Sibanye Gold Ltd., the South African miner spun off from Gold Fields Ltd. this year, will acquire a majority stake in Gold One International Ltd.’s Cooke operations to expand production by mining ore dumps.
Sibanye will hand new shares accounting for 17 percent of its total stock to Gold One, it said today in a statement. The 150 million shares to be issued were valued at about 1.5 billion rand ($148 million) at yesterday’s close in Johannesburg.
Gold companies in the nation, where output has shrunk about 60 percent since 2001, are seeking new ways to boost volumes and profits. By using machines rather than workers to mine dumps at Cooke, which includes discarded ore from the Kloof-Driefontein complex, Sibanye can increase production at lower risk and cost.
“Driefontein-Kloof are some of the biggest gold mines there have ever been,” James Wellsted, director of corporate affairs at the Westonaria-based company, said today by phone. The acquisition may create the largest ore-dump mining facility in South Africa, he said.
Sibanye rose as much as 7.2 percent to 10.64 rand in Johannesburg trading, the highest intraday price in 10 weeks, and was at 10.32 rand as of 11:51 a.m. local time. Gold One, 90 percent-owned by a group of Chinese investors known as the BCX Consortium, traded up 23 percent at 2.34 rand.
The purchase will raise Sibanye’s annual output by 260,000 ounces for the next five years, according to the company, which produced 656,300 ounces in the first half. The acquisition will generate 645 million rand of free cash flow in 2014 and 949 million rand by 2016, based on gold at 425,000 rand a kilo, the statement showed. It will also provide uranium as a byproduct.