[miningmx.com] – SIBANYE Gold said it would issue 17% of its stock – equal to R1.2bn of its current market value – to Gold One International for control of its 260,000 ounce a year Cooke operations on Johannesburg’s West Rand.
The assets consist of underground gold and uranium reserves which have been developed to produce 260,000 oz and 570,000 pounds of uranium by-product over the next five years.
In addition, there are gold reserves of 2.8 million ounces and resources of 22.65 million ounces – enough to sustain operations for 13 years, said Sibanye Gold in a statement to the JSE today.
The Cooke operations also include surface operations which are building up to 400,000 tonnes a month of tailings and that could be combined with Sibanye Gold’s West Rand Tailings Re-treatment Project.
“The addition of the Cooke Operations to the Sibanye Gold portfolio could potentially create the largest surface retreatment project in South Africa and provides Sibanye,” said Neal Froneman, CEO of Sibanye Gold.
The transaction requires Sibanye Gold to issue about 1.5 million new shares which is equal to 17% of currently issued stock. At a market capitalisation of about R7.3bn, this is a transaction totalling R1.24bn.
“This is a cash flow accretive transaction for Sibanye Gold that will impact positively on projected cash flow per share.”
“The transaction also positions Sibanye Gold to reclaim the 6.4 million ounces of gold and 55 million pounds of uranium co-product contained in historical West Rand tailings deposits owned by the parties,” said Froneman.
“These resources will be capable of supporting additional gold production of up to 300,000 ounces of gold per annum with uranium as a co-product,” he said.
The transaction also sees Froneman return to assets he helped bring in to Gold One International when he was its CEO, prior to joining Sibanye Gold last year. It also raises the prospect that one day the two companies could form a closer alliance.
“Gold One and its 90% shareholder, the Chinese BCX Consortium, will be an anchor shareholder with a long term investment horizon, which will support Sibanye Gold’s long term growth strategy,’ said Froneman.
