[miningmx.com] – SIBANYE Gold has abandoned the possibility of completing a platinum transaction with Anglo American Platinum (Amplats) before the year-end, but said it was pursuing “other targets’.
Neal Froneman, CEO of Sibanye Gold, acknowledged there were other platinum companies affected by the five-and-a-half month strike in the platinum sector which didn’t have the financial flex to wait as long as the 18-month timeline set down by Amplats.
“We have got five targets and we have been through the front doors of all of them. We continue to engage with them, but it would be improper to say who they are,’ said Froneman. “You’ll have to work it out,’ he said.
Lonmin and Impala Platinum (Implats) both commented during the strike, waged by the Association of Mineworkers & Construction Union (AMCU), that a possible consequence of the prolonged action was portfolio restructuring.
Johan Theron, spokesman for Implats, said the company had started an intensive review of its mines. “We do a strategic review at the end of every calendar year but this year we have started the review earlier. At the end of the year we will engage with the board,” he said.
“It will be a much more comprehensive and more robust view on our assets this time around,” he added.
“The one public seller of platinum assets is going to take a lot longer than six months,’ Froneman said during the presentation of Sibanye Gold’s interim results in which it posted a 36% decline in headline earnings to R533m.
Amplats CEO, Chris Griffith, said earlier this month that the company would be “doing well’ if it were able to sell its non-core assets before the end of 2015. Amplats had identified its Union section, several Rustenburg shafts, and its stake in the Pandora Joint Venture for sale.
Sibanye Gold’s balance sheet is “arguably lazy’, said the company’s CFO, Charles Keyter. “We don’t have a lot of debt on the balance sheet, but there is no need to raise money at this stage. There is no pressing need,’ he said.
Were Sibanye required to raise money it would either issue shares or consider a convertible bond. “Those are the vanilla options that we have,’ said Keyter. Net debt as of end-June was R617m, down from R1.9bn at the interim stage in the previous financial year.
A decline in the gold price in both rands and dollars year-on-year and the impact of a R150m net loss from its 33% investment in Rand Refinery were among the key movers in its interim accounts.
It emerged last week that Rand Refinery botched the implementation of new software and could not account for about 87,000 ounces of gold.
Sibanye has assumed the gold is permanently lost and has written down the revenue loss in terms of its 33% stake in the refinery equal to R196.4m. Against this ‘loss’ it has added back R45.9m representing its share of Rand Refinery’s profits for 2013.
Keyter acknowledged the company may also have to impair a R455m loan provided as “a backstop’ to the refinery. In line with its shares in Rand Refinery, Sibanye joined AngloGold Ashanti, Gold Fields and Harmony Gold in providing a R1.2bn loan to the refinery.
Froneman could not discount the possibility of fraud, but said it was “impossible to say’ as there had been no impact on its working capital.
