Mining Weekly

JOHANNESBURG (miningweekly.com) – The progressing Lonmin acquisition and the already done DRDGold deal have been highlighted to the Denver Gold Forum by Sibanye-Stillwater, which is currently hosting investors and analysts at its Stillwater mine in Montana.

The forum heard how the Lonmin acquisition would add significantly to Sibanye-Stillwater’s platinum group metals (PGMs) resource base, and also about DRDGold hitting the ground running with the Far West Gold Recoveries Project, which is scheduled to deliver its first gold from retreated Sibanye-Stillwater tailings in the first quarter of next year.

Sibanye-Stillwater CEO Neal Froneman outlined to the Denver audience the many strong points of the progressing but not yet officially approved Lonmin transaction, which has the potential to unlock synergies worth R1.5-billion a year from 2021, offers full alignment with Sibanye-Stillwater’s mine-to-market strategy and provides access to commercially appealing smelting and refining facilities. Added is the upside presented by advanced brownfield and greenfield project pipelines.

Lonmin’s sizeable base would represent 59% of Sibanye-Stillwater’s mineral reserves and resources, as well as opening up mining opportunities across existing mine boundaries, optimising surface infrastructure and allowing for the best mining mix.

The inclusion of Lonmin’s production capacity would lift the group’s platinum output capacity to 1.6-million ounces of platinum a year and its palladium output capacity to 1.3-million ounces of palladium a year, while on the gold front, Sibanye-Stillwater is already the third-biggest gold producer at 4.3-million ounces of gold a year.

Official consummation of the deal would also make it the world’s largest producer of ruthenium and iridium and one of the largest chrome producers, and increase the employee complement from the current 66 000 people to close to 90 000 people. Still required, however, is approval from the South Africa’s Competition Tribunal, shareholders and the courts.

Meanwhile, DRDGold, which has its main base on the East Rand at Ergo, has been working on reclamation from Sibanye-Stillwater’s Driefontein 3 and Driefontein 5 tailings dams, which form part of the first phase of the Far West Gold Recoveries Project, which has a 12-year life.

Also being studied is the incorporation of that first-phase footprint into a far larger one, which could mean a far longer life-of-mine.

Sibanye-Stillwater told the Denver audience that it is moving to deleverage its balance sheet, maintain operational excellence, address its South Africa discount and pursue value-accretive growth based on a strengthened equity rating.

Sufficient liquidity has been provided by net cash and undrawn facilities, revolving credit and the proceeds from a recent streaming deal. This year’s production forecast is up to 1.76-million PGM ounces and up to 1.21-million gold ounces.

In June, Sibanye-Stillwater entered into an agreement with Regulus and Aldebaran to create a strategic partnership to unlock value at the Altar copper/gold project in Argentina. To date, 99.8% of Regulus shareholders have come out in favour of the arrangement and the requisite final court order for the partnership has been obtained from the courts. However, the closure of the transaction remains subject to the satisfaction of customary closing conditions, including receipt of listing approval for the Aldebaran shareholders.

Meanwhile, Sibanye-Stillwater is benefiting from upfront proceeds of $15-million and the retention of a direct interest in the project of either 40% or 20%, as well as an indirect exposure through its 19.9% shareholding in Aldebaran.