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MODERN MINING
September 2015
PLATINUM
I
n terms of the deal, Sibanye will acquire
the Rustenburg Operations for a minimum
consideration of R4,5 billion. This is made
up of an upfront payment of R1,5 billion
in cash or shares and a deferred consid-
eration equal to 35 % of the distributable free
cash flows generated by the Rustenburg Opera-
tions over a six-year period, subject to a mini-
mum nominal payment of R3 billion.
The Rustenburg Operations are located cen-
trally on the Western Limb of the Bushveld
Complex near the town of Rustenburg. They
comprise the Bathopele, Siphumelele and
Thembelani (including Khuseleka) mining
operations, two concentrating plants, an on-
site chrome recovery plant, the western limb
tailings retreatment plant and associated sur-
face infrastructure, as well as approximately
four months of working capital on a going con-
cern basis. The lease area covers an extensive
28 km strike length with the orebody extending
8 km down dip.
Three of the mining
operations covered by
the deal are relatively
old, with Khuseleka (now
part of Thembelani) and
Thembelani itself hav-
ing started operations
in the early 1970s and
Siphumelele in the early
1980s. Bathopele is of
more recent vintage, with
mining having commenced
in 1999. All are mined
conventionally except for
Bathopele which is a track-
less mechanised operation.
The mining depth at
Bathopele, a UG2 opera-
tion, is between 40 m and 350 m below surface
while at Thembelani and Khuseleka, which
both mine Merensky and UG2 ore, operations
take place between roughly 400 and 950 m.
Siphumelele, which currently mines Merensky
ore with UG2 planned for the future, is the
deepest of the mines with the mining depth
ranging from 600 m to 1 350 m below surface.
The transaction includes a Purchase of
Concentrate (PoC) agreement for all concen-
trate produced at the Rustenburg Operations
until 31 December 2018. Thereafter there will
be a transition to a toll treatment arrangement
to smelt and refine the concentrate from the
Rustenburg Operations.
The acquisition will roughly double the size
of Sibanye Gold – which will likely change
its name to reflect the fact that it is now no
longer purely focused on gold – and make it
the world’s fifth largest PGM producer. The
Rustenburg Operations are capable of produc-
ing 800 000 PGM ounces annually. Current
Sibanye Gold has performed impressively in turning around the ageing, high-
cost gold-mining operations which were previously part of Gold Fields’ South
African portfolio. With its much-anticipated acquisition of Anglo American
Platinum’s Rustenburg Operations now confirmed, the question is whether it can
produce a similar ‘miracle’ in the platinummining field and secure the future of
low-margin assets which are considered non-core by the present owner.
Neal Froneman (left), CEO of
Sibanye, and Chris Griffith,
CEO of Anglo American
Platinum, pictured at the
presentation at the JSE
announcing the acquisition
(photo: Arthur Tassell).
Sibanye Gold
takes the
plunge into platinum