Gold Fields Spinoff Sibanye Advances on First Day of TradingPaul Burkhardt
Sibanye Gold Ltd., the South African mining company spun off from Gold Fields Ltd., rose on its first day of trading in Johannesburg.
The stock closed at 13.56 rand, giving the company a market value of 9.9 billion rand ($1.1 billion). The price compares with the opening trade of 13.20 rand, according to data compiled by Bloomberg. The FTSE/JSE Africa Gold Mining Index fell 1.2 percent.
Gold Fields on Nov. 29 said it would place its deeper, more labor-intensive South African mines into Sibanye. The company is partly reacting to strikes that began in the country’s platinum industry before spreading to other operations. About 29,000 workers at mines that will be part of Sibanye walked out last year, winning pay gains that added to rising power costs and capital spending.
“We would’ve hoped for it to come in a little higher,” James Wellsted, a senior vice president of corporate affairs for Sibanye, said by phone. “There is a bit of uncertainty by international investors.”
Sibanye shares are worth 10 rand to 15 rand, David Davis, a Johannesburg-based mining analyst at SBG Securities Ltd., said by phone today. AngloGold Ashanti Ltd. and Harmony Gold Mining Co. also have mature assets and may follow a similar model to Gold Fields by unbundling, selling off or downsizing the operations to preserve value, Davis said.
“We could expect possibly the indication of a realignment of structures in production,” he said.
South Deep, a mechanized operation and the company’s second-biggest mine, along with facilities in Peru, Ghana and Australia, will remain within Gold Fields.
Employees who are members of the National Union of Mineworkers on Feb. 8 marched to Gold Fields’ Libanon mine in Carletonville, west of Johannesburg, to protest against the spinoff and to demand that management stop transferring workers between operations.
Sibanye, which will be the biggest South African producer of bullion after AngloGold, will comprise the KDC and Beatrix mines. Neal Froneman, the former chief executive officer of Gold One International Ltd., Goliath Gold Mining Ltd. and Uranium One Inc., is CEO.
The shares also make their debut on the New York Stock Exchange today. Investors in Gold Fields, now the fourth-largest producer of the metal, on Feb. 18 will receive one Sibanye share for each Gold Fields security, or one Sibanye American depositary receipt for every four in Gold Fields.
Gold Fields CEO Nick Holland said the company plans to concentrate on production costs and that dividends will have prority on cash flows.
“It is our intention to pay out 25-35 percent of normalized earnings,” he said in a statement today.
Gold Fields shares, adjusted for the Sibanye spinoff, declined 1.4 percent to 91.50 rand in Johannesburg. Gold retreated for a third day, losing 1 percent to $1,650.88 an ounce.