Sibanye Gold Acquiring Stillwater Mining in $2.2B Cash Deal

Stillwater Mining extracts platinum group metals from the J-M Reef in south-central Montana.
Sibanye Gold has agreed to acquire Stillwater Mining in a cash transaction valued at about $2.2 billion. Sibanye is headquartered in South Africa and is that nation’s largest producer of gold from domestic mines. The company has recently expanded into production of platinum group metals (PGM) through the acquisition of mining assets. Stillwater is the only U.S. miner of platinum group metals, with two mines and a metallurgical processing complex in south-central Montana.

Implementation of the transaction is subject to Stillwater and Sibanye shareholder approvals, as well as applicable regulatory approvals in the United States and South Africa. Sibanye has secured bridge financing of $2.7 billion provided by Citigroup Global Markets Ltd. and HSBC Bank to fund the transaction and repay certain existing indebtedness of Stillwater.

The companies expect the transaction to close in the second quarter of 2017. Assuming completion of the transaction, it will be Sibanye’s third major acquisition of PGM assets in a little more than a year. In early October 2015, the company announced a $294 million cash offer for Aquarius Platinum, following up on an agreement announced a month earlier to acquire the Rustenburg mining operations of Anglo American Platinum (Amplats) on the Western Limb of South Africa’s Bushveld Complex in a transaction valued at about $326 million.

The Aquarius transaction closed April 12. The Rustenburg transaction was effective November 1. Sibanye’s announcement stated that the Stillwater transaction is strategically compelling in that it expands the company’s PGM portfolio with Stillwater’s highgrade reserves, which currently support more than 25 years of mine life, while also providing near-term, organic, lowcost growth through Stillwater’s Blitz project. Furthermore, the extensive strike length of the mineralized J-M Reef, which hosts the Stillwater mines, suggests there may be upside exploration potential.

Also, Stillwater’s Columbus metallurgical complex will provide Sibanye with a “mine-to-market” PGM business, while its sizeable recycling operations, which recover PGMs from spent catalytic converters and other industrial sources, will provide a steady margin and strategic market insight.

“This transaction balances Sibanye’s portfolio operationally and geographically with the addition of a world-class operation in an attractive mining jurisdiction,” said Sibanye CEO Neal Froneman. “We have been most impressed with the workforce at Stillwater and look forward to the opportunity of working with them. We believe that our two organizations have a strong cultural fit, with mutual priorities of employee health and safety, the environment, and the communities in which we operate.”

As featured in Womp 2017 Vol 12 -