Sibanye backs out of Brazilian base metal mines acquisition

24th January 2022 By: Marleny Arnoldi - Deputy Editor Online

Sibanye backs out of Brazilian base metal mines acquisition

Santa Rita mine, in Brazil

JSE- and NYSE-listed Sibanye-Stillwater has decided to terminate its acquisition of the Santa Rita nickel and Serrote copper mines, both in Brazil, from Appian Capital for $1-billion and a 5% net smelter royalty over future production.

Sibanye intended to acquire operating companies Atlantic Nickel, which operates the Santa Rita mine, and Mineracao Vale Verder (MVV), which is developing the Serrote mine.

Sibanye explains that, subsequent to the signing of the sale and purchase agreements in October last year, a geotechnical event occurred at Santa Rita, which has been assessed and determined to have a material and adverse impact on the financial condition, the properties, assets, liabilities and operations of the mine.

The MVV deal will also be terminated, as it is conditional on the closing of the Atlantic deal.  

Sibanye continues to look at acquisitive growth opportunities in the battery metals space.

Meanwhile, Appian says there is no basis for Sibanye to lawfully terminate the two agreements.

The company notes in a separate statement that the geotechnical event amounts to a localised fracture that occurs in the normal course of openpit operations.

"To remedy the condition of the area in question, some additional waste will need to be mined earlier in the mine plan which equates to less than 1% of the mine’s volume over a 34-year mine life. Appian does not agree that this constitutes a material adverse event," it notes.

According to the company, Santa Rita is expected to have a strong operational and financial performance in 2022 and generate significant free cash flow.

Appian is currently assessing all of its legal options and will take all necessary action to enforce its legal rights.