Sibanye Gold’s $1.1bn rights offer subscribed five times over
SIBANYE Gold’s $1.1 billion rights offer was subscribed five times over, signalling the latest vote of confidence for the $2.2bn takeover of Stillwater Mining, the US based platinum and palladium producer.
Sibanye, the world’s third largest platinum company, said yesterday 97 percent of its shareholders had taken up the rights, the biggest rights offer for mining in South Africa.
It said also said shareholders had applied for an additional 5.8 billion new shares amounting to 492 percent of the rights offer shares available in the rights offer. The company said it would make the 36 million shares not exercised by shareholders available.
Sibanye made 1.19 billion shares available through the rights offer revealed last month for R11.28 each – a 60 percent discount to the closing price of May 17.
Sibanye chief executive Neal Froneman said: “We are delighted the rights offer has been such a success, beginning with resounding support from shareholders for the rights offer at the general meeting on April 25 and followed by the rights offer being close to fully subscribed, with overwhelming subscriptions for the excess applications.”
Rene Hochreiter, a mining analyst at Noah Capital Markets, said yesterday that the market expected the rights offer to be fully subscribed. “Many investors obviously thought that the rights offer price was good even after dilution.
“There are 2.1 billion shares in issue after the RO and share prices have been picking up since the RO closed.”
Hochreiter said the subscription demonstrated the value in this deal. “Stillwater has a 3:1 palladium-to-platinum ratio. Many forecasters are expecting the price of palladium to exceed the price of platinum possibly even this year,” said Hochreiter.
The fundamentals for palladium are stronger than platinum, with the palladium price soaring more than 7 percent on Friday to its highest in over 16 years.
Platinum has however been flat with an estimated 50 to 60 percent of production loss making. Under investment in platinum mines in South Africa which supplies 80 percent of the world’s primary production is problematic.
Meanwhile Sibanye has been grappling with an ongoing illegal strike at its Cooke operations, a gold uranium operation south west of Johannesburg amid an illegal mining scourge.
The strike began on Tuesday night after Sibanye implemented measures to root out illegal mining.
Company spokesman James Wellsted said the company had lost 15kg of production a day or around 75kg since the strike began.
Wellsted said 202 illegal miners were arrested yesterday after surfacing from the mine. Around 1 800 Cooke employees were undergoing a disciplinary process for the illegal strike .
He said prior to the illegal strike 101 illegal miners had been arrested together with 58 employees who were suspected of colluding with illegal miners.
Employees went on strike after the company implemented a food ban for underground operations in an effort to root out illegal miners.