SIBANYE-Stillwater has unveiled a share buy-back programme equal to 5% of its issued share capital and worth a total of just under R10bn at the current price of the company – up 12% since May 26.
Neal Froneman, CEO of Sibanye-Stillwater, said the capital return programme would not replace the company’s dividend policy which is to pay 25% to 35% of normalised earnings. It said in February it would pay a R10.7bn final dividend after recommencing the payout at the interim stage in August.
A total of 147.7 million shares would be bought between Wednesday (June 2) and April 6 in 2022, it said.
“The approval of the buyback programme underpins our commitment to creating value for all stakeholders through disciplined adherence to our capital allocation framework and reflects the robust financial position and positive fundamental outlook for the group,” said Froneman in a statement.
Shareholders in the gold and platinum group metal (PGM) producer approved a special resolution to buy-back 20% of the company’s shares at its annual general meeting last week although a pocket of investors were against the proposal.
There is a debate among investors regarding the value of share buy-backs with one school of thought believing that shares are only bought back at, or near, the top of the market which is why companies have excess cash to deploy.
In May, Froneman, promised “future windfalls” as a result of record PGM prices after the firm’s mines generated R15.3bn in first quarter earnings before interest, tax, depreciation and amortisation.
The buy-back programme is bound to raise the bar on capital returns among Sibanye-Stillwater’s peer group, including Impala Platinum, Anglo American Platinum (Amplats) and Northam Platinum which are all benefiting from sky-high PGM basket pricing.