Sibanye’s $1bn rights issue goes down well

Sibanye Gold’s $1 billion rights issue, aimed at raising capital to help fund its acquisition of US platinum producer Stillwater, was oversubscribed by almost five-fold, the company said yesterday.

Such capital raising efforts are comparatively rare at the moment in South Africa’s troubled mining sector.

But Sibanye, which has built a reputation on its dividend flow, is diversifying away from its home base with its Stillwater acquisition, reducing its exposure to the risks associated with doing business in South Africa.

Those risks are underscored by a violent, wildcat strike unfolding at Sibanye’s Cooke operation, triggered by worker resentment at the company’s drive to root out illegal miners.

“Approximately 97% of shareholders subscribed for 1.2 billion new Sibanye shares in terms of the rights offer resulting in ... Excess applications were received for an additional 5.9 billion new shares, almost five times more than the rights offer shares available,” Sibanye said.

Offered at a discount of 60% to its closing price on May 17, the funds raised will repay a portion of a $2.65 billion loan facility it used to acquire Stillwater.

Sibanye’s dividend yield is 5.64%, well above the 2.16% average of its South African peers, Reuters data shows.