Sibanye eyes Amplats mines

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Neal Froneman Independent Newspapers. Sibanye Gold chief executive Neal Froneman. Photo: Simphiwe Mbokazi.

Johannesburg - Sibanye Gold remains on the hunt for a platinum asset and has Anglo American Platinum's (Amplats) mines in its sights, ready to make a move if the owner decides on either a straight sale or a separate listing for the assets.

Sibanye has emerged as the front-runner in any race to acquire the slate of mines Amplats has said it plans to sell in its drive to recover from a five-month wage strike and shift towards more mechanised mining.

Speaking on Thursday after unveiling interim results, Sibanye chief executive Neal Froneman said the Amplats mines would not only fit his strategy but also dove-tail with calls by the ruling ANC for a South African buyer to step forward.

“We have clearly put our hands up to be the South African mining champion as we believe is supported by the African National Congress (ANC),” Froneman told Reuters in an interview.

The ANC said this week it preferred a local company to buy mines being sold by Amplats but that it would not influence the deal.

A unit of global mining house Anglo American, Amplats has said it plans to sell its Rustenburg operations, which were at the epicentre of the five-month, industry-wide strike, as well as its Union mine and a joint venture.

Some analysts have said the Rustenburg mines and the Union mine could together be worth between $1 billion (R11 billion) and $2 billion, but others have said the baggage they bring including labour tensions make them almost worthless.

The majority union at the labour-intensive mines is the hardline Association of Mineworkers and Construction Union (Amcu), which led this year's massive strike that was the longest and costliest in South African history.

 

LISTING OR SALE?

Amplats has said a straight sale is its preference, but it could also unbundle the assets into a separate listing.

Froneman said either would be fine by Sibanye, itself a spin-off from Gold Fields.

“Either way we see an opportunity and we remain interested. At the right price they are definitely assets that fit into our strategy,” he said.

But he also said the process might take longer than he originally hoped after Anglo Amercian's chief executive said last week it may be too optimistic to expect a sale of its South African platinum assets by 2015.

Froneman has looked at other platinum assets owned by other companies, but will not be drawn on their identity.

“We have looked at five platinum opportunities. We have walked through the front door and engaged with management.”

Sibanye's first-half earnings fell by 27 percent but it tried to placate investors with an interim dividend of 50 cents, in line with its policy of giving cash back to shareholders.

Its shares initially climbed over 3 percent, before sliding into negative territory in late trade, in line with its peers as bullion's spot price remained pinned below $1,300.

Normalised earnings per share for the six months ended 30 June 2014 declined to 138 cents per share from 190 cents but the company lifted its interim dividend by a third.

“Based on the total number of shares in issue this dividend is equivalent to 42 percent of normalised earnings, which is above the 25 percent to 35 percent range defined in Sibanye's dividend policy,” the company said.

Sibanye's shares have more than doubled this year, outpacing an 11 percent rise in Johannesburg's All-share index.

Sibanye has cast itself as a dividend play as it produces bullion from mature, deep-level mines nearing the end of their life which will not require massive levels of capital. Its dividend yield is 4.4 percent, according to Reuters' data.

Froneman said the company's high dividend policy would not be compromised by buying into platinum.

“In the medium to long term it has to impact positively on the dividend, otherwise we wouldn't do it. It's as simple as that,” Froneman said. - Reuters



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