Sibanye revises historic Lonmin B-BBEE structure to benefit its shareholders
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JOHANNESBURG - SIBANYE-Stillwater, the world’s leading platinum group metals (PGMs) producer, has revised Lonmin’s historic broad-based black economic empowerment (B-BBEE) structure as the wave of strong prices continues to boost the fortunes of the Marikana operations.
Sibanye, which took over bankrupt Lonmin in 2019, said under the new structure, Marikana empowerment shareholders would benefit from a 10 percent trickle dividend in spite of inter-company debt as well as the creation of a sustainable empowerment structure for Marikana.
Sibanye spokesperson James Wellsted said the Marikana B-BBEE shareholders were getting no financial benefit for their shareholding prior to the restructuring and now would be getting economic benefits.
“We have restructured the amount of money owed by the B-BBEE group in agreement with them and we agreed on a fair value of their stake. We have also introduced a 10 percent trickle dividend,which means that even while there is still debt outstanding they will still receive cash flows each year, which was not the case before,” said Wellsted.
Sibanye has restructured the Lonmin business and closed older and loss-making shafts which has made the business a going concern, while the higher PGM prices have helped the business to make a lot of money. In February Sibanye also announced a R4 billion investment in extending the life of the K4 project previously owned by Lonmin.
“What we are doing is to change what has been a very tragic legacy at Marikana and all the issues that led to the Marikana tragedy in 2012, including the indebtedness and communities living in dire conditions, all of those things we are trying to address now,” said Wellsted.
More than 40 people died in midAugust 2012 in violent clashes between police and Lonmin mine workers during a wage strike.
Commenting on the restructuring, Sibanye’s chief executive, Neal Froneman, said the agreement with relevant shareholders ensured the real accruing value to the Marikana empowerment shareholders that was fair to all.
“The revised structure will allow for a sustainable capital structure for the Marikana B-BBEE shareholders, as well as immediate access to distributable cash flow and the ongoing transfer of tangible value,” said Froneman.
According to a report by Statistics South Africa (StatsSA) this week, PGMs had a strong run in 2020 and despite a 15 percent drop in production the PGM profit surged 40 percent due to higher prices. StatsSA also said in the report that for the first time in the last decade PGM sales had overtaken those of coal to become the most significant contributor to total mining industry sales reaching R190 billion in 2020, which was more than gold and iron ore sales combined.
On Tuesday, Froneman told the Denver Gold that the group would like to increase its gold portfolio.
“It will only work if the gold assets have an increase in geographical diversity. There is no point in buying assets if there was a predominance of assets in southern or central assets.
“We are not going to buy a company that increases the perception of risks,” said Froneman.
Sibanye-Stillwater closed 5.32 percent higher at R70.45 on the JSE yesterday.