Sibanye Gold will pay between R4.5-billion and R20-billion for the first of four unwanted assets Anglo American Platinum (Amplats) put up for sale‚ saving jobs and extending the life of a mine the world’s largest platinum miner would not invest in any more.
Sibanye was the frontrunner in the bid for the three Rustenburg mines‚ two concentrators‚ a chrome recovery plant and tailings treatment operations.
It agreed to pay R1.5-billion upfront in cash or shares and then a deferred payment of a minimum of R3-billion from 35% of annual free cash-flows over six years. The payment was capped at R20-billion.
Amplats had a net asset value on the assets of R7.7-billion‚ but talks moved away from a “value transaction” because both sides had “such divergent views of the market” and talks switched‚ Sibanye chief executive Neal Froneman said.
The Rustenburg assets would be a platform for further consolidation in the platinum sector to reassure both that this was a sound transaction‚ he said‚ adding there were no plans to cut jobs at the operations.
If the assets had negative cash-flows, Amplats would pay Sibanye up to R267-million a year for three years to allow it to maintain capital expenditure plans to keep output steady at about 500000oz of platinum a year or 800000oz of four platinum group elements.
The cash from Amplats would also protect Sibanye’s ability to pay dividends‚ a non-negotiable for the company‚ Froneman said.
“This is a very cleverly structured deal. Well done on that‚” Citi analyst Johan Steyn said.
One of the key risks was securing approval from the Department of Mineral Resources. A source close to the deal cited its record in the 14-month wait for the transfer of mines from Total to Exxaro and the repeated delays that caused a deal between Aquarius and a Chinese company to collapse.
On Wednesday night, Mineral Resources Minister Ngoako Ramatlhodi said the details of the deal, including structure‚ financing and beneficiaries had not yet been communicated to the department and both companies still needed to engage with it.
Sibanye has spoken to the ANC and the department about the transaction and believes a 26% empowerment transaction it would put in place and vendor finance, would help secure approval‚ Froneman said.
The empowerment transaction would include employees‚ communities‚ Royal Bafokeng Holdings and the Bakgatla-Ba-Kgafela traditional community.
There were other bidders for the assets‚ some with higher offers‚ but South Africa’s largest gold producer ticked more of the boxes around experience‚ sustainability of the mines and social and labour objectives.
Sibanye said it would spend up to R1.4-billion a year for about five years at Rustenburg‚ with about half of that going towards developing new mining areas. — BDLive
'Clever' Sibanye lands first platinum asset
Sibanye was the frontrunner in the bid for the three Rustenburg mines‚ two concentrators‚ a chrome recovery plant and tailings treatment operations.
It agreed to pay R1.5-billion upfront in cash or shares and then a deferred payment of a minimum of R3-billion from 35% of annual free cash-flows over six years. The payment was capped at R20-billion.
Amplats had a net asset value on the assets of R7.7-billion‚ but talks moved away from a “value transaction” because both sides had “such divergent views of the market” and talks switched‚ Sibanye chief executive Neal Froneman said.
The Rustenburg assets would be a platform for further consolidation in the platinum sector to reassure both that this was a sound transaction‚ he said‚ adding there were no plans to cut jobs at the operations.
If the assets had negative cash-flows, Amplats would pay Sibanye up to R267-million a year for three years to allow it to maintain capital expenditure plans to keep output steady at about 500000oz of platinum a year or 800000oz of four platinum group elements.
The cash from Amplats would also protect Sibanye’s ability to pay dividends‚ a non-negotiable for the company‚ Froneman said.
“This is a very cleverly structured deal. Well done on that‚” Citi analyst Johan Steyn said.
One of the key risks was securing approval from the Department of Mineral Resources. A source close to the deal cited its record in the 14-month wait for the transfer of mines from Total to Exxaro and the repeated delays that caused a deal between Aquarius and a Chinese company to collapse.
On Wednesday night, Mineral Resources Minister Ngoako Ramatlhodi said the details of the deal, including structure‚ financing and beneficiaries had not yet been communicated to the department and both companies still needed to engage with it.
Sibanye has spoken to the ANC and the department about the transaction and believes a 26% empowerment transaction it would put in place and vendor finance, would help secure approval‚ Froneman said.
The empowerment transaction would include employees‚ communities‚ Royal Bafokeng Holdings and the Bakgatla-Ba-Kgafela traditional community.
There were other bidders for the assets‚ some with higher offers‚ but South Africa’s largest gold producer ticked more of the boxes around experience‚ sustainability of the mines and social and labour objectives.
Sibanye said it would spend up to R1.4-billion a year for about five years at Rustenburg‚ with about half of that going towards developing new mining areas. — BDLive
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