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Anglo American Platinum Limited announces the sale of its Rustenburg operations and withdrawal of cautionary
ANGLO AMERICAN PLATINUM LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1946/022452/06)
Share Code: AMS
ISIN: ZAE000013181
(“the Company" or "Anglo American Platinum")
ANGLO AMERICAN PLATINUM LIMITED ANNOUNCES THE SALE OF ITS RUSTENBURG
OPERATIONS FOR AT LEAST R4.5 BILLION (nominal terms) TO SIBANYE GOLD
LIMITED AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. Introduction
Anglo American Platinum announces that Rustenburg Platinum Mines Limited (“RPM”), a
wholly owned subsidiary of the Company, has entered into a Sale and Purchase
Agreement (“SPA”) (and related transaction agreements) on 8 September 2015 with
Sibanye Gold Limited (“Sibanye”) to sell its Rustenburg mining and concentrating
operations (“Rustenburg Operations”) for at least R4.5 billion (nominal terms), consisting
of an upfront payment in cash or Sibanye shares of R1.5 billon and deferred
consideration calculated as being equal to 35% of the distributable free cash flow
generated by the Rustenburg Operations over a defined period with a minimum amount (See Note 1)
payable of R3.0 billion (the “Transaction”).
2. Rationale for the Transaction
During 2012, Anglo American Platinum embarked on a portfolio review in response to the
structural changes taking place in the platinum industry. The outcome of the review was
to restructure the business to remove loss making ounces and align production with
market demand. This resulted in the consolidation of Rustenburg from five to three mines
and Union from two to one mine, removing 350koz of unprofitable platinum production.
A further cost and capital prioritisation programme was implemented which resulted in
revised operational mine plans, cost savings and revenue enhancements with a total
benefit of R4.2 billion.
In 2014 the Company announced the repositioning of its portfolio to focus on low cost
production through shifting towards mechanized operations. Given the number of
operations within its portfolio, the Company believes that certain operations will receive
greater management focus under different ownership where the mines will not be
competing for allocation of capital. Anglo American Platinum accordingly announced its
intent to exit from certain non-core operations, including the Rustenburg Operations.
Chris Griffith, CEO of Anglo American Platinum commented on the Transaction:
“We are pleased to announce a significant milestone in the repositioning of our portfolio
with the disposal of the Rustenburg Operations to Sibanye. The Rustenburg Operations
are quality assets with long-term and sustainable potential under Sibanye’s control, given
their proven and successful track record of operating conventional mines in South Africa.
Our focus from the outset has been to identify the right option for the business, its
stakeholders and shareholders and we believe we have concluded a beneficial
transaction for both parties, whilst also securing a sustainable future for the Rustenburg
Operations.
We remain committed to pursuing our strategy, continuing to reposition Anglo American
Platinum as a high quality, largely mechanised operator yielding high margins. We are
focusing on our core assets and exiting those assets we have identified as non-core in a
responsible manner, consistent with the objectives of the Mining Charter.”
In addition, Anglo American Platinum’s stakeholders and shareholders are referred to the
announcement released by Sibanye on the Stock Exchange News Service of the JSE
Limited (“JSE”) (“SENS”) on 9 September 2015, regarding the Transaction.
2.1 Overview of the Rustenburg Operations
The Rustenburg Operations consist of the Bathopele, Siphumelele and Thembelani
mining operations (which include the integrated Khuseleka & Khomanani mining
operations), two concentrating plants, an on-site chrome recovery plant, the Western
Limb Tailings Retreatment plant and associated surface infrastructure and related assets
and liabilities.
2.2 The purchase consideration
Under the terms of the SPA, Sibanye will (via a subsidiary) acquire the Rustenburg
Operations from RPM for at least R4.5 billion in nominal terms comprising both upfront
as well as deferred payment components as outlined below. The total maximum
consideration payable to RPM is R20 billion.
2.2.1 Upfront payment
Sibanye will pay an upfront consideration of R1.5 billion to be settled at its election in
cash or through the issue of listed Sibanye ordinary shares (based on the twenty day
volume weighted average price of Sibanye shares on the JSE ending six trading days
prior to completion of the Transaction). Sibanye will however endeavour to settle as
much as possible of the upfront payment in cash.
2.2.2 Deferred payment
Sibanye will pay minimum deferred consideration of R3.0 billion (nominal terms), to be
earned by RPM through a 35% share of the distributable free cash flows generated by
the Rustenburg Operations on an annual basis for a period of six full years commencing
from the later of 1 January 2017 or the completion date of the Transaction on the
following terms:
(1) to the extent there is an outstanding minimum deferred payment balance at the end
of the initial six year period, Sibanye shall have the option to extend the period in
which the RPM is entitled to receive 35% of the distributable free cash flow payments
for a further period of up to two years or until the outstanding minimum deferred
payment balance has been reduced to nil, whichever is earlier, or to settle such
balance in cash or listed Sibanye ordinary shares, on the same basis as described in
2.2.1;
(2) any outstanding minimum deferred payment balance after the further two year period
will similarly be settled either in cash or through the issue of listed ordinary shares in
Sibanye.
2.2.3 Adjustments to the purchase consideration
After closing of the Transaction, if the distributable free cash flow generated by the
Rustenburg Operations is negative in 2016, 2017 or 2018, there will be a downwards
adjustment to the total consideration received by an amount such that the distributable
free cash flow for the relevant year is equal to zero, but such payments by Anglo
American Platinum shall not exceed:
(1) in the year of the closing: R267 million pro-rated for the number of remaining full
months in the calendar year, post the end of the month that closing occurred (“Initial
Pro-rata Amount”);
(2) in each full calendar year post the year in which closing occurred, until 31 December
2018: the Initial Pro-rata Amount plus R267 million for each subsequent full calendar
year, less any payments made in respect of previous years.
2.3 Purchase of concentrate
Sibanye will sell all concentrate produced by the Rustenburg Operations to Anglo
American Platinum until 31 December 2018 based on pre-agreed commercial terms.
For a period of no less than two years but up to eight years starting 1 January 2019,
Sibanye will enter into a toll treatment arrangement whereby Anglo American Platinum
will undertake the smelting and refining activities in respect of the Rustenburg Operations
on pre-agreed commercial terms. The charge payable by Sibanye under the toll
treatment arrangement will reflect smelting and refining costs as well as an economic
return on the proportional share of the current capital base that Anglo American Platinum
has invested in its processing assets.
The arrangements above are dealt with in a Sale and Toll Treatment of Concentrate
Agreement to be signed simultaneously with the SPA.
2.4 Application of the purchase consideration
Cash proceeds received by the Company will be used to reduce the Company’s net debt.
Should all or part of the Transaction consideration be in shares, the Company will
dispose of these shares at an appropriate time.
2.5 Transaction effective date
The Transaction is subject to various approvals as outlined in section four below and is
expected to become unconditional during 2016 with a back-stop date of 30 June 2017.
2.6 Financial effects of the Transaction
The Rustenburg Operations comprised a net asset value of R7.7 billion as at 30 June
2015 and attributable after-tax losses of R0.5 billion for the period ended 30 June 2015.
It is anticipated that the Rustenburg Operations will be accounted for as an asset held for
sale once it is highly probably that the conditions precedent are met. The Transaction is
expected to be headline earnings accretive for the Company.
3. Overview of purchaser and Broad Based Black Economic Empowerment (“BBBEE”)
Sibanye is an independent, South African-domiciled mining group, which currently owns
and operates four underground and surface gold operations – the Cooke, Driefontein and
Kloof operations in the West Witwatersrand region, and the Beatrix Operation in the
southern Free State province. In addition to its mining activities, Sibanye owns and
manages significant extraction and processing facilities at the operations where the gold-
bearing ore is treated and processed before it is refined. The Group has a number of
organic projects including the West Rand Tailings Retreatment Project on the Far West
Rand and the Burnstone project on the South Rand of Gauteng province, as well as the
Beisa North, Beisa South, Bloemhoek, De Bron-Merriespruit, Hakkies and Robijn
projects in the Free State.
Sibanye is the largest individual producer of gold from South Africa and is one of the
world’s ten largest gold producers.
Sibanye will facilitate the introduction of a BBBEE stakeholder consortium which will own
26% of the Rustenburg Operations. Discussions in respect of the acquisition of such
shareholding are currently underway and it is envisaged that it will be vendor financed by
Sibanye on market related terms and conditions.
The BBBEE stakeholders comprises the following broad based partners:
- Employees Trust;
- Community Development Trust;
- Royal Bafokeng Holdings; and
- Bakgatla-Ba-Kgafela Traditional Community.
4. Conditions precedent and effective date
The Transaction remains subject to certain conditions precedent, amongst others:
- the approval of the Transaction by the competition authorities of the Republic of
South Africa; and
- all necessary consents being obtained from the Department of Mineral Resources of
South Africa, including approval for the transfer of the mining right related to the
Rustenburg Operations to Sibanye.
In addition the Transaction is subject to Sibanye shareholder approval due to the
Transaction being classified as a Category 1 transaction for Sibanye based on the JSE
Listings Requirements. No shareholder approval is required in respect of Anglo American
Platinum shareholders.
The parties have agreed conduct of business provisions applicable to the conduct of the
Rustenburg Operations in the period between the signature of the SPA and the effective
date.
The Transaction will become effective following the fulfilment or waiver of all conditions
precedent contained in the SPA. The other transaction agreements include:
- Use and Access Agreement governing issues of separation of the Rustenburg
Operations from the retained Rustenburg processing operations, co-existence of
these operations and reciprocal rights of access and use
- Sale and Tolling of Concentrate Agreement as described above; and
- Guarantee under which Sibanye guarantees the obligations of its subsidiary
purchaser of the Rustenburg Operations under the SPA.
5. Withdrawal of cautionary announcement
Shareholders are referred to the cautionary announcement released on SENS on 3
September 2015 are advised that, due to the fact that the above information has been
disclosed in this announcement, caution is no longer required to be exercised by
shareholders when dealing in the Company’s securities.
Note 1 Subject to adjustment in 2.2.3 below.
Johannesburg, South Africa
9 September 2015
Financial Advisor and JSE Sponsor to Anglo American Platinum
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Financial Advisor to Anglo American Platinum
CREDIT SUISSE SECURITIES (EUROPE) LIMITED
For further information, please contact:
Investors:
Emma Chapman
Tel: +27 (0)11 373 6239
Tel: +27 (0)76 480 1570
emma.chapman@angloamerican.com
Media:
Mpumi Sithole
Tel: +27 (0)11 373 6246
mpumi.sithole@angloamerican.com
Notes to editors:
Anglo American Platinum Limited is a member of the Anglo American plc Group and is the
world’s leading primary producer of platinum group metals. The company is listed on the
Johannesburg Securities Exchange (JSE). Its mining, smelting and refining operations are
based in South Africa and the Group owns Unki Platinum Mine in Zimbabwe. Anglo American
Platinum has a number of joint ventures with several historically disadvantaged South African
consortia as part of its commitment to the transformation of the mining industry. Anglo
American Platinum is committed to the highest standards of safety and continues to make
meaningful and sustainable difference in the development of the communities around its
operations.
www.angloamericanplatinum.com
Anglo American is a global and diversified mining business that provides the raw materials
essential for economic development and modern life. Our people are at the heart of our
business. It is our people who use the latest technologies to find new resources, plan and build
our mines and who mine, process and move and market our products – from bulk commodities
and base metals to precious metals and diamonds (through De Beers) – to our customers
around the world. Our diversified portfolio of products spans the economic development cycle
and, as a responsible miner, we are the custodians of precious resources. We work together
with our key partners and stakeholders to unlock the long-term value that those resources
represent for our shareholders, but also for the communities and countries in which we operate
– creating sustainable value and making a real difference. Our mining operations, growth
projects and exploration and marketing activities extend across southern Africa, South America,
Australia, North America, Asia and Europe.
www.angloamerican.com
Date: 09/09/2015 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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