By Clara Denina and Tanisha Heiberg
JOHANNESBURG, April 7 (Reuters) – Treasured metals miner Sibanye-Stillwater SSWJ.J is on the centre of deal talks within the gold sector however it might see its need to create a South African gold champion thwarted
as friends minimize publicity to the nation.
Sibanye CEO Neal Froneman, 61, final month floated the concept of a merger with Johannesburg-listed AngloGold Ashanti ANGJ.J and Gold Fields GFIJ.J, arguing consolidation is required for the nation’s gold miners to compete globally.
Hypothesis has mounted that Sibanye, the world’s greatest platinum producer, might bid for one or each of its South Africa-listed friends with some belongings probably being hived off to a 3rd get together.
Each AngloGold and Gold Fields have shed most of their South African belongings to deal with greater returns elsewhere as mining firms battle with rising prices, unstable labour relations and energy disruptions. Gold Fields retains one mine, South Deep.
A Sibanye spokesman stated the miner is fascinated with a mid-tier gold firm with greater than 1 million ounces in annual output and operations exterior South Africa.
He declined to touch upon whether or not it was already in talks with any firms.
With a market worth of 195 billion rand ($13.39 billion) Sibanye, which will get lower than 20% of its earnings from gold at present, needs to draw a broader shareholder base.
“You are able to do 10 small transactions however that is most likely going to take you 10 years. Or you could possibly do one or two giant transactions and considerably improve your dimension and grow to be related,” Froneman stated final month at a mining roundtable.
Sibanye has lengthy needed to spice up its gold publicity exterior South Africa, the place declining grades and chronic energy outages pose challenges.
Hovering platinum, rhodium and palladium costs have boosted its coffers and helped its share value outpace friends <<https://tmsnrt.rs/3sY2HV3>>
Froneman, nicknamed “Mr Repair-It” for his profitable turnarounds within the Nineteen Nineties, is a veteran dealmaker however some bankers and analysts stated a deal wouldn’t maintain a lot worth for both AngloGold or Gold Fields.
“There’s solely South African belongings in Sibanye on the gold aspect and (the 2 miners) have spent the final 10 years getting out of South Africa,” stated Rene Hochreiter, mining analyst at NOAH Capital Markets.
With an interim CEO since Kelvin Dushnisky stepped down at AngloGold final yr and Chris Griffith taking the highest spot at Gold Fields solely this month, each firms have appeared susceptible to a takeover, because the variety of top-tier belongings obtainable grows skinny.
The resignation final month of Gold Fields board member Rick Menell, who can be an unbiased non-executive director on Sibanye’s board, has additional stoked hypothesis of a tie-up between the 2 firms.
AngloGold stated it was centered on its natural development technique whereas Gold Fields declined to remark.
“Except he is available in with an all-cash proposal, which is extremely unlikely, shareholders at both of the 2 firms won’t be simply satisfied by the rationale of being taken over by Sibanye, which is to begin with a South African miner,” a banking supply stated.
The worth of mining sector M&A bounced again within the second half of 2020, pushed by greater gold costs, in line with S&P Global Market Intelligence.
Increased gold costs XAU= in 2020 additionally helped Sibanye pay down debt after a spate of acquisitions together with a 2019 takeover of London-listed Lonmin.
Sibanye, which was fashioned when Gold Fields spun off a few of its belongings in 2013, usually invests in a counter-cyclical approach and is betting that gold costs will proceed to retreat from 2020 highs as COVID-19 vaccines increase financial development, Froneman stated in a Kitco Information interview final month.
The miner, which additionally needs to amass extra battery metals belongings, was rumoured final yr to be in talks to purchase Canadian gold miner Kinross Gold Corp Ok.TO.
On the time, Froneman stated the excessive gold value meant any offers wouldn’t make industrial sense.
A profitable mega-merger would cement his repute as a savvy dealmaker as he nears retirement.
“Neal has tried to place himself because the champion of the mining trade in South Africa,” an trade lawyer stated.
“It is a sublime exit for him.”
($1 = 14.5639 rand)
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(Reporting by Tanisha Heiberg and Helen Reid in Johannesburg, Jeff Lewis in Toronto and Clara Denina in London, Writing by Tanisha Heiberg; Enhancing by Emelia Sithole-Matarise)
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