Sibanye to Buy Highest-Grade Platinum Deposit for $2.2 Billion

  • South African miner to purchase Montana-based Stillwater
  • Purchase price is more than Sibanye $1.9 billion market value

Sibanye Gold Ltd. agreed to pay more than its market value for Stillwater Mining Co. in a $2.2 billion deal that would see the South African miner take charge of the world’s highest-grade deposit of platinum-group metals.

Sibanye will pay $18 a share in cash, a 20 percent premium to the Montana-based miner’s volume-weighted average closing share price over the past 20 days, the South Africa-based company said in a statement Friday. The acquisition exceeds Sibanye’s market value of $1.9 billion.

The producer will fund the purchase through $2.7 billion in loans from Citigroup Inc. and HSBC Holdings Plc and will pay back $500 million of Stillwater’s convertible debt. The company will also raise at least $750 million in a share sale.

Sibanye Chief Executive Officer Neal Froneman has sought to expand beyond the company’s base of aging South African gold mines and last year agreed to buy platinum assets from Anglo American Platinum Ltd. and Aquarius Platinum Ltd. The Stillwater purchase is his biggest yet and first outside of South Africa. The Stillwater board has accepted the offer and recommends it to shareholders.

Stillwater’s two mines in Montana are the only platinum-group metals operations in the U.S. and the biggest producer of these outside of South Africa and Russia. The mines will produce 535,000 to 545,000 ounces of platinum and palladium in 2016 at a cash cost of $430 to $455 an ounce. Platinum dropped 0.2 percent to $936.32 an ounce at 6:20 a.m. in London.

“The transaction represents a unique opportunity for Sibanye to acquire high-quality, low-cost PGM assets which offer near-term organic growth,” Froneman said in the statement. The purchase will underpin the “strategy of paying sustainable, industry-leading dividends.”

Sibanye shares more than tripled in 2016 to a record-high 72.48 rand on Aug. 5, with Froneman saying earlier this year he would consider using the high stock price to make acquisitions. Since then, the stock has tumbled 61 percent to 28.35 rand.

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