Sibanye Gold’s $1.1bn rights of­fer sub­scribed five times over

The Star Early Edition - - LIFESTYLE - Di­neo Faku

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.

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