SIBANYE-Stillwater CEO, Neal Froneman, said on February 19 during the firm’s annual results presentation he wasn’t “a deal junkie”, but the firm has served notice of plans to conduct a $4bn to $5bn company or asset takeover within six to nine months.
“We are probably looking at six to nine months before we pull the trigger,” Froneman said in a televised interview with Bloomberg on the sidelines of the BMO Global Metals & Mining Conference in Florida on February 24.
“There’s a lot of work before we pull the trigger. A lot can change and of course today has been a reversal in terms of valuation gaps we’ve seen in terms of gold has gone up and PGMs [platinum group metals] have gone down, and that’s not good for our strategy. But I’m confident in the short- to medium-term things will pan out in our favour,” he said.
Asked by Bloomberg whether he could identify some of the potential assets in which he was interested, Froneman said: “I can’t mention the companies, but in terms of time scale: in six to nine months we’ll pull the trigger. I think we are doing a lot of work right now.”
Asked to verify if he meant that was when a bid would emerge, Froneman said: “Absolutely. Yes.”
Sibanye-Stillwater said last week that it would reinstate the dividend from the mid-year point owing to extremely strong cash flows, largely from PGM price improvements. The gold price – up $400/oz from the beginning of last year – was also robust amid coronavirus concerns and general global anxiety attached to trade war tensions, and climate change.
Shareholders have warned, however, that it wasn’t wise to keep turning the dividends tap on and off to accommodate merger and acquisition activity, Froneman said last week. He added that the dividend would be here to stay when it was re-adopted.
Sibanye-Stillwater suspended the dividend in mid-2017 after bidding R30bn for Stillwater Mining, having said dividends were wired into the company’s DNA. “We can’t keep starting and stopping dividends and we can’t be leveraged as before,” he said. “The board has a similar view and however we start, it has to be sustainable. You can accept that with confidence as we have to cut our cloth to suit on further M&A,” he said.
Froneman told Bloomberg he was “looking at certain assets” and that there were “a number of opportunities” requiring “a lot of desktop work”.
“We are not having any specific discussions yet. There is still a lot of work to do. But entering into discussions, doing a due diligence, getting all the finance in place … that is probably a six month process.” He would not get involved in hostile takeovers, however. “I don’t believe in it; it’s too risky.”
Froneman said he took seriously a shareholder’s question as to why the company wasn’t exposed to the silver industry, especially as the metal – whilst being a precious metal – also had strong industrial characteristics akin to PGMs. This was in line with the company’s strategy of becoming more involved in the mining of so-called ‘battery’ or high-tech metals, such as copper and lithium.