Sibanye Gold to Buy Aquarius Platinum for $294 Million -- Update
October 06 2015 - 4:16PM
Dow Jones News
By Alex MacDonald
LONDON--Sibanye Gold Ltd. (SGL.JO) said Tuesday it has offered
$294 million to buy South Africa's Aquarius Platinum Ltd (AQPTY) in
cash, making this the company's second big platinum bet in less
than a month as prices for the precious metal fall and costs
rise.
The deal would make South Africa's largest gold producer by
output also the world's fifth-largest platinum producer with annual
production of more than one million platinum equivalent ounces.
This would mark Sibanye's second platinum deal since Sept. 9
when it agreed to acquire the labor-intensive Rustenburg mine
operations from Anglo American PLC (AAL.LN) for at least 4.5
billion South African rand ($324 million).
Sibanye is delving into the platinum sector just as the industry
is due to brace for another round of potentially heated wage
negotiations next year. Last year, South Africa's platinum
companies suffered a five-month strike over wages and benefits that
crippled the country's platinum industry and dented its
economy.
Under the current deal, Aquarius shareholders will receive
$0.195 a share, or roughly 12.9 pence a share in cash, representing
a 60% premium to Aquarius's closing share price of GBP0.08 on
Monday, the trading day prior to the announcement.
The deal has been unanimously backed by Aquarius board and is
forecast to close in the first quarter of 2016, although it still
needs approval from Aquarius shareholders.
Aquarius's shares in London closed 37% higher at 11 pence share
on the news, while Sibanye's shares rose 10% to ZAR19.74 a
share.
For Sibanye, the deal gives the mining company access to two
low-cost mechanized mines in South Africa and Zimbabwe, the world's
top-two countries by platinum reserves. Sibanye said it remains
positive about the platinum market outlook over the long term
despite near-term uncertainty about pricing.
"We do think that PGM pricing headwinds may persist for slightly
longer period [but] that doesn't frighten us....Even with the
Volkswagen AG fallout...we will see an accelerated normalization of
inventory" as platinum demand grows and South African supply
remains restricted, said Neal Froneman, Sibanye's chief executive
in a call with analysts.
For Aquarius, the deal represents an exit from an industry whose
near-term prospects have worsened as a result of Volkswagen AG's
falsification of U.S. diesel-car emissions tests. This sent the
platinum price down to a near-seven year low last week as investors
fretted that diesel-car sales, a key driver behind platinum demand,
could ebb in the near term.
Mr. Froneman said his company should be able to extract notable
cost savings by combining Aquarius's Kroondal mine in South Africa
with the adjacent Rustenburg mine, thereby justifying the premium
offered for Aquarius.
The Aquarius deal would also give Sibanye a foothold in
Zimbabwe, which hosts the second-largest platinum reserves in the
world after South Africa.
"At higher platinum group of metal prices, these assets...offer
a substantial increase in earnings and value for Sibanye
shareholders," Mr. Froneman added.
Write to Alex MacDonald at alex.macdonald@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
October 06, 2015 16:01 ET (20:01 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
Aquarius Platinum (ASX:AQP)
Historical Stock Chart
From Aug 2024 to Sep 2024
Aquarius Platinum (ASX:AQP)
Historical Stock Chart
From Sep 2023 to Sep 2024