Please ensure Javascript is enabled for purposes of website accessibility

Why Sibanye Stillwater Stock Surged 15% in October

By Matthew DiLallo – Nov 8, 2021 at 9:15AM

Key Points

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Several catalysts drove the mining company last month.

What happened

Shares of Sibanye Stillwater (SBSW -2.95%) jumped 15.1% in October, according to data provided by S&P Global Market Intelligence. Several factors fueled the precious metal mining stock's rally, including acquisition news, earnings, and an analyst note. 

So what

Sibanye Stillwater had a busy October. One of the highlights was purchasing two mines in Brazil for $1 billion. The company bought the Santa Rita nickel mine and the Serrote copper mine from a private equity fund. Those mines align with the company's focus of building a portfolio of mines that produce metals vital to cleaner energy. Copper is essential to electric vehicles and renewable energy, while nickel is crucial for battery production. 

A stock chart with gold nuggets in the background.

Image source: Getty Images.

The mining company also reported its quarterly financial results last month. Sibanye Stillwater noted that its mines operated at pre-pandemic levels for the second consecutive quarter. Overall, the company's legacy gold and platinum group metals (PGM) operations generated about $1 billion of earnings before interest, taxes, depreciation, and amortization (EBITDA) during the period. While its PGM operations reported lower production, gold output rose year over year. The company also maintained its production guidance for the full year.  

Meanwhile, an analyst from Deutsche Bank initiated coverage on Sibanye Stillwater in October. The analyst gave the mining company a buy rating and set a $19 price target. The analyst noted that the company had acquired several assets and companies over the years to build a portfolio aimed at generating free cash flow in the future.  

That's giving it the funds to invest in its green metals strategy. In addition to its recent Brazilian copper and nickel acquisitions, Sibanye Stillwater has made three other deals focused on green metals important to the energy transition in recent months. In September, it agreed to invest $490 million in a lithium-boron joint venture in the U.S. Meanwhile, earlier this year, it signed an option agreement to acquire a nickel procession facility in France and invested in a lithium project in Finland.   

Now what

Sibanye Stillwater is using the cash flows produced by its precious metals mining operations to expand into green metals. Last month, the company took another step forward on that strategy by agreeing to acquire copper and nickel mines in Brazil. When combined with its other nickel and lithium investments, those deals position the company to benefit from the growing demand for metals to drive the energy transition to cleaner alternative energy sources. This strategy could pay big dividends in the future if demand for green metals grows as the company anticipates.

Matthew DiLallo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.