PRECIOUS metals producer Sibanye-Stillwater’s shares leapt nearly 4 percent yesterday after the group told investors that the $1 billion (R14.74bn) acquisition of green metal assets in Brazil was value accretive to its cash flow and earnings.
In intraday trade, the share leapt to a high of R53.79 on the JSE, opening the day at R51.79, before closing at 53.12.
Sibanye-Stillwater said it had signed sale agreements with affiliates of funds advised by Appian Capital Advisory to acquire full ownership of the Santa Rita nickel and the Serrote copper mines in Brazil for $1bn. The company is also buying a 5 percent net smelter return royalty over potential future underground production at Santa Rita.
Chief executive Neal Froneman said yesterday that in addition to generating a strong return on investment based on current operations, there was substantial long-term upside from the potential development of the underground mine at Santa Rita, with this project to be studied and evaluated further over the next 18 months.
“The transaction represents a unique opportunity for Sibanye-Stillwater to acquire significantly pre-developed and pre-capitalised, low-cost, producing nickel and copper assets with strong environmental social and governance credentials, which will continue to be managed by a high-quality team with a wealth of operating experience in Brazil,” Froneman said.
The transaction is in line with Sibanye-Stillwater’s strategy to invest in future focused metals that are essential for the transition to a cleaner future.
Last month the company became Finnish lithium mining company Keliber Oy’s largest shareholder after acquiring a 27 percent stake in the company.
JSE- and New York-listed Sibanye-Stillwater also invested $490 million in a lithium mining project in Nevada, US, in a joint venture (JV) with Australia-listed ioneer.
The JV is developing the Rhyolite Ridge, a shallow lithium-boron deposit. Rhyolite Ridge is expected to be one of the first large-scale US lithium projects to enter production, currently anticipated in the second half of 2024.
Sibanye-Stillwater said the combined net asset value of Santa Rita and Serrote, in the accounts, as at the year ended December 2020 was $258m.
Sibanye-Stillwater, which is focused on its strategy to build an operating portfolio of green metals and related technologies, said this transaction was a further meaningful step, adding two low-cost, producing assets to its green metals portfolio.
“Both assets have been substantially pre-capitalised and, as a result, the transaction will be immediately accretive to Sibanye-Stillwater’s cash flow and earnings,” said Froneman.
The transaction is subject to regulatory approvals.
BUSINESS REPORT ONLINE