[miningmx.com] – SIBANYE Gold has expressed an interest with Anglo American Platinum (Amplats) regarding the possibility the gold producer could buy shafts owned by the Anglo American subsidiary, said James Wellsted, head of corporate affairs for Sibanye.
“We have indicated our interest to them. There is nothing substantive yet but we have planted our flag,” he said. “We have engaged and we have said we would be interested,” Wellsted added.
He also indicated that the firm’s strategy to add underground, hard rock platinum mining to its existing gold assets, had met with the approval of Sibanye’s shareholders. “They are on board because the strategy is first to pay a dividend,” he said.
Said Daniel Sacks, whose firm Investec Asset Management has about 15% of Sibanye Gold shares: “There is shareholder alignment”. Allan Gray, which holds just under 15% of Sibanye shares was also on the board with the plan, said Wellsted.
Sibanye Gold told Bloomberg News on April 4 that the company would wait until after the resolution of a strike over wages with the Association of Mineworkers & Construction Union (AMCU) before proceeding with possible corporate action.
The strike, now into its eleventh week, does not appear to be heading to imminent conclusion with AMCU sticking to its demand for a basic R12,500 per month salary for all workers – a level Amplats said would sink its Rustenburg operations.
The platinum producer has since said that it may have to close its operations were it to agree to AMCU’s demands whilst Mark Cutifani, CEO of Anglo American, has floated the idea of selling Amplats or its operations.
Wellsted said buying a platinum mine was not an enormous shift in strategy for shareholders to take. “The platinum sector is moving to deep level mining which is a lot like the gold mines we bought.”
He said Sibanye was confident of enjoying the same success in removing overheads and operating costs at the platinum mines in the same way it had lowered the break-even at the gold mines in Carletonville and Beatrix in the Free State province.
“It’s a deal that can be done because there’s not alot of growth in the gold sector unless AngloGold Ashanti were to sell their Mponeng or Tau Tona mines. Also the gold premium is now out of gold stocks so you can mix gold with platinum mines which you couldn’t do in the past,” he said.
Wellsted added, however, that the company had to preserve the company’s dividend yield. “We won’t do a deal that would dilute the dividend strategy. Our whole strategy is to keep the dividend going,” he said.
Sibanye Gold paid a R1.12/share dividend in its 2013 financial year but analysts said it could lift that to R1,50/share in the current period.
“I suppose that’s possible because production and costs will be about the same but the rand gold price has been higher,” said Wellsted.
