Johannesburg - Sibanye Gold looks set to make its second platinum play after Aquarius Platinum’s board on Tuesday recommended shareholders vote in favour of Sibanye’s all cash $294 million offer for the listed platinum miner.
Aquarius chairman Sir Nigel Rudd says the offer is “fair and reasonable and in the best interests of Aquarius’ shareholders and subject to no superior proposal emerging”.
Sibanye’s offer, worth around R4 billion, comes less than a month after Sibanye put R4.5 billion on the table to buy Anglo American Platinum’s Rustenburg Platinum Mines unit.
That deal was set to turn Sibanye into the world’s eighth largest platinum producer. At the time, the listed miner - which has previously focused on gold - noted it had been keen to move into the platinum group metals sector.
Commodities are currently under the whip and miners have been cutting their losses by trimming workforces. The route seems set to continue plaguing miners with several large banking groups this morning warning that the fall off in price was set to continue.
Step forward
In a statement to shareholders on Tuesday, announcing the deal, Sibanye CEO Neal Froneman says the acquisition is “an important strategic step for Sibanye, which we are confident will result in the realisation of substantial value for stakeholders. Simultaneously Aquarius shareholders realise an attractive cash premium for their current equity holdings”.
The company says Aquarius’ well managed, low cost, mechanised operations will enhance its asset portfolio and value.
“Importantly though, significant additional value can be realised by optimising inherent regional and operational synergies between Aquarius’ Kroondal mine and the adjacent Rustenburg Operations, which Sibanye is in the process of acquiring from Anglo American Platinum.”
Aquarius currently has two properties that are producing platinum group metals: Kroondal and Mimosa. Its CTRP property was placed under care and maintenance in August 2012 because of the “continuing challenging operating and economic conditions in the PGM industry”.
Earlier this month, the platinum miner said it had received approval to transfer its rights over its Everest mine to Northam Platinum. Aquarius is selling its stake in Everest to Northam for R450 million.
Attractive stake
Sibanye says buying Aquarius will give it access to a mechanised operation that will also provide an entry point to Zimbabwe, which hosts the second-largest platinum reserves in the world and represents significant, low cost optionality.
It expects the benefits to include cost savings and efficiencies as it rationalises shared operations, optimises surface infrastructure and removes traditional lease boundaries, which will lead to “optimal use of existing underground infrastructure and improved operational planning”.
“The Aquarius operations are efficiently managed, mechanised and low-cost operations that will consolidate Sibanye’s position in the South African PGM sector and also provide Sibanye with additional PGM operational experience.”
Notes Froneman: “The transaction is value-accretive, adding low cost and cash generative operations to Sibanye’s asset portfolio.
Froneman adds the premium on the share price, as the offer is at R2.66 per share and 56 percent higher than yesterday’s close, is justified because there is “very significant potential to realise additional value”.
The deal is subject to customary conditions and is expected to close in the first quarter of 2016.
IOL