South African Mining: THE VALUATION RESET

Research evidence excerpt

South African Mining: THE VALUATION RESET

earnings and price target revisions

Across our coverage, price target revisions reflect a combination of updated commodity

price assumptions, the resulting changes to earnings forecasts and, where appropriate,

more conservative valuation multiples as the broad sector re-rating has unwound. While

price targets have generally moved lower, the relative contribution from earnings and

valuation differs by company depending on commodity exposure, operational leverage

and asset quality. Our ratings remain unchanged, as we believe recent share price

weakness has already priced in much of the weaker macro sentiment.

PGMs

We reduce our PGM basket assumptions following weaker platinum, palladium and

rhodium price expectations, resulting in lower earnings forecasts across the sector.

While we remain constructive on the medium-term supply-demand outlook, we believe

investors are likely to require clearer evidence of improving end-market demand before

awarding higher valuation multiples. Consequently, we maintain a disciplined valuation

framework despite attractive long-term fundamentals.

Valterra: Price target reduced primarily on lower earnings forecasts. We retain our

5.8x EV/EBITDA valuation multiple, reflecting confidence in operational execution

and improving returns.

Implats: Lower commodity assumptions reduce earnings expectations, and our

valuation multiple is reduced from 3.2 to 3.0x EV/EBITDA, reflecting greater

uncertainty around excess cash returns to shareholders against the continued

macro uncertainty.

Northam: Lower platinum forecasts reduce medium-term earnings while its

higher leverage to platinum supports a a reduced 4.2x EV/EBITDA multiple.

Sibanye: Price target declines reflect both weaker earnings and a more cautious