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SIBANYE GOLD LIMITED - Sibanye-Stillwater and DRDGOLD to create an industry-leading surface mining partnership

Release Date: 22/11/2017 07:40
Code(s): SGL     PDF:  
Wrap Text
Sibanye-Stillwater and DRDGOLD to create an industry-leading surface mining partnership

SIBANYE GOLD LIMITED
Trading as Sibanye-Stillwater
Reg. No. 2002/031431/06
Incorporated in the Republic of South Africa
Share Code: SGL
ISIN Code: ZAE000173951
Issuer Code: SGL
(“Sibanye-Stillwater” or “the Company” or “the Group”)


Sibanye-Stillwater and DRDGOLD to create an industry-leading surface mining
partnership


Key highlights
-   Sibanye-Stillwater to vend selected gold surface processing assets and tailings
    storage facilities for a 38% stake in DRDGOLD
-   Immediate crystallisation of c.R1.3 billion of value for the selected assets while
    retaining long term exposure to the West Rand Tailings Retreatment Project (“WRTRP”)
    assets and growth in DRDGOLD
-   Option to increase equity ownership in DRDGOLD to 50.1% within 24 months
-   DRDGOLD to undertake a phased development of the WRTRP, culminating in the development
    of a Central Processing Plant (“CPP”) and a Regional Tailings Storage Facility
    (“RTSF”)
-   Sibanye-Stillwater retains full ownership of the Cooke and Ezulwini processing plants
    and tailings facilities ensuring full uranium optionality
-   Partnership with DRDGOLD presents an opportunity, in an exciting mining segment, to
    leverage off DRDGOLD’s proven surface retreatment capabilities, to capitalise on
    further growth opportunities both locally and abroad


1. Introduction
Sibanye-Stillwater is pleased to announce that it has entered into various agreements
with DRDGOLD Limited (“DRDGOLD”) in terms of which, Sibanye-Stillwater will exchange
selected surface gold processing assets and tailings storage facilities (“TSF”) for
c.265 million newly issued DRDGOLD shares (“the Transaction”). This will result in
Sibanye-Stillwater   holding   38%   of   the   issued   share   capital   of   DRDGOLD,   post   the
Transaction. At the current DRDGOLD share price of R4.96* this equates to c.R1.3 billion
of crystallised value.


The Transaction includes the following assets:
    -   TSFs:
           - Driefontein 3 and 5
           - Kloof 1
           - Venterspost North and South
           - Libanon
    -   Active TSFs:
           - Driefontein 4
    -   The land required for future development of:
           - A Central Processing Plant(“CPP”)
           - A Regional Tailings Storage Facility (“RTSF”)and return water dam



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      -    Surface gold processing plants:
              - Driefontein 2 plant (“DP2”)
              - Driefontein 3 plant (“DP3”)
              - WRTRP pilot plant (for ongoing WRTRP gold recovery optimisation)
(together referred to as “the Selected Assets”).


The  following   currently   active   TSFs    will    also   be    transferred,   for   no   additional
consideration, once they have been decommissioned by Sibanye-Stillwater:
      -    Driefontein 1 and 2
      -    Kloof 2
      -    Leeudoorn

The Selected Assets, with the addition of the currently active TSFs, have Probable gold
Mineral Reserves of 3.82 million ounces and Probable uranium Mineral Reserves of 42.9
million pounds¹.


The Transaction excludes the Cooke uranium and gold assets which comprise: the Cooke
TSF, Millsite TSF and the Cooke surface gold plant as well as the Ezulwini gold and
uranium plant and associated Ezulwini 4 TSF. The Cooke and Ezulwini TSFs contain Probable
gold Reserves of 2.401 million ounces and Probable uranium Reserves of 54.26 million
pounds¹. Sibanye-Stillwater retains full ownership of these assets and the right to
process  and deposit this material onto the RTSF, subject   to   contributing   their
proportionate capital and operating costs.  As such, Sibanye-Stillwater retains full
exposure to a higher uranium price environment.


Sibanye-Stillwater and DRDGOLD have simultaneously entered into an option agreement in
terms of which, Sibanye-Stillwater will have the option to subscribe for a sufficient
number of DRDGOLD ordinary shares to attain a 50.1% shareholding in DRDGOLD (the “Option
Shares”) for up to 24 months post completion of the Transaction (“Option Period”). The
option has to be exercised in whole, anytime within the Option Period. The subscription
price for the Option Shares shall be at a 10% discount to the 30 day volume weighted
average traded price (“VWAP”) of DRDGOLD shares on the day prior to the date of exercise.


2. Rationale for the Transaction
The Transaction allows Sibanye-Stillwater to immediately crystallise c.R1.3 billion in
value from the Selected Assets, while partnering with DRDGOLD to further develop the
WRTRP.       Furthermore, this partnership presents an opportunity, in an exciting mining
segment, to leverage off DRDGOLD’s proven surface retreatment capabilities with the
potential to capitalise on further growth opportunities both locally and abroad.
DRDGOLD has significant experience in TSF reclamation and has a proven track record of:
      -    Optimisation of innovative technology driven processing and
      -    Proven project management expertise for the execution and implementation of
           surface processing infrastructure development




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Commenting on the Transaction, Neal Froneman, CEO of Sibanye-Stillwater, said: “We are
excited about the inherent potential in the investment and look forward to partnering
with   DRDGOLD    in   growing   an    international,      industry   leading,   surface     retreatment
business. Sibanye-Stillwater will realise immediate value for underutilised surface
infrastructure and TSFs, while retaining upside to the West Rand Tailings Retreatment
Project and future growth in DRDGOLD. Our stakeholders in the region also stand to
benefit from the future development of this long life surface reclamation project”.


3. DRDGOLD and its strategy for the Selected Assets
DRDGOLD has a network of surface assets that is unrivalled in South Africa and is focused
on   optimising   these   assets      in   order   to   increase   gold   production   and   extend   its
operational life.


DRDGOLD intends developing the Selected Assets through a phased approach. The first
phase (“Phase 1”) will include upgrading the existing Driefontein 2 and 3 plants to
process tailings from the high grade Driefontein 5 TSF. Phase 1 must be completed within
24 months after the closing of the Transaction while commissioning is expected to take
12 months and will include:

-    Construction and upgrading of relevant pump stations and slurry pipelines                        and
     associated process water pump station and pipeline

-    Upgrading of the Driefontein 2 and 3 plants from their name plate capacity of
     315   000 tonnes per month (“tpm”) to between 400 000 to 600              000 tpm for processing
     of higher tailings volumes

-    Potential upgrading of the Driefontein 4 TSF for additional tailings storage capacity

-    Refurbishment of conventional Carbon in Leach treatment plants (DP2&DP3)



Further evaluation of all the TSFs through the pilot plant located at DP3 within 24
months. The evaluation of each resource will include:
-    Bulk samples to be trucked to DP3 plant for evaluation
-    CIL, milling, flotation and concentrate leaching
-    Blending of various resources to determine the optimal combination and ratio

Phase 1 is expected to be cash generative with minimal upfront capital investment
required. These cash flows will be prioritised for the development of subsequent phases.
Outputs from Phase 1 will enable DRDGOLD to refine the original WRTRP process and
engineering design as well as financial and capital models for Phase 2.


Phase 2 will deliver a central, high-volume, CPP capable of processing at least
1 million tpm of tailings and development of a new RTSF including associated pipeline
infrastructure, within an additional 24 month period.




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4. Conditions Precedent
The implementation of the Transaction is both subject to, and conditional on, the
fulfilment of conditions precedent customary for a transaction of this nature including,
inter alia:


    -     The approval of the Transaction and passing of such resolutions as may be required
          by    DRDGOLD     shareholders,    which   resolutions       shall   include      a   waiver      of   the
          obligation of Sibanye-Stillwater to make a mandatory offer to the remaining
          shareholders of DRDGOLD as per the regulations of the Companies Act regulations
          2011
    -     All necessary approvals from the Johannesburg Stock Exchange and New York Stock
          Exchange and
    -     The approval of the Transaction by the competition authorities of the Republic of
          South Africa, to the extent required


Sibanye-Stillwater and DRDGOLD have committed to engage the relevant authorities in
order to fulfil the conditions precedent as soon as possible. The Transaction is expected
to close in the second quarter of the 2018 calendar year.


5. Additional information:
This is a voluntary announcement by Sibanye-Stillwater as the Transaction falls below
the 5% threshold of the categorisation of transactions in terms of the JSE Limited´s
Listings Requirements (“Listing Requirements”). Should Sibanye-Stillwater subscribe for
the Option Shares during the Option Period, Sibanye-Stillwater will determine the
categorisation of exercising the option on that date in terms of the Listing
Requirements.


A joint presentation will be held this morning at 10h00 (CAT) at the JSE Auditorium
(located at One Exchange square, Gwen Lane, Sandton. For dial-in and webcast details
please refer to www.sibanyestillwater.com/investors/transactions/drdgold.




*   DRDGOLD’s closing share price on 20 November 2017
¹   For the full Mineral Reserves and Resources statement, please refer to
https://www.sibanyestillwater.com/investors/financial-reporting/annual-reports/2016.                       The   lead
competent person designated in terms of the SAMREC Code, with responsibility for the consolidation
and reporting of Sibanye-Stillwater’s Mineral Resources and Mineral Reserves, and for overall
regulatory compliance of these figures, is Gerhard Janse van Vuuren., Gerhard gave his consent
for the disclosure of the 2016 Mineral Resources and Mineral Reserves Statement as included in
this announcement. Gerhard [GDE (Mining Eng), MBA, MSCC and B.Tech (MRM)] is registered with
SAIMM (706705) and has 29 years’ experience relative to the type and style of mineral deposit
under consideration.




Ends.




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22 November 2017
Johannesburg


Investor relations contact:
James Wellsted
Tel: +27 (0) 83 453 4014
Email: ir@sibanyestillwater.com


Corporate Advisor: Qinisele Resources Proprietary Limited
South African Legal Advisor: Werksmans Attorneys
Sponsor: J.P. Morgan Equities South Africa Proprietary Limited


FORWARD LOOKING STATEMENTS
Certain statements in this document constitute “forward-looking statements” within the meaning of the “safe
harbour” provisions of the United States Private Securities Litigation Reform Act of 1995.


These forward-looking statements, including, among others, those relating to Sibanye-Stillwater’s future
business prospects, revenues and income, wherever they may occur in this document and the exhibits to this
document, are necessarily estimates reflecting the best judgment of the senior management and directors of
Sibanye-Stillwater, and involve a number of known and unknown risks and uncertainties that could cause actual
results, performance or achievements of the Group to differ materially from those suggested by the forward-
looking statements. As a consequence, these forward-looking statements should be considered in light of
various important factors, including those set forth in this document. Important factors that could cause the
actual results to differ materially from estimates or projections contained in the forward-looking statements
include, without limitation, economic, business, political and social conditions in South Africa, Zimbabwe
and elsewhere; changes in assumptions underlying Sibanye-Stillwater’s estimation of its current Mineral
Reserves and Resources; the ability to achieve anticipated efficiencies and other cost savings in connection
with past and future acquisitions, as well as existing operations; the success of Sibanye-Stillwater’s
business strategy, exploration and development activities; the ability of Sibanye-Stillwater to comply with
requirements that it operate in a sustainable manner; changes in the market price of gold, platinum group
metals (“PGMs”) and/or uranium; the occurrence of hazards associated with underground and surface gold, PGMs
and uranium mining; the occurrence of labour disruptions and industrial action; the availability, terms and
deployment of capital or credit; changes in government regulations, particularly environmental regulations
and   new   legislation   affecting   water,   mining,   mineral   rights   and   business   ownership,   including   any
interpretations thereof which may be subject to dispute; the outcome and consequence of any potential or
pending litigation or regulatory proceedings or other environmental, health and safety issues; power
disruptions, constraints and cost increases; supply chain shortages and increases in the price of production
inputs; fluctuations in exchange rates, currency devaluations, inflation and other macro-economic monetary
policies; the occurrence of temporary stoppages of mines for safety incidents and unplanned maintenance;
Sibanye-Stillwater’s ability to hire and retain senior management or sufficient technically skilled employees,
as well as its ability to achieve sufficient representation of historically disadvantaged South Africans in
its management positions; failure of Sibanye-Stillwater’s information technology and communications systems;
the adequacy of Sibanye-Stillwater’s insurance coverage; any social unrest, sickness or natural or man-made
disaster at informal settlements in the vicinity of some of Sibanye-Stillwater’s operations; and the impact
of HIV, tuberculosis and other contagious diseases. These forward-looking statements speak only as of the
date of this document.


The Group 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 document or to reflect the occurrence
of unanticipated events.




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