[miningmx.com] – SIBANYE Gold’s cash generating ability, even at the lower dollar gold price, was tacitly acknowledged by its bankers which have agreed the company may pay an interim dividend, and a larger final dividend.
The terms of the group’s R6bn bridging loan facility, which comprised of a fixed term loan totalling R4bn, and a revolving credit facility (RCF), were also relaxed such that R1bn of debt was reallocated to the RCF. The bridging loan will fall to R5bn by Sibanye’s year-end which is December 31.
In terms of the bridging loan facility arranged at the end of last year following the creation of Sibanye Gold, no interim dividend was allowed while a final dividend could not exceed 25% of normalised earnings and provided debt did not exceed R4bn.
The new terms allow for an interim dividend of 25% of normalised earnings provided net debt is below R4bn, and a larger 35% final dividend.
Sibanye’s debt situation started at R4.2bn in January, rose slightly and was reduced again to R4bn by April following a R570m payment. Cash on hand is about R1.2bn.
While the announcement of kinder debt obligations recognises Sibanye Gold is able to generate cash, the prospect of an earlier shareholder payout in the form of the interim dividend comes with conditions.
According to the agreement with banks, Sibanye Gold first has to sign a wage deal with unions, the National Union of Mineworkers (NUM) and the restive the Association of Mineworkers & Construction Union (AMCU).
Sibanye’s half-year closed on June 31 and with wage negotiations only kicking off today (July 11), and with a two-month negotiation period forecast, it’s possible the firm may wait for the year-end to reward shareholders.
“It wouldn’t be responsible for us to pay an interim dividend now; not while we have wage negotiations to traverse,” said James Wellsted, head of corporate affairs at Sibanye Gold by telephone.
“The revised terms recognise the cash generative ability of our assets, even at lower prevailing gold prices and will provide greater balance sheet flexibility and the ability to pay dividends to shareholders earlier,’ said Sibanye Gold CEO, Neal Froneman.
All in all, it has been a good day for Sibanye. Wage negotiations are thought to have kicked off without a hitch while the stronger gold price has added 8.5% to the firm’s market value, currently at R6.2bn.
