Amplats put its Rustenburg and Union mining operations up for sale as it focused on its shallower, lower-cost and more mechanised assets.
Sibanye CEO Neal Froneman has openly spoken of wanting to buy platinum group metal (PGM) assets and that the company, which operates four underground gold mines in Gauteng and the Free State, was in talks with Amplats.
"We have for some time indicated our interest in participating in the PGM sector and believe that these assets provide an attractively priced entry at an advantageous moment in the price cycle," Mr Froneman said on Wednesday.
The mines and concentrators give Sibanye 800,000oz of four PGMs a year and a resource of more than 88-million ounces of PGMs.
"The Rustenburg operations are quality assets with long-term and sustainable potential under Sibanye's control, given their proven and successful track record of operating conventional mines in SA," said Amplats CEO Chris Griffith.
Sibanye will pay R1.5bn upfront in either cash or the issue of Sibanye shares. A deferred payment will be calculated as 35% of annual free cash generated by the Rustenburg assets over a six-year period, with a floor of R3bn.
Up to the end of December 2018, Sibanye will sell all concentrate to Amplats and then for eight years after that it will toll-treat its concentrate with Amplats, giving Sibanye access to its own metal to market and sell.
Sibanye will vendor finance the entrance of black economic empowerment partners to acquire 26% of the Rustenburg assets. The partners will include employee and community trusts, Royal Bafokeng Holdings and the Bakgatla-Ba-Kgafela Traditional Community.
Source: BDpro
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