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Sibanye Gold Limited Reg. 2002/031431/06
Registered and Business Address: Libanon Business Park 1 Hospital Street (Off Cedar Ave) Libanon, Westonaria, 1780
Postal Address: Private Bag X5 Westonaria, 1780
Tel +27 11 278 9600 Fax +27 11 278 9863 |
Tia L. Jenkins
Senior Assistant Chief Accountant
Office of Beverages, Apparel and Mining
United States Securities and Exchange Commission
Division of Corporation Finance
100 F Street, N.E.
Washington D.C. 20549 – 7010
U.S.A.
November 17, 2015
By EDGAR
Dear Ms. Jenkins,
| Re: | Sibanye Gold Limited | |
| Form 20-F for the year ended December 31, 2014 | ||
| Filed March 24, 2015 | ||
| File No. 001-35785 |
We refer to your comment letter (the “Comment Letter”) dated October 22, 2015 setting forth the comments of the staff (“Staff”) of the Division of Corporation Finance of the Securities and Exchange Commission (the “Commission”) on the above referenced Form 20-F (the “2014 Form 20-F”) of Sibanye Gold Limited (the “Company”). For your convenience, we have set forth below the text of the Staff’s comments, followed in each case by our response.
Directors:Sello Moloko* (Chairman) Neal Froneman (CEO) Charl Keyter (CFO) Chris Chadwick* Robert Chan* Timothy Cumming* Barry Davison* Rick Menell* Nkosemntu Nika* Keith Rayner* Sue van der Merwe* Jerry Vilakazi* Jiyu Yuan*
Cain Farrel (Corporate Secretary) (*Non-Executive)
Vat No. 473 020 9410
Form 20-F for the Year Ended December 31, 2014
Notes to the Consolidated Financial Statements
1. Accounting Policies, page 178
| 1 | In future filings, please disclose the date the financial statements were authorized for issue and who gave that authorization. Please refer to IAS 10.17 for further guidance. In addition, please tell us the date the current year financial statements were authorized for issue and who gave that authorization. |
Response
The Company acknowledges the staff’s comment. The Company will include in future filings the date the financial statements were authorized for issue and who gave authorization. The Company respectfully submits that the consolidated financial statements for the year ended December 31, 2014 were authorized for issue by the Board of Directors on March 23, 2015 and were signed on its behalf by Neal Froneman, Chief Executive Officer and Charl Keyter, Chief Financial Officer.
13. Property, Plant and Equipment, page 195
Mine development and infrastructure, page 196
| 2 | Your accounting policy indicates that you capitalize expenditure incurred to evaluate new ore bodies as mine development and infrastructure costs. Please a) tell us the nature of the evaluation expenditure incurred; b) clarify your basis to capitalize the evaluation expenditure; and c) quantify the evaluation expenditure capitalized as of December 31, 2014 and 2013. In your response, please provide reference to the authoritative literature that supports your accounting treatment. |
Response
The Company acknowledges the Staff’s comment and respectfully submits the requested information below:
| a) | Expenditure incurred to evaluate new ore bodies includes: |
| • | acquisition of rights to explore (e.g. exploration licences); |
| • | topographical, geological, geochemical and geophysical studies; |
| • | exploratory drilling; |
| • | trenching; |
| • | sampling; and |
| • | activities in relation to evaluating the technical feasibility and commercial viability of extracting a mineral resource (e.g. feasibility study costs). |
| b) | In terms of IFRS 6Exploration for and Evaluation of Mineral Resources paragraph 9, for each type of exploration and evaluation expenditure, an entity chooses an accounting policy, to be applied consistently, of either immediately expensing the expenditure or capitalizing it as an exploration and evaluation asset. It further indicates that in making this determination, an entity considers the degree to which the expenditure can be associated with finding specific mineral resources. In line with the Company’s accounting policy, all exploration and evaluation expenditure, prior to obtaining the legal rights to explore a specific area, is recognized in profit or loss until the viability of the mining venture has been proven. After the legal rights to explore are obtained, exploration and evaluation expenditure is capitalized when it relates directly to a |
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| specific identifiable mineral asset which is assessed on a project-by-project basis. Therefore the Company respectfully submits that the chosen accounting policy results in relevant and reliable information. As discussed in our response to Staff comment 3, we will expand in future filings ourexploration and evaluation assets accounting policy; and |
| c) | Exploration and evaluation expenditure capitalized as of December 31, 2014 and 2013 was R1,885.0 million and R244.3 million, respectively. As discussed in our response to Staff comment 3, we will expand theexploration and evaluation assets accounting policy andproperty, plant and equipmentdisclosure to includeexploration and evaluation assetsas a separate class of property, plant and equipment, as these costs are tangible in nature. |
Mining exploration, page 197
| 3 | Please expand your accounting policy in future filings to explicitly state whether you have capitalized mining exploration expenditure under the IFRS 6 provisions. If yes, please disclose the amounts capitalized at each of the reporting date. In your response, please provide us with draft disclosure to be included in future filings. |
Response
The Company acknowledges the Staff’s comment and respectfully submits that the Company will expand in future filings theexploration and evaluation assets accounting policy andproperty, plant and equipment disclosure. If the Company had included such disclosure for the purpose of its 2014 Form 20-F, the proposed disclosure would have read as follows:
“Exploration and evaluation expenditure
All exploration and evaluation expenditure, prior to obtaining the legal rights to explore a specific area, is recognized in profit or loss. After the legal rights to explore are obtained, exploration and evaluation expenditure, comprising the costs of acquiring prospecting rights and directly attributable exploration expenditure, is capitalized as a separate class of property, plant and equipment or intangible assets, on a project-by-project basis, pending determination of the technical feasibility and commercial viability.
The technical feasibility and commercial viability of extracting a mineral resource is considered to be determinable through a feasibly study and when proven reserves are determined to exist. Upon determination of proven reserves, exploration and evaluation assets attributable to those reserves are first tested for impairment and then reclassified from exploration and evaluation assets to another appropriate class of property, plant and equipment. Subsequently, all cost directly incurred to prepare an identified mineral asset for production is capitalized to mine development assets. Amortization of these assets commences once these assets are available for use, which is expected to be when the mine is in commercial production. These assets will be measured at cost less accumulated amortisation and impairment losses.”
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Figures in million – SA rand | Total | Mine development, infrastructure and other | Land, mineral rights and rehabilitation | Exploration and evaluation assets | ||||||||||||
31 December 2014 | ||||||||||||||||
Cost | ||||||||||||||||
Balance at beginning of the year | 43,970.8 | 42,362.5 | 1,364.0 | 244.3 | ||||||||||||
Additions | 3,250.8 | 3,231.2 | 1.1 | 18.5 | ||||||||||||
Change in estimates of rehabilitation assets | 131.5 | — | 131.5 | — | ||||||||||||
Disposals | (68.1 | ) | (66.1 | ) | (2.0 | ) | — | |||||||||
Assets acquired on acquisition of subsidiaries | 7,119.9 | 3,110.0 | 2,387.7 | 1,622.2 | ||||||||||||
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Balance at end of the year | 54,404.9 | 48,637.6 | 3,882.3 | 1,885.0 | ||||||||||||
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Accumulated depreciation | ||||||||||||||||
Balance at beginning of the year | 28,819.8 | 27,942.0 | 877.8 | — | ||||||||||||
Amortization and depreciation | 3,254.7 | 3,054.0 | 200.7 | — | ||||||||||||
Impairment | 155.5 | 155.5 | — | — | ||||||||||||
Reversal of impairment | (474.1 | ) | (448.1 | ) | (26.0 | ) | — | |||||||||
Disposals | (55.0 | ) | (53.2 | ) | (1.8 | ) | — | |||||||||
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Balance at end of the year | 31,700.9 | 30,650.2 | 1,050.7 | — | ||||||||||||
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Carrying value at end of the year | 22,704.0 | 17,987.4 | 2,831.6 | 1,885.0 | ||||||||||||
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Figures in million – SA rand | Total | Mine development, infrastructure and other | Land, mineral rights and rehabilitation | Exploration and evaluation assets | ||||||||||||
31 December 2013 | ||||||||||||||||
Cost | ||||||||||||||||
Balance at beginning of the year | 41,362.3 | 39,593.4 | 1,524.6 | 244.3 | ||||||||||||
Additions | 2,901.5 | 2,901.5 | — | — | ||||||||||||
Change in estimates of rehabilitation assets | (160.6 | ) | — | (160.6 | ) | — | ||||||||||
Disposals | (15.2 | ) | (15.2 | ) | — | — | ||||||||||
Loss of control of subsidiary | (117.2 | ) | (117.2 | ) | — | — | ||||||||||
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Balance at end of the year | 43,970.8 | 42,362.5 | 1,364.0 | 244.3 | ||||||||||||
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Accumulated depreciation | ||||||||||||||||
Balance at beginning of the year | 24,986.2 | 24,238.0 | 748.2 | — | ||||||||||||
Amortization and depreciation | 3,103.9 | 3,018.7 | 85.2 | — | ||||||||||||
Impairment | 821.0 | 776.6 | 44.4 | — | ||||||||||||
Disposals | (13.8 | ) | (13.8 | ) | — | — | ||||||||||
Loss of control of subsidiary | (77.5 | ) | (77.5 | ) | — | — | ||||||||||
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Balance at end of the year | 28,819.8 | 27,942.0 | 877.8 | — | ||||||||||||
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Carrying value at end of the year | 15,151.0 | 14,420.5 | 486.2 | 244.3 | ||||||||||||
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Supplemental Information
Pursuant to a request from the Staff, the Company hereby acknowledges (i) it is responsible for the adequacy and accuracy of the disclosure in the filing, (ii) Staff comments or changes to disclosure in response to Staff comments do not foreclose the Commission from taking any action with respect to the filing and (iii) it may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.
*****
Should you or the Staff have any questions or require any additional information, please contact the undersigned at 011 27 11 278 9699 or via e-mail at charl.keyter@sibanyegold.co.za.
Sincerely,
/s/ Charl Keyter
Charl Keyter
Chief Financial Officer
Sibanye Gold Limited
| cc: | Suying Li, Securities and Exchange Commission |
| Angela Lumley, Securities and Exchange Commission |
| Hartley Dikgale, Sibanye Gold Limited |
| Thomas B. Shropshire, Jr., Linklaters LLP |
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