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Signs term sheet with the Waterberg Coal Group
SIBANYE LIMITED
(Reg. No. 2002/031431/06)
(Incorporated in the Republic of South Africa)
Share Code: SGL
ISIN Code: ZAE000173951
Issuer Code: SGL
(“Sibanye” or “the Company”)
_________________________________________________________________________
SIBANYE SIGNS TERM SHEET WITH THE WATERBERG COAL GROUP
Introduction
Sibanye is pleased to announce that the Company has signed a term sheet (“Term Sheet”)
with Waterberg Coal Company Limited (“WCC”), Firestone Energy Limited (“FSE”); Sekoko
Resources Proprietary Limited and Sekoko Coal Proprietary Limited (collectively the
“Waterberg Coal Group” or, “the WCG”). The salient features of the Term Sheet provide as
follows:
- Sibanye to acquire a secured convertible note in WCC from a consortium of lenders
comprising The Standard Bank of South Africa Limited and Abu Dhabi Investment
Council (“the Facility”) for AU$22.5 million. The terms of the Facility are to be revised
and will provide for conversion rights into the consolidated WCG;
- Sibanye to inject AU$8.5 million of working capital to enable the WCG to further
develop its Waterberg Coal Project (“the WCP”);
- Sibanye to have the right to subscribe for such number of additional new shares in the
WCG in order for it to achieve a 51% shareholding within a 18 month period from
closing; and
- Sibanye to enter into a coal off-take agreement with WCG for purposes of securing
feed for its independent power producer (“IPP”) platform.
The terms and conditions set out in the Term Sheet are to be formalised in a set of definitive
transaction agreements (“Transaction Documents”), which are currently being negotiated by
the Parties.
Conditions
The proposed transaction is still subject to conditions precedent which are customary for a
transaction of this nature, including inter alia:
- Completion of a detailed due diligence; and
- Entering into the Transaction Documents, which shall include;
o Revised Facility terms;
o Coal off-take agreement for a Sibanye dedicated IPP.
Shareholders will be advised on the detailed terms and progress of the proposed transaction
in due course.
Rationale
Sibanye has been exploring various alternative sources of long term stable energy supply in
response to the inconsistent and increasingly expensive power supplied by Eskom. To this
end, the WCP has been identified as a viable platform to facilitate the Company’s electricity
supply objectives. The WCP as a multi-product coal project has the potential to provide
Sibanye with a sizable coal resource base, which could underpin the development of a
viable IPP platform.
Neal Froneman, CEO of Sibanye commenting on the proposed transaction said: “We have
been investigating various energy alternatives for some time now and the WCP has the
potential to be a medium to long term sustainable power solution for Sibanye. The multi-
product nature of the WCP, provides the ability to produce energy from coal that would
otherwise have been thought of as discard, in an economically viable manner. This will
facilitate Sibanye securing a reliable energy supply while simultaneously having a greater
control over energy costs. Ultimately, the security of supply and enhanced cost control will
continue to support our bottom line and hence our ability to pay industry leading dividends.”
Information on the WCG
WCC and FSE are primarily listed on the Australian Securities Exchange, with secondary
listings on the JSE Limited (“JSE”). WCC is the lead and managing partner of WCP, a joint
venture between the WCG. The WCP is situated in the Limpopo Province, South Africa.
The WCP comprises three projects:
- an export project through which the WCG intends mining high grade coal for export
purposes. WCG has completed a feasibility study on the project;
- an Eskom project through which the WCG intends selling thermal quality coal to
Eskom. WCG has completed a feasibility study on the project. WCG has yet to
conclude a coal supply agreement with Eskom; and
- an IPP platform through which the WCG intends developing coal-fired power
generation facilities. The discard coal from the export and Eskom projects will be used
as a low cost fuel to the IPP platform.
The projects are based on a SAMREC compliant coal mineral resource of 3,400 Mt of which
1,315 Mt is in the measured, 1,247 Mt is in the indicated and 838 Mt is in the inferred mineral
resource categories (GTIS)(1).
The transaction is below JSE Listings Requirements transaction thresholds and is published
for information purposes only.
17 September 2015
Libanon
Corporate Advisor Sponsor
Qinisele Resources J.P. Morgan Equities South
Proprietary Limited Africa Proprietary Limited
.
FORWARD LOOKING STATEMENTS
Certain statements included in this announcement, as well as oral statements that may be
made by Sibanye, or by officers, directors or employees acting on its behalf related to the
subject matter hereof, constitute or are based on forward-looking statements. Forward-
looking statements are preceded by, followed by or include the words “may”, “will”, “should”,
“expect”, “envisage”, “intend”, “plan”, “project”, “estimate”, “anticipate”, “believe”, “hope”,
“can”, “is designed to” or similar phrases. These forward-looking statements involve a
number of known and unknown risks, uncertainties and other factors, many of which are
difficult to predict and generally beyond the control of Sibanye, that could cause Sibanye’s
actual results and outcomes to be materially different from historical results or from any
future results expressed or implied by such forward-looking statements. Such risks,
uncertainties and other factors include, among others, Sibanye’s ability to complete the
transaction, Sibanye’s ability to successfully integrate the acquired assets with its existing
operations, Sibanye’s ability to achieve anticipated efficiencies and other cost savings in
connection with the transaction, Sibanye’s ability to increase gold and uranium production,
the success of exploration and development activities and other risks. Sibanye undertakes
no obligation to update publicly or release any revisions to these forward-looking statements
to reflect events or circumstances after the date of this announcement or to reflect any
change in Sibanye’s expectations with regard thereto.
Note (1 ):
Table 1 – Coal Resource on all six Waterberg Coal Project Properties under both
Prospecting Permit and Mining Right
Resource Coal Ash % IM % Vol % CV TS %
Classification Resource(1) (ad) (ad) (ad) (Mj/kg) (ad)
(Mt) (ad)
Measured 1314.51 57.6 2.2 17.9 10.7 1.00
Indicated 1247.2 57.4 2.3 17.8 10.7 1.13
Inferred 838 58.5 2.2 17.6 10.4 1.19
Total 3400 57.7 2.2 17.8 10.6 1.09
Resources
Coal Resource (1) based on minimum thickness cut-off of 0.5m
Gemecs (Pty) Limited was commissioned by the WCC, to undertake an Updated
Independent Persons Geological Report for WCP.
The Coal Resources were estimated in accordance with the South African code for the
Reporting of Exploration Results, Mineral Resources and Mineral Reserves
(“SAMREC Code”), Australasian Code for Reporting of Exploration Results. Mineral
Resources and Ore Reserves (“the JORC Code”) and South African National Standard
(SANS 10320:2004) guidelines.
The information in this announcement that relates to Exploration Results, Mineral
Resources or Ore Reserves is based on information compiled by Mr Coenraad D van
Niekerk, Pr.Sci.Nat (Reg. No 400066/98), M.Sc Hons (Geology), MDP, an employee of
Gemecs (Pty) Limited, who is a Fellow of the Geological Society of South Africa. Mr
van Niekerk is a mining geologist with 40 years’ experience in the mining industry,
sufficient experience relevant to the style of mineralisation and type of deposit under
consideration and to the activity which he is undertaking to qualify as a Competent
Person as defined in the 2004 Edition of the Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves. Mr van Niekerk consents
to the inclusion in the announcement of the matters based on this information in the
form and context in which it appears.
Any discrepancy is due to rounding.
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