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Sibanye-Stillwater announces $450m convertible bond offering

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Sibanye-Stillwater announces $450m convertible bond offering

Photo by Duane Daws
Sibanye-Stillwater CEO Neal Froneman

19th September 2017

By: Martin Creamer
Creamer Media Editor

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JOHANNESBURG (miningweekly.com) – Precious metals mining company Sibanye-Stillwater on Tuesday announced the impending launch of a $450-million convertible bond offering linked to the refinancing of the outstanding portion of the bridge loan the company raised to buy Stillwater Mining in the US.

The senior unsecured guaranteed convertible bonds, which fall due in 2023, will be issued by the company on September 26, underpinned by the Stillwater and Kroondal operations.

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The convertible bonds are expected to pay a coupon of between 1.625% and 2.375% a year half yearly in arrears in equal instalments.

The initial conversion price is expected to be set within a premium range of 30% to 35% above the volume weighted average price of Sibanye-Stillwater’s shares on the Johannesburg Stock Exchange.

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The bonds will be convertible into new and existing shares or a combination of both.

The South African domiciled precious metals mining group, headed by Neal Froneman, last week announced that it had successfully extended the platinum group metals (PGM) mineralisation at the Stillwater mine’s Blitz project in Montana, a brownfield extension of the existing Stillwater mine.

The company revealed that mineralised ore at the Blitz project had been intersected at a grade of 79 g/t, a significantly richer grade than the compliant proven and probable reserve grades of 19.55 g/t.

The Blitz project is expected to lift output from the US PGM operations by about 300 000 oz/y of palladium and platinum, once operating at a steady state from early 2022.

The increased output from Blitz is also expected to reduce unit operating costs of the Stillwater mine.

Not only has the palladium price soared by 64% since Sibanye began discussions for the acquisition of Stillwater Mining, the world’s largest primary palladium producer, but the Stillwater operation itself has also performed well under its new owner.

At current basket prices, Stillwater will pay off its capital and financing costs and return some cash to shareholders.

Sibanye-Stillwater owns and operates gold and uranium operations and projects throughout the Witwatersrand basin in South Africa, as well as PGM operations in the Bushveld Igneous Complex in South Africa and the Great Dyke in Zimbabwe.

It has four underground and surface gold operations in Driefontein, Kloof and Cooke in the West Witwatersrand region and Beatrix in the southern Free State province.

It also has underground and surface PGM operations, including the Rustenburg Operations and a 50% interest in Kroondal as well as a 50% interest in the Mimosa mine, a PGM joint venture in Zimbabwe.

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