Johannesburg - Sibanye Gold on Friday said it might raise as much as $1.3billion (R17.21bn) to partly fund its planned takeover of US-based platinum and palladium miner Stillwater Mining.
When it announced the deal in December last year, Sibanye said it would raise a minimum of $750million. But in a statement on Friday the gold producer said it had decided to raise the amount after taking into consideration the strong rand environment, spot precious metals prices and in response to feedback from certain shareholders regarding the impact of these on the availability of the company to achieve a more desirable financial leverage ratio.
“While the amount is still to be finalised and is subject to then prevailing market conditions, exchange rates, commodity prices and further engagement with our shareholders, Sibanye believes that increasing the equity component would be prudent in the current strong rand environment, allowing the company to maintain a strong balance sheet,” Sibanye said.
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The deal will give Sibanye access to a portfolio of low-cost assets with growth potential. When it announced the deal in December, Sibanye said the transaction would enhance its asset base by, adding two low-cost, low-risk, steady state producing platinum group metals mines to its portfolio as well as improve its cash flow.
The company said, despite the sustained US dollar strength last year, the palladium price had continued its upward trajectory from $500 per ounce in January 2016 to more than $700 per ounce in January 2017. Stillwater’s platinum group metals reserves comprise approximately 78percent palladium, Sibanye said.
Sibanye Gold shares on the JSE fell 3.69percent on Friday to close at R30 a share.