (some renewable, others not) and processes (such as climate regulation and the carbon cycle) that enable life to continue in a balanced way. All organisations rely on natural capital to some degree and have an environmental impact; consuming energy and creating waste. Organisations need to be aware of the limits in the use of the natural environment, and to operate accordingly.

 

Sibanye is committed to the responsible stewardship of natural resources for present and future generations. The Group takes a precautionary approach in all activities by:

Ÿ   assessing and meeting the requirements of industry standards with respect to environmental management practices;
Ÿ   implementing, maintaining and integrating internationally recognised environmental management systems (EMSs) that ensure continuous improvement of environmental performance and the prevention of pollution through recognised practices;
Ÿ   complying with applicable legal and other requirements relating to environmental aspects;
Ÿ   using resources efficiently and managing all waste streams responsibly;
Ÿ   contributing to the conservation of biodiversity and applying integrated approaches towards closure and post-mining land-use planning; and
Ÿ   establishing an appropriate level of awareness and training of employees with environmental responsibilities, as required.

MORE THAN COMPLIANCE

Sibanye’s approach to environmental management is risk-based, with a strong focus on management assurance, legal compliance and, ultimately, mine closure. The Group’s approach is, therefore, integrated within its broader Sustainable Development Framework.

An overarching EMS that is aligned with the ISO 14001 standard is in place across the group, with appropriate operating procedures at an operational level. Sibanye’s EMPs, one of the pillars of its legal right to mine

the resource, are legally binding commitments that have been agreed with the regulators. The EMP is based on sound environmental management principles and associated risks and, incorporates risk management and the mitigation measures implemented.

Materials used

Sibanye in the course of its normal business mines significant amounts of gold bearing ore and associated waste rock. Sibanye’s emphasis on quality mining ensures that the Group removes as little waste rock as possible and focuses on removing the gold-bearing reef. The reprocessing of surface gold-bearing material supplements the processing stream and has a positive environmental impact.

Hydrometallurgical extraction is the only economically viable method of extracting gold from the gold bearing ore and involves a leaching step during which gold is dissolved in an aqueous medium. This is followed by the separation of the gold-bearing solution from the residues, or adsorption of the gold onto activated carbon. As gold is not soluble in water, cyanide is used to stabilise gold in solution and, with oxygen, is used to dissolve the gold.

While cyanide is less costly and potentially less harmful than other reagents with similar properties, there are risks associated with its storage and use. All of Sibanye’s mines and plants comply with the International Cyanide Management Code for the Manufacture, Transport and Use of Cyanide in the Production of Gold. (Beatrix was last certified in February 2012, Driefontein in August 2012 and Kloof in December 2012).

Water management

Water is a critical resource for the Group and for South Africa as a whole, and one which Sibanye manages with care.

Sibanye focuses on achieving integrated dynamic mine water management through the SibanyeAMANZI Project. This is aligned with the Group’s business model in terms of the integrated mine water plan.

All three of Sibanye’s operations are water-positive, which means they need to pump significant quantities of underground water to dewater for safety purposes. Neither the quantity nor the quality of water sources (fissure or potable water sources) is under threat. However, the future cost of water remains a risk.

The receipt of integrated water use licences (IWULs) remains a concern for the mining industry as a whole, with a significant backlog in their issuances by the DWA. In the absence of issued or valid IWULs, water management is conducted taking cognisance of current legislation and the permits, exemptions and directives that have been issued.

Energy

The gold-mining industry is a significant user of energy, and is vulnerable to variations in energy supply and cost. Given the national power utility Eskom’s difficulties in meeting energy demand, security of supply is by no means certain. Eskom’s reliance on fossil fuel based energy exposes its clients to impending carbon tax.

 

 

52  Sibanye Gold Integrated Report


Table of Contents

As a Group, Sibanye is committed to monitoring usage, researching and developing new strategies for efficient energy use, complying with legislation and encouraging its business partners to adopt similar principles.

Sibanye has undertaken numerous energy-saving, load-clipping and load-shifting projects over the years. The latter is aimed at reducing usage when consumer demand peaks and are often funded by Eskom Integrated Demand Management.

Although Sibanye has reduced energy consumption, a significant portion of this reduction has been as a result of downscaling operations and reduced production over the years. In 2013 Sibanye achieved a saving of 33.4MW compared to 2012 due to various initiatives and projects. However, there was also a 6.9MW increase as a result of new load that came on line during 2013 due to increased production.

Sibanye seeks to make use of alternative energy sources, where feasible, in order to offset fossil-fuel generated Eskom energy. The Beatrix methane project and the concentrated solar power (CSP) plant at Driefontein are examples.

Carbon management

Sibanye’s Carbon Management Strategy (CMS) is integrated with its approach to energy management, given that its carbon footprint is dominated by its energy use and, in particular, the use of fossil-based electricity sourced from Eskom.

In terms of Sibanye’s Integrated Energy and Carbon Management Strategy (IECMS), the Group seeks to understand and manage its energy/carbon footprints, investigate renewable energy sources, invest in energy saving equipment with

improved efficiencies and empower employees with knowledge and awareness.

While energy-consumption targets are set and measured at an operational level, translations from energy consumption into carbon intensities are conducted as part of the on-going carbon-footprinting exercise. Depth of mining and ore yields are taken into consideration when setting carbon intensity ratios.

The Beatrix methane project, which captures and utilises methane for electricity generation, as well as the ventilation fans projects at Beatrix, Driefontein and Kloof have contributed to the optimisation and reduction of carbon dioxide (CO2) emissions. Another carbon-reduction project at Beatrix was registered under the Clean Development Mechanism (CDM) of the Kyoto Protocol in late 2013. It involves the installation of energy-efficient axial ventilation fans in the mine’s underground operations.

Sibanye is also involved in a number of projects in collaboration with Eskom, supporting the use of renewable energy such as solar power, and climate-change adaptation initiatives such as the optimal TSF Cover Design Study.

Land management

In 2013 Sibanye owned or held licences over approximately 36,690ha of land; only 7,449ha of land have been disturbed by mining and processing activities. A Biodiversity Action Plant (BAP) has been developed for Driefontein, while a biodiversity assessment that will inform a BAP for Kloof is underway. A similar process will be undertaken for Beatrix in 2014.

Sibanye aims to work towards final land use at all stages of operation. A land-use survey was, therefore,

conducted to determine current and proposed activities within the areas of operation. Importantly, the Group’s aim is to link its LED projects with land management and rehabilitation to ensure sustainable land use that will be viable once mining operations come to an end.

Closure planning is closely linked to the Group’s life-of-mine plans. Interim closure plans are in place and are reviewed every two years. Detailed closure plans will be developed for all operations from 2014. Where possible, demolition and rehabilitation takes place during the operational phase.

Sibanye’s closure liabilities are assessed on an annual basis by Golder Associates (Proprietary) Limited, and it has the requisite trust funds and insurance guarantees in place to provide for closure.

 

 

       

Sustainability

          

 

Sibanye Gold Integrated Report  53


Table of Contents

SUSTAINABILITY OPERATIONAL REVIEW

 

operational review

 

    

THE BEATRIX OPERATION

Beatrix is located in the Free State province of South Africa, some 240km south-west of Johannesburg, near Welkom and Virginia. Beatrix operates under mining rights covering a total area of 16,821ha.

It is principally an underground mine with nominal surface reserves represented by surface rock dumps accumulated during the operating history of the mine. Beatrix has three operating shaft systems, with two ventilation shafts to provide additional up-cast and down-cast ventilation capacity. Beatrix is serviced by two metallurgical plants.

Beatrix is a shallow to intermediate-depth operation, mining at depths of between 700m and 2,200m below surface. Beatrix has access to the national electricity grid and to water, road and rail infrastructure and is located near regional urban centres where it can routinely obtain supplies.

The present scope of operations is the result of the consolidation on 1 July 2002 of the adjacent Beatrix and Oryx mines (No 4 shaft, also known as West Section).

Gold mining commenced at Beatrix in 1985 and at Oryx in 1993.

Geology

Beatrix exploits the Beatrix Reef (BXR) at shafts No 1, 2 and 3, and the

Kalkoenkrans Reef (KKR) at shaft No 4. The reefs are developed on the Aandenk erosional surface and dip to the north and north east at between four and nine degrees.

In general, the BXR occurs at depths of between 570m and 1,380m and the KKR at depths of between 1,800m and 2,200m. Both reefs are markedly channelised and consist of multi-cycle, upward-fining conglomerate beds with sharp erosive basal contacts. A general east-west trending pay-zone, some 500m to 800m wide, has been identified east of shaft No 4 and is known as the main channel. Zone 5 extends south of the main channel and represents the majority of the reserves at the operation.

Development at the Beatrix West Section has been reduced significantly since the 2013 underground fire. Further limited development has been approved for 2014 and the main focus areas will be the Syncline and North Block development.

Infrastructure

Beatrix has three producing shaft systems and two gold metallurgical plants with the following capacities:

 

Shaft system

   Hoisting capacity

No 1 – North

   138,000tpm

No 3 – South

   170,000tpm

No 4 – West

   120,000tpm

 

 

 

Processing plant, capacity and recoveries

 

Plant

   Capacity    Recovery factor

No 1 plant (commissioned in 1983)

   240,000tpm    95.5%

No 2 plant (commissioned in 1992)

   130,000tpm    95.5%

‘Beatrix achieved a 64% reduction in the fatality rate.’

 

 

54  Sibanye Gold Integrated Report


Table of Contents

Processing occurs by way of carbon-in-leach (CIL) and carbon-in-pulp (CIP) treatment at the No 1 and No 2 plants respectively. In 2004 a Knelson concentrator was installed at No 1 plant which removes gold early in the metallurgical process. A gravity concentrating circuit, which was commissioned in November 2006, was installed at No 2 plant in order to reduce locked-up gold in the mills and to improve the overall recovery.

Operational review

Detailed below are the operating and production results for the past two financial years.

 

Production    2013      2012  
              u/g      Surface      Total      u/g      Surface      Total  

Main development

     m         17,531                 17,531         20,117                 20,117   

Area mined

     m 2       434,438                 434,438         392,412                 392,412   

Tons milled

     ‘000         2,371         1,720         4,091         2,069         1,299         3,368   

Yield

     g/t         3.9         0.3         2.4         4.2         0.3         2.7   

Gold produced/sold

     kg         9,195         527         9,722         8,656         325         8,981   
       ‘000oz         295.6         17.0         312.6         278.3         10.4         288.7   

Main development decreased year-on-year due to the fire at the West Section and the subsequent re-planning of the development during the Section 189 process. North and South sections increased by 892m and 241m respectively while West Section reduced main development by 3,719m.

The year-on-year increase in the area mined resulted in an increase in the tonnages milled and gold sold, despite a marginal decrease in the yield from underground material. The main reason for the increase in production was the prolonged duration of the industrial action in 2012.

 

Costs and margins            2013      2012  

Capital expenditure

     Rm         537         658   

– sustaining

     Rm         201         211   

– ORD

     Rm         336         447   

All-in cost

     R/kg         378,029         380,938   
   US$ /oz         1,225         1,447   

All-in cost margin

     %         13      12

Total cash cost

     R/kg         319,039         295,176   
     US$ /oz         1,034         1,121   

 

Production costs increased due to the above-inflation wage increase effective from 1 July, the increased electricity tariffs, general inflation and the increased production (tons milled increased by 21%). Despite the increase in costs, the All-in cost figure decreased to R378,029/kg.

Sustaining capital remained constant year-on-year. The reduction in the ore reserve development in 2013 was as a

result of an assessment at June 2013 that the future economic benefit of Beatrix West Section is not probable, whereafter all ore reserve development was expensed.

Improvements were achieved on all safety indices with the most notable being the 64% reduction in the fatality rate. The rollout of the auditing team’s mid-2013 report resulted in a significant improvement in the physical condition

of the underground workings, which contributed toward the achievement of the safety objectives.

During 2013, in consultation with the unions and other stakeholders a Section 189 process was conducted. A large number of employees left the Group by taking voluntary or early retirement packages as part of the Section 189 avoidance measures and forced retrenchments were minimised.

 

 

       

Sustainability

          

 

Sibanye Gold Integrated Report  55


Table of Contents

SUSTAINABILITY OPERATIONAL REVIEW

 

operational review continued

 

THE DRIEFONTEIN OPERATION

Driefontein is located on the Far West Rand, in the mining district of Oberholzer, some 70km south-west of Johannesburg and in Gauteng province. Driefontein operates under mining rights covering a total of 8,561ha.

It is an underground mine with surface reserves represented by rock dumps and tailings storage facilities (TSFs) that have been accumulated throughout the operating history of the mine.

Driefontein has seven operating shaft systems and three metallurgical plants, and operates at depths of between 700m and 3,420m below surface.

Driefontein has access to the national electricity grid and to water, road and rail infrastructure and is located near regional urban centres where it can routinely obtain supplies. Driefontein was formed from the consolidation in 1981 of the East Driefontein and West Driefontein mines.

Geology

Gold mineralisation at Driefontein is contained within three reef horizons: the Carbon Leader Reef (Carbon Leader), the Ventersdorp Contact Reef (VCR) and the Middelvlei Reef (MVR), which occur at depths of between 500m and 4,000m. Stratigraphically, the Carbon Leader is situated 40m to 70m below the VCR

and MVR, and is a generally high-grade reef comprising different facies. It dips to the south at approximately 25 degrees. The Carbon Leader sub-crops against the VCR in the eastern part of the mine. The west-dipping Bank Fault defines the eastern limit of both reefs. The VCR is most-extensively developed in the east, and sub-crops to the west. The MVR is a secondary reef, situated approximately 50m above the Carbon Leader and, at present, is a minor contributor to reserves and production. The average gold grades vary with lithofacies changes in all of the reefs.

Infrastructure

Driefontein comprises seven producing shafts systems and three gold metallurgical plants with the following capacity:

 

Shaft system

   Hoisting capacity

No 1

   101,000tpm

No 2

   165,000tpm

No 4

   57,000tpm

No 5

   159,000tpm

No 6*

   26,000tpm

No 8

   55,000tpm
* Shaft No 6 Tertiary and 6 Main are currently only operated on a limited scale, with the focus on reclamation and cleaning and shaft No 10 remains a pumping facility.

No 1 plant was upgraded in 2004 with a processing capacity of 240,000 tpm and treats underground ore from the Driefontein shafts. The upgraded

circuit at No 1 plant consists of a semi-autogenous (SAG) mill circuit followed by cyanide leaching, CIP and a central Zadra elution facility.

No 2 plant underwent a modernisation and plant upgrade programme in 2003. Driefontein surface rock-dump material is delivered to No 2 plant by rail and truck to the plant feed bunkers. The plant flow incorporates two SAG mills and a ball milling circuit, cyanide leaching and a CIP plant.

No 3 plant, originally commissioned as a uranium plant, was converted to a low-grade surface rock-treatment gold plant in 1998. The plant was constructed using a combination of new as well as existing equipment on site. Similar to No 2 plant, ore is received from surface rock dumps by rail and truck. The plant has four SAG mills followed by cyanide leaching and CIP.

Loaded carbon from No 2 and No 3 plants is trucked to No 1 plant and processed at the central elution and smelting facility. Further upgrading of the No 2 plant is planned for 2014.

Operational review

Detailed below are the operating and production results for the past two financial years.

 

 

Processing plant, capacity and recoveries

Plant      Capacity           Recovery factor   

No 1 plant (commissioned in 1972)

     240,000tpm           97

No 2 plant (commissioned in 1964)

     150,000tpm           85 %* 

No 3 plant (commissioned in 1998)

     100,000tpm           85
* Currently at 78% due to decreased leach circuit residence time as a result of failure of two leach tanks. New CIL tanks will be constructed in 2014 to achieve a minimum of 90% recovery.

‘Driefontein comprises seven producing shaft systems and three gold metallurgical plants.’

 

56  Sibanye Gold Integrated Report


Table of Contents
Production                   2013                      2012          

 

          u/g      Surface      Total      u/g      Surface      Total  

Main development

     m        17,751                 17,751         20,136                 20,136   

Area mined

     m 2      397,579                 397,579         320,949                 320,949   

Tons milled

     ‘000        2,527         2,783         5,310         1,886         2,849         4,735   

Yield

     g/t        6.7         0.7         3.5         5.9         0.9         2.9   

Gold produced/ sold

     kg        16,927         1,848         18,775         11,180         2,548         13,728   
       ‘000oz        544.2         59.4         603.6         359.5         81.9         441.4   

While the main development metres mined dropped by 12% year-on-year, the achievement exceeded plan for 2013 by 15%. Production volumes increased by 24% from 2012 with improvements shown at all mining units. This can partly be attributed to a recovery from the fire at mining unit 2 and from the industry-wide strike, which affected production during the latter half of 2012, together with a general increase in productivity at all shafts. Production volumes from surface were relatively unchanged but at a lower grade. The lower grades were aligned with the plan due to the depletion of available higher-grade surface rock dumps. Underground gold produced increased by 51% which, apart from the increase in underground volumes, was a result of an increase in the average mined face grades from 1,649cm.g/t to 1,847cm.g/t and an improvement in the mine call factor from 75% to 86%.

 

Costs and margins            2013      2012  

Capital expenditure

     Rm         1,023         1,091   

– sustaining

     Rm         320         241   

– ORD

     Rm         703         850   

All-in cost

     R/kg         333,012         407,751   
   US$ /oz         1,079         1,549   

All-in cost margin

     %         23         6   

Total cash cost

     R/kg         277,614         311,238   
     US$ /oz         899         1,182   

 

As detailed above, with production significantly affected late in 2012 and the restructuring process undertaken since unbundling, unit costs and margins improved considerably during 2013. The All-in cost margin increased to 23% from only 6% achieved in 2012. Underground tons milled increased to 2.53Mt from 1.89Mt in 2012. The majority of capital expenditure was spent on ORD, energy-saving projects, relocation of laboratory and social

and safety projects. The weaker rand resulted in significantly lower unit costs in US dollars compared with the improved rand unit costs.

Safety

Driefontein showed an overall improvement in all safety lagging indicators, particularly the FIFR, which improved by 64% and was the lowest ever recorded by the mine to date.

With the introduction of AMCU as the new majority employee representative union, a new Health and Safety Agreement has been concluded and the mine is in the process of finalising full-time elections of Health and Safety representatives. Thereafter, a Joint Health and Safety Committee will be established in line with the agreement.

 

 

 

       

Sustainability

          

 

Sibanye Gold Integrated Report  57


Table of Contents

SUSTAINABILITY OPERATIONAL REVIEW

 

operational review continued

 

THE KLOOF OPERATION

Kloof is located in the Far West Rand mining district of Westonaria, some 60km south-west of Johannesburg in Gauteng province. Kloof operates under mining rights covering a total of approximately 20,100ha. It is principally an underground mine with nominal surface reserves represented by surface rock dumps and TSFs accumulated during the operating history of the mine.

Kloof has multiple operating shaft systems and three metallurgical plants one of which (KP2) processes underground ore from all the Kloof shafts. The remaining two process low-grade ore from surface rock dump (SRD) sources (KP1 and the Python plants).

Kloof is an intermediate to ultra-deep level mine, with operating depths of between 1,300m and 3,500m below surface. Kloof has access to the national electricity grid and to water, road and rail infrastructure and is located near regional urban centres where it can routinely obtain supplies. Kloof’s present scope of operations is the result of the consolidation in 2000 of the Kloof, Libanon, Leeudoorn and Venterspost mines. Gold mining began in the area now covered by these operations in 1934.

Geology

Kloof is located on the West Wits Line that forms the Far West Rand of the Witwatersrand Basin. The majority of production at Kloof is from the VCR, which occurs at depths of between 1,300m and 3,350m below surface. The VCR is a tabular orebody that has a general northeast-south-west strike and that dips to the south-east at

between 20 and 45 degrees. The MVR is classified as Kloof’s secondary reef and further minor production volumes are delivered from the Kloof Reef and the Libanon Reef.

Kloof lies between the Bank Fault to the West, and the north trending West Rand Fault to the east. The latter truncates the VCR along the eastern boundary of the mine, with a 1km to 1.5km upthrow to the east. Normal faults are developed sub-parallel to the west-dipping West Rand Fault, with sympathetic north/north-east trending dykes that show little or no apparent offset of the stratigraphy. A conjugate set of faults and dykes occurs on a west/south-west trend, with throws of one to 50m. Structures that offset the VCR increase in frequency toward the southern portion of the mine as the Bank Fault is approached.

Infrastructure

Kloof comprises five producing shafts systems and three gold metallurgical plants with the following capacities:

 

Shaft system    Hoisting capacity  

No 1

     100,000tpm   

No 3

     36,000tpm   

No 4

     82,000tpm   

No 7

     58,000tpm   

No 8

     73,000tpm   

KP1 was commissioned in 1968 and originally designed as a reef plant. It currently treats ore from surface rock dumps. The plant is comprised of three-stage crushing, open-circuit rod mills for primary grinding and closed circuit pebble mills for secondary milling. This is followed by cyanide leaching, filtration, zinc precipitation and smelting. In June 2001, a CIP

pumpcell was installed to replace the less-efficient filtration and zinc precipitation and smelting was discontinued. Loaded carbon is transported by truck to KP2 for treatment at an independent elution facility. In 2013, all crushing was stopped, the secondary crushing circuit was bypassed and modifications were made to the conveyor feed ore-delivery system with the addition of an overland conveyor completed to allow screened material from the SRD’s to feed the mill silos directly.

In November 1990, KP2 was commissioned and currently treats all of Kloof’s underground ore. Reef is trucked and conveyed to a central stacker pad which feeds two SAG mills equipped with variable-speed ring motor drives. Milling is followed by cyanide leaching, CIP and treatment at an independent elution and smelting facility. The elution facility was upgraded in June 2001 and again in October 2003 to process loaded carbon from KP1 and the former KP3 (Libanon) plant. The upgrade included the installation of continuous electrowinning sludge reactors.

A new pilot Python 500 plant was commissioned in February 2011 to treat SRD by concentrating the feed-grade material through screening, optical sorting and liberation of gold through comminution using a Vertical Shaft Impact (VSI) Crusher. Gold was to be recovered by a jig and flotation circuit followed by intensive cyanide leaching and carbon-in-columns. This was later replaced by an upgraded Python 2500 in July 2013 which is still being optimised.

 

 

Processing plant, capacity and recoveries

 

Plant    Capacity      Recovery factor

No 1 plant (KP1) commissioned in 1968

   165,000tpm      90%

No 2 plant (KP2) commissioned in 1990

   105,000tpm      98%
No 3 plant (KP3/Python) was originally commissioned in February 2011 and an upgraded unit recommissioned in July 2013    140,000tpm      85%

 

58  Sibanye Gold Integrated Report


Table of Contents

Operational review

Detailed below are the operating and production results for the past two financial years.

 

Production                   2013                      2012          
             u/g      Surface      Total      u/g      Surface      Total  

Main development

     m        19,331                 19,331         16,438                 16,438   

Area mined

     m 2      300,985                 300,985         277,855                 277,855   

Tons milled

     ‘000        1,898         2,325         4,223         1,801         2,281         4,082   

Yield

     g/t        7.7         0.6         3.8         7.7         0.7         3.8   

Gold produced/sold

     kg        14,533         1,444         15,977         13,866         1,484         15,350   
       ‘000oz        467.3         46.4         513.7         445.7         47.8         493.5   

Main development improved by 18% year-on-year with increases at all shafts. The long-life, high-grade No 2 and 4 shafts both increased their development profile by more than 10%. Square metres mined increased by 8% mainly due to recovery from the industry-wide strike which affected production during the latter half of 2012. Normalised production was relatively unchanged. Tonnages milled from surface sources as well as surface yields were marginally lower than in the previous year, but underground face grades mined improved by 2%. When coupled with the improvement in underground volumes, the total gold produced improved by 627kg year-on-year, or 4%.

 

Costs and margins            2013      2012  

Capital expenditure

     Rm         1,304         1,335   

– sustaining

     Rm         460         504   

– ORD

     Rm         844         831   

All-in cost

     R/kg         355,599         356,840   
   US$ /oz         1,152         1,355   

All-in cost margin

     %         18      18

Total cash cost

     R/kg         272,367         259,365   
     US$ /oz         882         985   

 

Production costs increased due to the above-inflation wage increases, increases in electricity costs and general inflation. Margins and other unit costs were similar year-on-year as the increased production was offset by the higher costs. Capital expenditure was similar year-on-year with the majority of expenditure on ore reserve development, the new Python processing plant, SLP housing projects and technical improvement projects. The reduction in the US dollar unit cost was mainly due to the weaker rand.

Safety

Kloof unfortunately had four fatalities in 2013. In spite of the regression measured against the one fatality, as recorded during 2012, the longer-term trend is positive for all key safety lagging indicators. Kloof received a number of safety awards for the year. The implementation of the overall organisational safety strategy will remain a key focus, in order to realise continual improvement.

Energy

Energy consumption for 2013 was 1,718MWh lower than 2012, in spite of significantly increased production year-on-year.

Water

Total water withdrawal in 2013 (76,636Ml) was higher than in 2012 (64,788Ml). Shafts and plants must explore the use of mine water for industrial applications and so reduce the use of potable water for industrial purposes.

 

 

       

Sustainability

          

 

Sibanye Gold Integrated Report  59


Table of Contents

REPORTS AUDIT COMMITTEE REPORT

 

audit committee report

for the year ended 31 December 2013

 

The Audit Committee has accepted formal terms of reference which are updated on an annual basis. The Board is satisfied that the Audit Committee has complied with these terms and with its legal and regulatory responsibilities as set out in the Companies Act, King III and the JSE Listings Requirements.

The Audit Committee consisted of four independent non-executive directors throughout the financial year and membership and attendance at meetings is set out on page 41. The Board believes that the members collectively possess the knowledge and experience to supervise Sibanye’s financial management, internal and external auditors, the quality of Sibanye’s financial controls, the preparation and evaluation of Sibanye’s consolidated financial statements and Sibanye’s financial reporting.

The Board has established and maintains internal controls and procedures, which are reviewed on a regular basis. These are designed to manage the risk of business failures and to provide reasonable assurance against such failures. However this is not a guarantee that such risks are eliminated.

It is the duty of the Audit Committee, among other things, to monitor and review:

Ÿ   the effectiveness of the internal audit function;
Ÿ   audit findings, audit reports and the appointment of external auditors;
Ÿ   reports of both internal and external auditors;
Ÿ   evaluation of the performance of the CFO;
Ÿ   the adequacy and effectiveness of the Group’s enterprise-wide risk management policies, processes and mitigating strategies;
Ÿ   the governance of information technology (IT) and the effectiveness of the Group’s information systems;
Ÿ   interim and annual financial and operating reports, the consolidated annual financial statements and all other widely distributed documents;
Ÿ   the Form 20-F filing with the US Securities and Exchange Commission (SEC);
Ÿ   accounting policies of the Group and proposed revisions;
Ÿ   compliance with applicable legislation, requirements of appropriate regulatory authorities and the Group’s Code of Ethics;
Ÿ   the integrity of the Integrated Report (by ensuring that its content is reliable and recommending it to the Board for approval); and
Ÿ   policies and procedures for preventing and detecting fraud.

Internal and external auditors have unrestricted access to the Audit Committee, the Audit Committee Chairman and the Chairman of the Board, ensuring that auditors are able to maintain their independence. Both the internal and external auditors report at Audit Committee meetings. The Audit Committee also meets with both internal and external auditors separately without other invitees being present.

The Audit Committee is responsible for recommending the appointment of a firm of external auditors to the Board who in turn will recommend the appointment to the shareholders. The Audit Committee is also responsible for determining that the designated appointee has the necessary experience, qualifications and skills and that the audit fee is adequate.

The Audit Committee reviewed and assessed the independence of the external auditor, including confirmation in writing that the criteria for independence as set out in the rules of the Independent Regulatory Board for Auditors and international bodies have been followed. The Audit Committee is satisfied that KPMG Inc. is independent of the Group. An audit fee for the year of R10.9 million was approved. The Audit Committee determines the nature and extent of

non-audit services that the firm can provide and pre-approves all permitted non-audit assignments by the Group’s independent auditor. The Audit Committee approved the annual audit plan presented by the external auditors and monitors progress against the plan. The audit plan provides the Audit Committee with the necessary assurance on risk management, internal control environments and IT governance.

The Audit Committee recommends that KPMG Inc. is reappointed for the 2014 financial year with Jacques Erasmus as the Group audit engagement partner.

The Audit Committee has satisfied itself that both KPMG Inc. and Jacques Erasmus are accredited in terms of the JSE Listing Requirements. The internal control systems of the Group are monitored by internal auditors who report their findings and recommendations to the Audit Committee and to senior management. The Audit Committee determines the purpose, authority and responsibility of the internal audit function in an Internal Audit Charter. The internal audit function is headed by the Vice President: Internal Audit, who can be appointed or dismissed by the Audit Committee. The Audit Committee is satisfied that the Vice President: Internal Audit has the requisite skills and experience and that she is supported by a sufficient staff complement with appropriate skills and training.

Sibanye’s Internal Audit (SGIA) operates in accordance with the International Standards for the Professional Practice of Internal Auditing as prescribed by the Institute of Internal Auditors. The internal audit activities carried out during the year were identified through a combination of the Sibanye Gold Risk Management framework and the risk based methodologies adopted by SGIA. The Audit Committee approves the annual

 

 

60  Sibanye Gold Integrated Report


Table of Contents

Internal Audit assurance plan presented by SGIA and monitors progress against the plan.

SGIA reports deficiencies to the Audit Committee every quarter together with recommended remedial actions which are then followed up. SGIA provided the Audit Committee with a written report which assessed as adequate the internal financial controls (SOx controls), IT governance and the risk management process during 2013.

The Audit Committee is responsible for IT governance on behalf of the Board and reviews the report of the IT Senior Manager at each meeting. During the year the IT team conducted a global ISO 27001 security standard gap analysis. This determined the areas of weakness which were then addressed by implementing an Information Security Management System aligned to the ISO 27001 standard.

The Audit Committee evaluated the expertise and performance of the CFO during 2013. It is satisfied that he has the appropriate expertise and experience to carry out his duties as the CFO of the Group and is supported by qualified and competent senior staff.

AUDIT COMMITTEE STATEMENT

Based on information from, and discussions with, management and external auditors, the Audit Committee has no reason to believe that there were any material breakdowns in the design and operating effectiveness of internal financial controls during the year and that the financial records can be relied upon as the basis for preparation of the consolidated financial statements.

The Audit Committee considered and discussed this Integrated Report with both management and the external auditors.

During this process, the Audit Committee:

Ÿ   evaluated significant judgements and reporting decisions;
Ÿ   determined that the going-concern basis of reporting is appropriate;
Ÿ   evaluated the material factors and risks that could impact on the Integrated Report;
Ÿ   evaluated the completeness of the financial and sustainability discussion and disclosures; and
Ÿ   discussed the treatment of significant and unusual transactions with management and the external auditors.

The Audit Committee considers that the Integrated Report complies in all material respects with the statutory requirements of the various regulations governing disclosure and reporting of the consolidated financial statements and that the consolidated financial statements comply in all material respects with U.S. GAAP. The Audit Committee has recommended to the Board that the consolidated annual financial statements be adopted and approved by the Board.

Keith Rayner

Chairman, Audit Committee

29 April 2014

 

 

           

Reports

      

 

Sibanye Gold Integrated Report  61


Table of Contents

REPORTS DIRECTORS’ REPORT

 

directors’ report

for the year ended 31 December 2013

 

The directors have pleasure in submitting their second report and the consolidated annual financial statements of Sibanye Gold (the Company) and its subsidiaries (together referred to as the Group) for the year ended 31 December 2013.

PROFILE

Business of the Group

Sibanye is a producer of gold and a major holder of gold resources and reserves in South Africa. The Group is primarily involved in underground and surface gold mining and related activities, including extraction, and processing. All of the Group’s operations are located in South Africa. The Group has gold reserves of 19.7Moz as at 31 December 2013.

REVIEW OF OPERATIONS

The activities of the various Sibanye operations are detailed in the Chief Executive Officer’s Report on page 15.

FINANCIAL RESULTS

The information on the financial position of the Group for the year ended 31 December 2013 is set out in the financial statements elsewhere in this annual report. The income statement for the Group shows a net income of R2,175 million (US$227 million) for the year ended 31 December 2013 compared with R2,967 million (US$362 million) in 2012.

DIRECTORATE

Composition of the Board

The following change in directorate occurred during the year under review:

Ÿ   On 1 October 2013 Dr Zola Skweyiya was appointed an independent non-executive director. He is eligible and available for election.
Ÿ   At the shareholders meeting held on 5 November 2013 Messrs Robert Chan and Chris Chadwick, both nominees of Gold One International Limited (Gold One), were elected as directors of the company to serve on its board with effect from the closing date for the acquisition of
   

Gold One’s Cooke Operations (proposed transaction). The closing date being the date of the allotment and issue to Gold One of such number of Sibanye Gold shares as represents 17% of its issued share capital, on a fully diluted basis on a business day that is not more than ten business days after all conditions precedent to the proposed transaction have been fulfilled.

Ÿ   The membership of all the Board sub-committees is disclosed on pages 41 to 43.

Directors’ and officers’ disclosure of interests in contracts

During the year under review, no contracts were entered into in which directors and officers of Sibanye had an interest and which significantly affected the business of the Group.

Related party information is disclosed on pages 151 to 153.

Rotation of Directors

Directors retiring in terms of the Company’s MOI are Sello Moloko, Neal Froneman, Charl Keyter, Keith Rayner and Zola Skweyiya. All the Directors are eligible and offer themselves for re-election.

The Board of Directors of various subsidiaries of the Company comprise some of the executive officers and one of the executive directors, where appropriate.

FINANCIAL AFFAIRS

Dividend policy

Sibanye adopted a dividend policy to pay between 25% and 35% of normalised earnings as dividends. Normalised earnings are defined as profit for the year excluding gains and losses on foreign exchange, financial instruments, non-recurring items and share of associates after royalties and taxation.

For the year under review, the Group paid a total dividend of R272 million (US$27 million) compared with R731 million (US$96 million) in 2012.

On 19 February 2014 a final dividend in respect of the financial period ended 31 December 2013 of 75 Rand cents per share was approved by the Board.

On 17 March 2014 the Group paid this dividend totaling R555 million (US$52 million).

Borrowing powers

In terms of Clause 4 of the Company’s MOI, the borrowing powers of the Company are unlimited. As at 31 December 2013, the Company and the Group’s borrowings totalled R1,991 million (US$193 million), compared to total borrowings of R4,220 million (US$493 million) at 31 December 2012.

Sibanye is subject to financial and other covenants and restrictions under its credit facilities from time to time. Such covenants may include restrictions on Sibanye incurring additional financial indebtedness and obligations to maintain certain financial covenant ratios for as long as any amount is outstanding under such facilities.

SIGNIFICANT ANNOUNCEMENTS

01 March 2013

Sibanye announced its reviewed preliminary condensed consolidated results for the year ended 31 December 2012.

18 March 2013

Sibanye gave an update on the power failure post lightning strike which affected power supply to Driefontein Mine.

12 April 2013

Shareholders advised of the delivery of summarised financial statements and the 2012 Annual Report.

29 May 2013

Agreement reached with employees and organised labour on the future of its Beatrix West Section, following the consolidation process which began on 2 April 2013.

 

 

62  Sibanye Gold Integrated Report


Table of Contents

21 August 2013

Sibanye announced that it had reached agreement with Gold One International Limited to acquire its Cooke underground and surface operations.

11 September 2013

Sibanye advises shareholders that it has concluded a two-year wage agreement with the National Union of Mineworkers, Solidarity and the United Association of South Africa.

12 September 2013

Sibanye declared a 37 cents a share maiden interim dividend for the six months ended 30 June 2013.

5 November 2013

Sibanye announced that it’s shareholders approved the issue of 150 million ordinary shares, or such number of shares that represent 17% of the issued capital, on a fully diluted basis for the acquisitions of the Cooke operations.

11 December 2013

Sibanye announced that it had offered to acquire the entire issued share capital of Witwatersrand Consolidated Gold Resources Limited, thereby securing the future of Beatrix.

GOING CONCERN

The consolidated financial statements have been prepared using appropriate accounting policies, supported by reasonable judgements and estimates. The directors believe that the Group has adequate resources to continue as a going concern for the foreseeable future.

Refer to pages 128 to 129 of the Operating and Financial Review and Prospects for details on the Group’s liquidity position at 31 December 2013.

OCCUPATIONAL HEALTHCARE SERVICES

Occupational healthcare services are made available by Sibanye to employees from its existing facilities. There is a risk that the cost of providing

such services could increase in the future, depending upon changes in the nature of underlying legislation such as the ruling by the Constitutional Court in February 2011 against Anglo American Limited in favour of a claimant, who suffered from silicosis. Increased costs, should they transpire, are currently indeterminate. The Company is monitoring developments in this regard. Further information is provided below under the Litigation paragraph and in note 19 to the consolidated financial statements.

SPECIAL RESOLUTIONS ADOPTED BY SUBSIDIARY COMPANIES

The following special resolutions were passed by subsidiary companies during the year ended 31 December 2013.

1. Agrihold Proprietary Limited

Ÿ   Special resolution passed by the sole shareholder of Agrihold Proprietary Limited approving that the board of directors of the company may at any time and from time to time during the 2 (two) years from the passing hereof authorise the company in terms of and subject to the provisions of section 45(3)(b) of the Companies Act, to provide any type of direct or indirect financial assistance as defined in Section 45(1) of the Companies Act, to any company or corporation that is related or inter-related to the company, on such terms and conditions and for such amounts as the board of directors may determine.
Ÿ   Special resolution passed by the sole shareholder approving the abrogation and replacement of the existing memorandum of incorporation of the company, consisting of a memorandum and articles of association.

2. Bushbuck Venture Proprietary Limited

Ÿ   Special resolution passed by the shareholders of Bushbuck Venture Proprietary Limited, approving the adoption of the new Memorandum of Incorporation, in substitution for
   

the existing memorandum and articles of association of the company, in accordance with section 16(1)(c) of the Companies Act, in order to, among other things, align and harmonise the company’s constitutional documents with the Companies Act.

Ÿ   Special resolution passed by the shareholders of Bushbuck Venture Proprietary Limited approving that the board of directors of the company may at any time and from time to time during the 2 (two) years from the passing hereof authorise the company in terms of and subject to the provisions of section 45(3)(b) of the Companies Act, to provide any type of direct or indirect financial assistance as defined in Section 45(1) of the Companies Act, to any company or corporation that is related or inter-related to the company, on such terms and conditions and for such amounts as the board of directors may determine.

3. Golden Hytec Farming Proprietary Limited

Ÿ   Special resolution passed by the sole shareholder of Golden Hytec Farming Proprietary Limited approving that the board of directors of the company may at any time and from time to time during the 2 (two) years from the passing hereof authorise the company in terms of and subject to the provisions of section 45(3)(b) of the Companies Act, to provide any type of direct or indirect financial assistance as defined in Section 45(1) of the Companies Act, to any company or corporation that is related or inter-related to the company, on such terms and conditions and for such amounts as the board of directors may determine.

4. Golden Oils Proprietary Limited

Ÿ  

Special resolution passed by the sole shareholder of Golden Oils Proprietary Limited approving that the board of directors of the company may at any time and from time to time during the 2 (two) years

 

 

           

Reports

      

 

Sibanye Gold Integrated Report  63


Table of Contents

REPORTS DIRECTORS’ REPORT

 

directors’ report continued

for the year ended 31 December 2013

 

   

from the passing hereof authorise the company in terms of and subject to the provisions of section 45(3)(b) of the Companies Act, to provide any type of direct or indirect financial assistance as defined in Section 45(1) of the Companies Act, to any company or corporation that is related or inter-related to the company, on such terms and conditions and for such amounts as the board of directors may determine.

5. Living Gold Proprietary Limited

Ÿ   Special resolution passed by the shareholders of Living Gold Proprietary Limited, approving the adoption of the new Memorandum of Incorporation, in substitution for the existing memorandum and articles of association of the company, in accordance with section 16(1)(c) of the Companies Act, in order to, among other things, align and harmonise the company’s constitutional documents with the Companies Act.
Ÿ   Special resolution passed by the shareholders of Living Gold Proprietary Limited approving that the board of directors of the company may at any time and from time to time during the 2 (two) years from the passing hereof authorise the company in terms of and subject to the provisions of section 45(3)(b) of the Companies Act, to provide any type of direct or indirect financial assistance as defined in Section 45(1) of the Companies Act, to any company or corporation that is related or inter-related to the company, on such terms and conditions and for such amounts as the board of directors may determine.

6. M Janse van Rensburg Proprietary Limited

Ÿ   Special resolution passed by the sole shareholder of M Janse van Rensburg Proprietary Limited approving that the board of directors of the company may at any time and from time to time during the 2 (two) years from the passing hereof authorise the
   

company in terms of and subject to the provisions of section 45(3)(b) of the Companies Act, to provide any type of direct or indirect financial assistance as defined in Section 45(1) of the Companies Act, to any company or corporation that is related or inter-related to the company, on such terms and conditions and for such amounts as the board of directors may determine.

7. Milen Mining Proprietary Limited

Ÿ   Special resolution passed by the sole shareholder of Milen Mining Proprietary Limited, approving the adoption of the new Memorandum of Incorporation, in substitution for the existing memorandum and articles of association of the company, in accordance with section 16(1)(c) of the Companies Act, in order to, among other things, align and harmonise the company’s constitutional documents with the Companies Act.
Ÿ   Special resolution passed by the sole shareholder of Milen Mining Proprietary Limited approving that the board of directors of the company may at any time and from time to time during the 2 (two) years from the passing hereof authorise the company in terms of and subject to the provisions of section 45(3)(b) of the Companies Act, to provide any type of direct or indirect financial assistance as defined in Section 45(1) of the Companies Act, to any company or corporation that is related or inter-related to the company, on such terms and conditions and for such amounts as the board of directors may determine.

8. Oryx Ventures Proprietary Limited

Ÿ   Special resolution passed by the shareholders of Oryx Ventures Proprietary Limited, approving the adoption of the new Memorandum of Incorporation, in substitution for the existing memorandum and articles of association of the company, in accordance with section 16(1)(c) of the Companies Act, in order to, among other things,
   

align and harmonise the company’s constitutional documents with the Companies Act.

Ÿ   Special resolution passed by the shareholders of Oryx Ventures Proprietary Limited approving that the board of directors of the company may at any time and from time to time during the 2 (two) years from the passing hereof authorise the company in terms of and subject to the provisions of section 45(3)(b) of the Companies Act, to provide any type of direct or indirect financial assistance as defined in Section 45(1) of the Companies Act, to any company or corporation that is related or inter-related to the company, on such terms and conditions and for such amounts as the board of directors may determine.

9. Sibanye Gold Academy Proprietary Limited

Ÿ   Special resolution passed by the sole shareholder of Gold Fields Business Leadership Academy Proprietary Limited, approving the name change of the company from Gold Fields Business Leadership Academy Proprietary Limited to Sibanye Gold Business Leadership Academy Proprietary Limited.
Ÿ   Special resolution passed by the Consolidated sole shareholder of Sibanye Gold Business Leadership Academy Proprietary Limited, approving the name change of the company from Sibanye Gold Business Leadership Academy Proprietary Limited to Sibanye Gold Academy.
Ÿ  

Special resolution passed by the sole shareholder of Sibanye Gold Academy Proprietary Limited approving that the board of directors of the company may at any time and from time to time during the 2 (two) years from the passing hereof authorise the company in terms of and subject to the provisions of section 45(3)(b) of the Companies Act, to provide any type of direct or indirect financial assistance as defined in Section 45(1) of the Companies Act, to any company or corporation that

 

 

64  Sibanye Gold Integrated Report


Table of Contents
   

is related or inter-related to the company, on such terms and conditions and for such amounts as the board of directors may determine.

10. Sibanye Gold Nursing College Proprietary Limited

Ÿ   Special resolution passed by the sole shareholder of Sibanye Nursing College Proprietary Limited, approving the name change of the Company from Gold Fields Nursing College Proprietary Limited to Sibanye Gold Nursing College Proprietary Limited.
Ÿ   Special resolution passed by the sole shareholder of Sibanye Gold Nursing college Proprietary Limited, approving the adoption of the new Memorandum of Incorporation, in substitution for the existing memorandum and articles of association of the company, in accordance with section 16(1)(c) of the Companies Act, in order to, among other things, align and harmonise the company’s constitutional documents with the Companies Act.

11. Sibanye Gold Protection Services Limited Proprietary Limited

Ÿ   Special resolution passed by the sole shareholder of Gold Fields Security Limited, approving the name change of the company from Gold Fields Security Limited to Sibanye Gold Security Limited.
Ÿ   Special resolution passed by the sole shareholder of Sibanye Gold Security Limited, approving the name change of the company from Sibanye Gold Security Limited to Sibanye Gold Protection Services Proprietary Limited.
Ÿ   Special resolution passed by the sole shareholder of Sibanye Gold Protection Services Proprietary Limited approving that the board of directors of the company may at any time and from time to time during the 2 (two) years from the passing hereof authorise the company in terms of and subject to the provisions of section 45(3) (b) of the Companies Act, to provide any
   

type of direct or indirect financial assistance as defined in Section 45(1) of the Companies Act, to any company or corporation that is related or inter-related to the company, on such terms and conditions and for such amounts as the board of directors may determine.

12. Sibanye Gold Shared Services Proprietary Limited

Ÿ   Special resolution passed by the sole shareholder of Gold Fields Shared Services Proprietary Limited, approving the name change of the company from Gold Fields Shared Services Proprietary Limited to Sibanye Gold Shared Services Proprietary Limited.
Ÿ   Special resolution passed by the sole shareholder of Sibanye Gold Shared Services Proprietary Limited, approving the adoption of the new Memorandum of Incorporation, in substitution for the existing memorandum and articles of association of the company, in accordance with section 16(1)(c) of the Companies Act, in order to, among other things, align and harmonise the company’s constitutional documents with the Companies Act.
Ÿ   Special resolution passed by the sole shareholder of Sibanye Gold Shared Services Proprietary Limited approving that the board of directors of the company may at any time and from time to time during the 2 (two) years from the passing hereof authorise the company in terms of and subject to the provisions of section 45(3) (b) of the Companies Act, to provide any type of direct or indirect financial assistance as defined in Section 45(1) of the Companies Act, to any company or corporation that is related or inter-related to the company, on such terms and conditions and for such amounts as the board of directors may determine.

13. West Driefontein Gold Mining Company Limited

Ÿ   Special resolution passed by the sole shareholder of West Driefontein Gold
   

Mining Company Limited, approving the adoption of the new Memorandum of Incorporation, in substitution for the existing memorandum and articles of association of the company, in accordance with section 16(1)(c) of the Companies Act, in order to, among other things, align and harmonise the company’s constitutional documents with the Companies Act.

Ÿ   Special resolution passed by the sole shareholder of West Driefontein Gold Mining Company Limited approving that the board of directors of the company may at any time and from time to time during the 2 (two) years from the passing hereof authorise the company in terms of and subject to the provisions of section 45(3) (b) of the Companies Act, to provide any type of direct or indirect financial assistance as defined in Section 45(1) of the Companies Act, to any company or corporation that is related or inter-related to the company, on such terms and conditions and for such amounts as the board of directors may determine.

14. Witwatersrand Deep Investments Limited

Ÿ   Special resolution passed by the sole shareholder of Witwatersrand Deep Investment Proprietary Limited, approving the adoption of the new Memorandum of Incorporation, in substitution for the existing memorandum and articles of association of the company, in accordance with section 16(1)(c) of the Companies Act, in order to, among other things, align and harmonise the company’s constitutional documents with the Companies Act.
Ÿ  

Special resolution passed by the sole shareholder of Witwatersrand Deep Investment Proprietary Limited approving that the board of directors of the company may at any time and from time to time during the 2 (two) years from the passing hereof authorise the company in terms of and subject to the provisions of section 45(3) (b) of

 

 

           

Reports

      

 

Sibanye Gold Integrated Report  65


Table of Contents

REPORTS DIRECTORS’ REPORT

 

directors’ report continued

for the year ended 31 December 2013

 

   

the Companies Act, to provide any type of direct or indirect financial assistance as defined in Section 45(1) of the Companies Act, to any company or corporation that is related or inter-related to the company, on such terms and conditions and for such amounts as the board of directors may determine.

LITIGATION

On 21 August 2012, a court application was served on a group of respondents that included Sibanye (the August Respondents). On 21 December 2012, a further court application was issued and was formally served on a number of respondents, including Sibanye, (the December Respondents and, together with the August Respondents, the Respondents) on 10 January 2013, on behalf of classes of mine workers, former mine workers and their dependants who were previously employed by, or who are currently employed by, among others, Sibanye and who allegedly contracted silicosis and/or other occupational lung diseases (the Classes). The court application of 21 August 2012 and the court application of 21 December 2012 are together referred to below as the Applications. These Applications request that the court certify a class action to be instituted by the applicants on behalf of the Classes. The Applications are the first and preliminary steps in a process where, if the court were to certify the class action, the applicants may, in a second stage, bring an action wherein they will attempt to hold the Respondents liable for silicosis and other occupational lung diseases and resultant consequences. In the second stage, the Applications contemplate addressing what the applicants describe as common legal and

factual issues regarding the claim arising from the allegations of the entire Classes. If the applicants are successful in the second stage, they envisage that individual members of the Classes could later submit individual claims for damages against the respective Respondents. The Applications do not identify the number of claims that may be instituted against the Respondents or the quantum of damages the applicants may seek.

With respect to the Applications, Sibanye has filed a notice of its intention to oppose the application and has instructed its attorneys to defend the claims. Sibanye and its attorneys are engaging with the applicants’ attorneys in both Applications to try to establish a court-sanctioned process to agree the timelines, (including the date by which Sibanye must file its papers opposing the Applications) and the possible consolidation of the separate applications. At this stage, Sibanye cannot quantify their potential liability from these actions. The two class actions were consolidated into one action during 2013 and the attorneys for the applicants in those matters have now applied to the court for a case management procedure in order to set times in which the parties have to comply with various legal processes and timeframes in terms of the application. Sibanye has entered notices to oppose the various actions and its attorneys are currently considering the opposition in detail. Accordingly, Sibanye cannot quantify the potential liability from these actions. Other than the above, Sibanye is not a party to any material legal or arbitration proceedings, nor is any of its property the subject of pending material legal proceedings.

ADMINISTRATION

Cain Farrel was appointed Company Secretary of Sibanye with effect from 1 January 2013.

With effect from 11 February 2013 Computershare Investor Services Proprietary Limited became the Company’s South African transfer secretaries and Capita Asset Services became the United Kingdom registrars of the Company.

AUDITORS

The Audit Committee has recommended to the Board that KPMG Inc. continues in office in accordance with section 90(1) of the Companies Act.

SUBSIDIARY COMPANIES

Details of major subsidiary companies in which the Company has a direct or indirect interest are set out in “Further Information—Operating and Financial Review and Prospects—Organization chart”.

 

 

66  Sibanye Gold Integrated Report


Table of Contents

share capital statement

for the year ended 31 December 2013

 

SHARE CAPITAL

Authorised and issued

At the shareholder’s meeting held on 21 November 2012 (Gold Fields being the sole shareholder) the Company’s authorised and issued share capital each consisting of 1,000 par value shares of R1.00 each was converted into 1,000 ordinary shares with no par value. The authorised share capital was increased by the creation of a further 999,999,000 ordinary no par value shares, each ranking pari passu in all respects with the existing no par value shares in the Company’s share capital so as to result in the Company’s authorised share capital being 1,000,000,000 ordinary no par value shares. As at 31 December 2012 the authorised share capital was 1,000,000,000 ordinary no par value shares and the issued share capital was 1,000 ordinary no par value shares.

On 1 February 2013, prior to the unbundling of Sibanye from Gold Fields on 18 February 2013, Gold Fields subscribed for a further 731,647,614 shares in Sibanye for R17,246 million. As of this date the issued share capital

was 731,648,614 ordinary no par value shares.

During 2013 the Company issued 3,430,417 shares as part of the SGL Share Plan.

As at 31 December 2013 the authorised share capital was 1,000,000,000 ordinary no par value shares and the issued share capital was 735,079,031 ordinary no par value shares.

In terms of the general authority granted at the shareholder’s meeting on 13 May 2013, the authorised but unissued ordinary share capital of the Company representing not more than 5% of the issued share capital of the Company as at 11 February 2013, after setting aside so many ordinary shares as may be required to be allotted and issued pursuant to the share incentive scheme, was placed under the control of the directors. This authority expires at the next annual general meeting where shareholders will be asked to place under the control of the directors the authorised but unissued ordinary share capital of the Company representing not more than

5% of the issued share capital of the Company from time to time.

On 5 November 2013 the shareholders approved the issue of 150 million ordinary shares, or such number of shares that represent 17% of the issued capital, on a fully diluted basis for the acquisition of the Cooke operations.

Repurchase of shares

The Company has not exercised the general authority granted to buy back shares from its issued ordinary share capital granted at the shareholders’ meeting held on 13 May 2013. At the next annual general meeting, shareholders will be asked to review the general authority for the acquisition by the Company, or a subsidiary of the Company, of its own shares.

 

 

           

Reports

      

 

Sibanye Gold Integrated Report  67


Table of Contents

REPORTS REMUNERATION REPORT

 

remuneration report

for the year ended 31 December 2013

 

It is the Remuneration Committee’s role and responsibility to ensure that the remuneration arrangements for executive directors and senior executives offer an incentive to enhance the Group’s performance and deliver responsibly on the Group’s strategy. The Remuneration Committee also needs to ensure that the actual rewards received by the executive directors are proportionate to levels of performance achieved and the returns received by shareholders. The Remuneration Committee gives full consideration to the Group’s priorities, its performance and shareholder interests.

Sibanye believes it is important that the structure and level of remuneration and reward are consistent across the Group and competitive within the operating market. Our remuneration structures are benchmarked against our peers and we operate comprehensive performance-based reward systems to retain and also attract the best people.

All information disclosed in this Remuneration Report for the year ended 31 December 2013 was in compliance with remuneration policies set by the Remuneration Committee. The Remuneration Committee reviewed the performance measures for the Group’s incentive plans during 2013 to reposition alignment with the Group strategy.

It should be noted that no information was disclosed in this Remuneration

Report for the years prior and up to 31 December 2012 as such information was in respect of the Gold Fields’ senior executives and not that of Sibanye as a standalone independent company. Sibanye’s senior executives were only appointed after the unbundling of Gold Fields, which took place on 18 February 2013.

2013 REMUNERATION POLICY

The key principles of Sibanye’s remuneration policy are:

Ÿ   support the execution of the Group’s business strategy;
Ÿ   provide competitive rewards to attract, motivate and retain highly skilled executives;
Ÿ   motivate and reinforce individual, team and business performance; and
Ÿ   ensure Sibanye’s remuneration arrangements are equitable and facilitate the deployment of people across the Group’s operations.

At Sibanye, one of the critical drivers of performance is the Total Reward strategy. The Total Reward strategy forms an integral part of the people strategy and promotes a holistic total reward approach of combining all elements of remuneration with other elements of reward to attract, retain and motivate employees. The principle of performance-based remuneration is one of the cornerstones of the reward strategy. The reward strategy is also underpinned by sound remuneration management and governance principles which are promoted across Sibanye in order to ensure the consistent application of the reward strategy and policies.

The Group’s reward strategy includes the following elements:

Ÿ   Guaranteed remuneration
Ÿ   Benefits
Ÿ   Cash bonus
Ÿ   Bonus shares
Ÿ   Performance shares

REMUNERATION MIX

Sibanye’s remuneration philosophy is aimed at attracting and retaining motivated, high-calibre employees aligned with the interests of shareholders. Such alignment is achieved through an appropriate mix of guaranteed and performance-based remuneration (variable pay), which provides for differentiation between high, average and low performers. The pay mix of guaranteed and variable remuneration differs according to the level of the individual in the Group. Generally, more senior employees’ remuneration will consist of a higher portion of variable pay as a percentage of their total package. The maximum at-risk rewards that could be earned are twice the on-target percentages for both the annual bonus and performance shares.

The remuneration policy aligns senior executives’ interests with shareholders by promoting and measuring performance that drives long-term growth and sustained shareholder value. The following remuneration mix for the period under review was approved by the Remuneration Committee for 2013.

 

 

68  Sibanye Gold Integrated Report


Table of Contents

Role

     Total        
 
Guaranteed
pay
  
  
    
 
Cash
bonus
  
  
    
 
Bonus
shares
  
  
    
 
Performance
shares
  
  

CEO

     100%         36%         24%         16%         24%   

CFO

     100%         39%         23%         15%         23%   

COO

     100%         41%         22%         15%         22%   

SVP

     100%         43%         21.5%         14%         21.5%   

 

GUARANTEED REMUNERATION

Sibanye endeavours to reward its people fairly and consistently according to their role and individual contribution to the Group. To achieve external equity and a competitive total remuneration position, Sibanye surveys the relevant markets regularly.

The benchmark for guaranteed remuneration is the market median levels within the relevant gold mining companies and other comparable mining companies.

Guaranteed remuneration levels are reviewed annually by the Remuneration Committee, taking into account the Group’s performance, change in responsibility, levels of increase based on market trends and inflation. The Remuneration Committee also considers the impact of any guaranteed remuneration increase on the total remuneration package.

ANNUAL BONUS

Executive directors are able to earn bonuses of 60% (for the CFO) and 65% (for the CEO) of their salaries for on-target performance, which is a combination of Group and individual performance. The annual bonus could increase above 60% and 65% if stretch targets are achieved. The maximum earning potential is capped at two times the on-target bonus percentage.

The targets for annual bonus are set by the Remuneration Committee. In the case of the CEO and CFO, 90% of the annual bonus is based on Group objectives and the remaining 10% on individual objectives.

In 2013 annual bonuses were based on targets approved in advance by the Remuneration Committee, comprising a combination of Group and Operational objectives taking account of the Group’s business plans. For the year ended 31 December 2013, the Group

performance measures for the senior executives were set by the Remuneration Committee and the weightings were as follows:

 

Ÿ   Safety 10%;

 

Ÿ   Production (Volume) 20%;

 

Ÿ   Cost 30%; and

 

Ÿ   Quality (Grade) 40%.

Aside from these four key drivers, the CEO and CFO were also assessed on personal objectives. Personal objectives are set every year for each executive based on key performance areas and are approved at the beginning of each year by the Remuneration Committee. The personal objectives are centred on three themes: Operational Excellence, Growing Sibanye Gold and Securing Our Future.

For the year ended 31 December 2013, the Sibanye Group performance measures for executive directors and senior executive were:

 

 

Corporate performance 2013    Weight      Actual      Target      Achieved  
       %                  +100%         %   

Reduce fatalities

     5.0         9         14.40         200   

Reduce LTIFR rate

     2.5         6.13         6.21         112   

Reduce SIFR rate

     2.5         3.50         3.30         46   

Primary on-reef development (m)

     10.0         12,260         13,660         32   

Primary off-reef development (m)

     10.0         42,353         39,473         149   

Cost of ore milled – R/ton (underground)

     30.0         1,636         1,893         191   

Grade and quality – gold produced (kg)

     40.0         44,474         40,799         160   
       100.0                           153   

 

           

Reports

      

 

Sibanye Gold Integrated Report  69


Table of Contents

REPORTS REMUNERATION REPORT

 

remuneration report continued

for the year ended 31 December 2013

 

In addition to Group performance as determined by the above scorecard, individual performance is also considered in determining the annual performance incentive award. The CEO develops specific individual objectives with his direct reports at the beginning or prior to the beginning of each year. These objectives are then reviewed with the Remuneration Committee and form the basis upon which the executives’ performance will be reviewed at the end of the year.

Based on the bonus accrued for the year ended 31 December 2013, the annual bonus as a percentage of guaranteed pay paid to directors and prescribed officers of Sibanye in February 2014 was:

 

Name    Actual 2013 Annual Incentive  

Executive directors

  

Neal Froneman

     107.1%   

Charl Keyter

     91.5%   

Prescribed officers

  

Shadwick Bessit

     75.4%   

Hartley Dikgale 1

     50.4%   

Cain Farrel

     60.0%   

Dawie Mostert

     71.9%   

Adam Mutshinya

     71.4%   

Peter Turner

     92.8%   

Robert van Niekerk 2

     76.9%   

James Wellsted

     75.4%   

 

1 Appointed as a prescribed officer on 1 May 2013, however bonus percentage calculated on full annual pay

 

2 Appointed as a prescribed officer on 1 February 2013, however bonus percentage calculated on full annual pay

Directors’ fees

In terms of the MOI, the fees for services as non-executive directors are determined by the Company’s shareholders at a general meeting.

 

      Per annum  
The Chair of the Board      R1,500,000   
The Chair of the Audit and Risk Committee      R287,000   
The Chairs of the Nominating and Governance Committee, Remuneration Committee, Social and Ethics   
Committee and Safety, Health and Sustainable Development Committee (excluding the Chairman of the Board)      R177,000   
Members of the Board (excluding the Chairman of the Board)      R793,000   
Members of the Audit Committee (excluding the Chairman of the Board)      R149,000   

Members of the Nominating and Governance Committee, Remuneration Committee, Social and Ethics

 

Committee and Safety, Health and Sustainable Development Committee (excluding the Chairman of the Board)

     R112,000   

 

70  Sibanye Gold Integrated Report


Table of Contents

Non-executive directors’ fees, executive directors and prescribed officers’ remuneration

The directors and prescribed officers of Sibanye were paid the following remuneration during the year ended 31 December 2013:

 

     Directors’
fees
(R’000)
    Committee
fees
(R’000)
    Salary
(R’000)
    Annual bonus
accrued for the
period ending
31 December
2013 paid in
2014
(R’000)
    Shares
proceeds
and
dividends
on Bonus
Shares
(R’000)
    Pension
scheme total
contributions
(R’000)
    Expense
allowance
(R’000)
    For the
period
ended
31 December
2013
(R’000)
    For the
period
ended
31 December
2012
(R’000)
 

Executive directors

                 

Neal Froneman

                  6,300        7,500               700        125        14,625          

Charl Keyter 1

                  3,100        3,203        109        438        50        6,900        749   

Prescribed officers

                           

Shadwick Bessit 2

                  2,966        2,577        14        513               6,070          

Hartley Dikgale 3

                  1,544        1,208               100               2,852          

Cain Farrel

                  1,636        1,201        92