[miningmx.com] – Neal Froneman, CEO of Sibanye Gold, left the door ajar to other corporate manoeuvrings following the proposal to buy Aquarius Platinum for R4bn earlier this month – a transaction that catapults the company into the top five of global platinum producers.
“We do sense we are near the bottom of the cycle so there are a lot of opportunities,’ he said. “We are not stopping looking, but I don’t expect other than what’s announced in the pipeline in the shorter term,” he said.
Froneman has been accused of empire-building in the past but his recent track-record of asset grabbing is impressive, even by his standards. His current merger and acquisition team are trawling through three concurrrent deals with a combined value of R9bn.
These include the cash injection and debt assumed in the proposed takeover of Waterberg Coal Company and the shares or cash in the R4.5bn bid for the Rustenburg mines of Anglo American Platinum.
However, Froneman stepped back from other major consolidatory steps in both the platinum and the gold industry in the shape of Lonmin and Harmony Gold respectively – companies with which he’s been connected in the past.
Both were saddled with too much debt – in the case of Lonmin it would need a recapitalisation of $600m or R8bn which is double the price Froneman is paying for Aquarius – and both are struggling to generate cash.
Aquarius Platinum, however, reported cash of $196m in its 2015 financial year despite a 7% decline year-on-year in platinum group metal (PGM) prices. It also has net cash of about $72m as of end-June.
Nonetheless, there’s some pretty heavy lifting that needs to take place at Sibanye Gold over the coming months.
Apart from getting three concurrent transactions away, Froneman’s team has to set about extracting the synergies and benefits he said all three deals contain. This will be no easy task.
Keeping Aquarius Platinum CEO, Jean Nel, on board will be crucial for Sibanye’s platinum prospects. “I think Jean Nel is a catch if they can keep him,” said a UK analyst who isn’t allowed to comment on the record.
Provided he is not completely frazzled after running so hard keeping Aquarius afloat, Nel may well be tempted, especially if Froneman offers him executive authority over the recently launched Sibanye Pt, Sibanye Gold’s platinum division.
Said Hanre Rossouw: “I don’t think Jean got much out of being CEO at Aquarius. He took shares instead of a salary so his in-price is probably far less than what’s being offered by Sibanye”.
Nel announced in September 2013 that he would take up to 70% of his salary and bonuses in Aquarius Platinum shares for three years during which time the company’s share price has slid 72%.
