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Sibanye mulls equity raise increase to US$1.3B for Stillwater deal

Sibanye Gold Ltd. on Feb. 3 said it is considering increasing the size of the equity component of its financing package to fund the US$2.2 billion acquisition of Stillwater Mining Co.

In December 2016, Sibanye announced that its U.S. subsidiary will acquire Stillwater's entire share capital for US$18.00 in cash per share, valuing the deal at US$2.2 billion.

At the time, the company aimed to raise between US$750 million and US$1 billion under the equity component of its associated financing. Citing the current strength of the South African rand, spot metals prices and shareholder feedback as factors in its decision, the company now aims to raise up to US$1.3 billion through a rights offering.

Sibanye also reported that gold production in the second half of 2016 was 7% lower year over year at 23,800 kilograms, primarily due to the closure of the Cooke 4 shaft in South Africa during the period as well as power outages in the fourth quarter of 2016.

All-in sustaining costs during the review period are expected to be lower than guidance, at about 452,000 rand per kilogram, or US$1,007 per ounce.

The company received a gold price of approximately US$1,268 per ounce for the six-month period, 6% lower than the preceding half-year, primarily due to a 9% stronger average exchange rate, which offset a 4% increase in the average U.S. dollar gold price.

Full-year 2016 gold production of 47,000 kilograms or 1.5 million ounces of gold was about 2% lower than Sibanye's revised guidance as of October 2016.

Sibanye's platinum division delivered a strong operating performance, with production of about 230,000 ounces of platinum group metals in the December 2016 quarter, which includes 210,000 ounces from the Rustenburg operations in South Africa.

For the six-month period that ended Dec. 31, 2016, the company's share of PGM production from its 50%-owned Kroondal and Mimosa mines was approximately 118,000 ounces and 62,000 ounces, respectively.

Cash operating costs for the platinum division, including the Rustenburg operations, were 10,600 rand per PGM ounce, in line with expectations.

CapEx for the six-month period totaled approximately 2.4 billion rand, while full-year CapEx came in at 4.2 billion rand, including growth CapEx of approximately 750 million rand.