Sibanye Gold to Buy Miner Aquarius Platinum for $294 Million

  • Offer follows deal to buy Anglo American assets in S. Africa
  • Aquarius' biggest shareholder Investec opposed to takeover

Sibanye Gold Ltd., the largest miner of bullion in South Africa, agreed to buy Aquarius Platinum Ltd. for $294 million, further increasing its exposure to the precious metal following its agreement to buy some Anglo American Platinum Ltd. assets in the country last month.

The company will offer $0.195, or 2.66 rand, a share for Aquarius, Sibanye said in a statement on Tuesday. While Aquarius’ board has recommended shareholders vote in favor of the offer, Investec, the company’s biggest investor, said it opposes the deal. The platinum miner’s shares rose 37 percent to 2.32 rand in Johannesburg.

Aquarius’ main operating asset is the Kroondal venture with Anglo Platinum near Rustenburg, about 140 kilometers (87 miles) north-west of Johannesburg. That’s close to the assets that Sibanye agreed to buy from the world’s largest platinum producer for at least $331 million on Sept. 9. Aquarius also owns a stake in the Mimosa venture in Zimbabwe with Impala Platinum Holdings Ltd.

“Rustenburg was just the first step and that consolidation in the industry was necessary for long-term survival and value-creation,” Sibanye Chief Executive Officer Neal Froneman said by phone. “We always had this as a second step, we were always clearly well advanced as we were doing Rustenburg.”Sibanye shares gained 10 percent to 19.74 rand, the highest since July 16, valuing the miner at 18.1 billion rand.

Sibanye shares gained 10 percent to 19.74 rand, the highest since July 16, valuing the company at 18 billion rand.

“The problem was always would Aquarius be able to do a deal with Sibanye, now that Sibanye has got the Rustenburg assets?,” Rene Hochreiter, an analyst at Noah Capital Markets Pty Ltd. in Johannesburg, said by phone, referring to the deal with Anglo Platinum. “Froneman is probably quite smart to get rid of that little problem.”

Aquarius, listed in Sydney, London and Johannesburg, had slumped by 96 percent in value from its record high in May 2008, when its market value was A$5.3 billion, as of the market close on Monday. The price of platinum declined 57 percent in the period. Aquarius will come with $72 million cash after debt payments, Froneman said.

Sibanye is expanding into platinum to boost long-term cash flow to sustain its dividend. The company’s yield is 6.25 percent, the highest among the 15-member Bloomberg Intelligence Senior Gold Valuation Peers gauge.

Dividend Payments

The company was created as a spin out of three aging South African gold mines from Gold Fields Ltd. in 2013. Froneman has boosted output while lowering costs, allowing him to pay a dividend even though the gold price has tumbled 31 percent since Sibanye began trading.

His foray into platinum allows him to replace the company’s reserves of precious metals, cash from which would otherwise begin to decline from 2018.

HSBC Holdings Plc was the sole acquisition adviser to Sibanye and provided a $300 million bridge loan facility to fund the deal.

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