Mining Weekly

JOHANNESBURG – Three of Sibanye Gold’s largest investors, controlling more than a third of its shares, have indicated they will vote in favor of its planned takeover of Lonmin Plc, according to people familiar with the matter.

Gold One Group, Sibanye’s largest investor with about 19%, and South Africa’s Public Investment Corp. both told the companies they will support the all-share deal, said the people, who asked not to be identified because the information is private. Exor Investments UK, which owns shares in both companies, has also indicated it will back the transaction, they said.

The PIC, Africa’s largest money manager, owns about 9% of Sibanye and is Lonmin’s biggest investor with about 30%. The deal requires more than 50% approval in a vote by Sibanye investors, in addition to Lonmin shareholders’ approval.

Sibanye believes investors will recognize the rationale of the proposed transaction, spokesperson James Wellsted said.

“We feel if there are no onerous conditions placed on us, they will support the transaction,” he said.

SIBANYE INVESTORS

As of July 27, Gold One held 19.35% of Sibanye's shares; Van Eck Associates 10%; the PIC 9.36%; Exor Investments UK 7.82%; and Investec Asset Management 7.21%.

The PIC said it wouldn’t comment publicly on how it would vote on the deal. Gold One, which is owned by a Chinese consortium, didn’t immediately respond to emailed questions. Matteo Scolari, managing director for London-based Exor Investments, declined to comment. Exor held about 8% of Sibanye as of late July, according to Sibanye.

The Lonmin transaction is the latest in a series of deals by Sibanye Chief Executive Officer Neal Froneman, who has transformed the gold miner by expanding into platinum-group metals assets and last year bought a US palladium miner for $2.2-billion. For Lonmin, the takeover represents a lifeline after the company struggled through years of losses and was forced to seek debt-covenant waivers from lenders until early next year.

While Sibanye said this month that the deal remains on track, Froneman has warned that investors can’t be expected to approve the deal if it means adding more debt. Sibanye is under pressure to reduce borrowings after the US purchase last year.

NET CASH
Lonmin’s net cash rose to $23-million in June from $17-million at the end of its second quarter, it said in July. The balance has continued to increase since then, said one of the people.

The transaction is being reviewed by South Africa’s competition authorities and Froneman said he expects to receive approval within the coming months. If that happens by October, Sibanye’s investors could vote in December, he said.

“There is a recognition this is good for Lonmin, it’s good for us – that’s why our shareholders will support it,” Froneman said Aug. 23 in an interview.

Lonmin closed 2.8% higher at 7.76 rand a share in Johannesburg on Friday. Sibanye rose 6.6% to 8.55 rand a share.