Sibanye-Stillwater nears New Century takeover
Sibanye-Stillwater is on the cusp of taking full ownership of New Century Resources after incrementally building up its stake in the Australian miner to just over 90%, a key threshold that makes it mandatory to buy out the remaining shareholders, as stipulated by Australia’s regulatory requirements.
Sibanye under CEO Neal Froneman has built a reputation for turning around underperforming mining assets. It is currently the world’s largest producer of platinum group metals, having begun its journey in 2013 as a gold producer after it was unbundled from Gold Fields.
Sibanye first announced its intention to swoop on the Australian firm in February after it put forward a R1.5bn unsolicited offer to buy the 80% of New Century it did not own, saying it was unhappy with the firm’s strategic direction. At the time, it owned 20% of the shares.
The board of the Australian company, which initially advised its shareholders to take no action, has since recommended that they accept the Sibanye offer. New Century two weeks ago suspended trade in its shares on the Australian Securities Exchange (ASX) as Sibanye closed in on sealing the deal to acquire the company.
New Century retreats mine waste and is one of the top five zinc producers. It is also looking at restarting a copper mine in Tasmania, Australia.
The SA mining group has said the proposed takeover is in line with its strategy to invest in the circular economy and be a globduction al leader in tailings retreatment and recycling.
However, Froneman has also criticised the management of New Century after the decline in the value of its shares on the ASX. He has said New Century may need to raise capital for its growth plans, which would result in “a material dilution for existing New Century shareholders, particularly given the current share price, broader equity market conditions and limited trading liquidity in New Century Shares”.
Sibanye last week said it will provide A$30m (about R365m) in emergency support to Century Resources after it suspended operations at its Century operations in northern Queensland because of extreme weather.
The multinational precious and base metals miner said the money would be allocated to the zinc tailings operations that were flooded after record rainfall earlier this month, as well as the Karumba port facility. Proclaimed was halted and work is expected to resume in April.
Business Day reported last week that New Century chair Kerry Gleeson told shareholders that Sibanye’s offer is beneficial to all parties, adding that there was uncertainty whether New Century could continue to operate as a stand-alone entity.
An environmental bond facility (EBF) with Argonaut Insurance and Macquarie Bank requires New Century to amortise a further $160m under an agreed schedule. An A$10m payment is due on April 3 and the final completion date is in April 2025, Gleeson added.
“There is no guarantee that New Century will generate sufficient profits from operations to meet its amortisation obligations under the EBF, assuming it is not replaced by an alternative mechanism or a renegotiated amortisation profile in due course,” she said, adding Sibanye may provide alternatives.