Anglo American sells platinum mines for R4.5 billion to Sibanye Gold

Otmane El Rhazi from The Bullion Desk.

Anglo American Platinum will sell its Rustenburg operations to Sibanye Gold for at least R4.5 billion ($330 million), it said in a Wednesday announcement.

The sale and purchase agreement -signed between the companies on Tuesday – will consist of an upfront payment in cash or Sibanye shares of R1.5 billon and a deferred consideration. The consideration is calculated as the equivalent of 35 percent of the distributable free cash flow generated by the Rustenburg operations over a defined period with a minimum amount payable of R3 billion.

Since 2012, Anglo American Platinum had started restructuring its business, consolidating its mines – which removed some 350,000 ounces of unprofitable platinum production – and exiting non-core operations including the Rustenburg operations.

“Given the number of operations within its portfolio, the company believes that certain operations will receive greater management focus under different ownership where the mines will not be competing for allocation of capital,” Anglo American said on its rationale for the sale.

Sibanye and Anglo American Platinum have also entered into a sale and toll treatment of concentrate agreement. Under the agreement, Sibanye will sell all concentrate produced by the Rustenburg operations to Anglo American Platinum until December 31, 2018. Anglo American Platinum will also undertake the smelting and refining activities in respect of the Rustenburg operations for a period of no less than two years but up to eight years starting 1 January 2019.

Anglo American had announced last week that it was in talks with Sibanye Gold to sell its Rustenburg operations.

The Rustenburg operations consist of the Bathopele, Siphumelele and Thembelani mining operations -which include the integrated Khuseleka  and Khomanani mining operations – two concentrating plants, an on-site chrome recovery plant, the Western Limb tailings retreatment plant and associated surface infrastructure.

Operations at Rustenburg were hit by a five-month strike last year that affected production. These operations produced 108,000 ounces of platinum in the second quarter of this year.

(Editing by Kathleen Retourne)

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