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Proposed placing of new ordinary shares

April 12, 2019 Business News No Comments Email Email

Sibanye-Stillwater announces its intention to conduct a non pre-emptive cash placing of new ordinary no par value shares in the authorized but unissued share capital of the Company (the “Placing Shares”) to certain institutional investors (the “Placing”), of up to 108,932,356 shares, which represents approximately 5 per cent of the Company’s existing issued ordinary share capital base which is the maximum authorized issuance under current authorities. As at the date of this announcement, gross proceeds will amount to approximately ZAR1.8 billion / US$130 million, based on the closing share price as at 9 April 2019.

The Placing is being conducted through an accelerated bookbuild process (the “Bookbuild”), which will be launched immediately following this announcement. J.P. Morgan Securities plc (the “Manager”) is acting as Sole Bookrunner in respect of the Placing.


Consistent with our three-year strategic goals, proactive steps to address our balance sheet leverage were taken during 2018, with US$400 million of the US$500 million stream transaction successfully applied towards reducing long term debt. Significant progress on our deleveraging strategy was however delayed by the sharp decline in adjusted EBITDA from our SA gold operations in 2018.

The safety related and other operational disruptions which severely impacted production from the SA gold operations in H1 2018 were compounded by the AMCU strike, which began on 21 November 2018, resulting in adjusted EBITDA from the SA gold operations for FY 2018, declining by 75% relative to FY 2017. Whilst the economic backdrop has improved significantly in 2019, with elevated PGM basket prices forecast to drive our covenant leverage ratios lower and measurably improve Group liquidity, the ongoing strike at the SA gold operations and the commencement of upcoming SA PGM wage negotiations at the end of Q2 2019, pose  potential operational risks that require due consideration.

In order to ensure that any potential upcoming events can be negotiated in a strategically appropriate manner, as well as to favorably position the Group for any unforeseen external macro-economic downside risks during this period, management deems it prudent to ensure sufficient financial flexibility for the Group through the proposed Placing.

The net proceeds from the Placing will enhance balance sheet flexibility and ensure that Group leverage is appropriately reduced. Management has confirmed that should these uncertain events be successfully navigated and appropriate gearing levels maintained, the resumption of dividend payments, in line with the existing dividend policy, are anticipated. Post transaction, assuming net proceeds to the Company from the Placing of ZAR1.8 billion, the leverage of the Company is expected to reduce by 0.2x Net debt / adjusted EBITDA, from c.2.5x as at 31 December 2018, to c.2.3x pro forma Net debt / adjusted EBITDA.

Quarter 1 2019 update

Attributable production from the South African PGM Operations is estimated to be approximately 234,000 4Eoz and in line with annual guidance. For Rustenburg, production includes ounces contained in concentrate that was delivered during Q1 for toll treatment. Delivery of refined metals is only expected during Q2 2019.

The US PGM operations experienced a slower than planned start to the year producing an estimated 131,000 2Eoz, with lower production volumes resulting in temporarily elevated costs. Sales however, were in line with plan. Production is planned to return to normal levels from Q2 and full year production guidance remains unchanged. Following the commissioning of the second furnace (EF2) at the Columbus Metallurgical Complex, throughput at the smelter improved, resulting in a drawdown of recycling metal inventories. The recycling division is expected to average 23.0 tonnes of feed material per day in the first quarter of 2019, compared to an average feed rate of 22.0 tonnes per day in 2018.

Gold production during Q1 2019 was negatively impacted by the ongoing AMCU strike and is expected to be approximately 104,000oz, 90% of what was planned under strike conditions, and 36% of production levels relative to the same period in 2018. Unit operating and all in sustaining costs will be negatively impacted by the reduced production levels.

Details of the Placing

The Placing will be made outside the United States in reliance on Regulation S (“Regulation S”) under the U.S. Securities Act of 1933, as amended (the “Securities Act”) to persons who are not U.S. persons (as defined in Regulation S), and within the United States only to persons reasonably believed to be qualified institutional buyers within the meaning of Rule 144A under the Securities Act in transactions exempt from the registration requirements of the Securities Act. No American Depositary Shares representing ordinary shares of the Company are being offered in the Placing. In South Africa, the Placing will be made only by way of separate private placements to: (i) selected persons falling within one of the specified categories listed in section 96(1)(a) of the South African Companies Act, 2008 (“South African Companies Act”); and (ii) selected persons, acting as principal, acquiring Placing Shares for a total acquisition cost of R1,000,000 or more, as contemplated in section 96(1)(b) of the South African Companies Act (“South African Qualifying Investors”).

The Placing Shares will be issued by the Company under and in accordance with its existing general authority to issue shares for cash, granted by shareholders at the 2018 annual general meeting of the Company (the “General Authority”) and will be issued only to public shareholders in accordance with the General Authority.

The price per ordinary share at which the Placing Shares will be placed (the “Placing Price”) will be decided at the close of the Bookbuild. The timing of the closing of the Bookbuild, the Placing Price and allocations are at the discretion of the Company and the Sole Bookrunner. The Placing Price will be announced as soon as practicable on the Stock Exchange News Service of the exchange operated by the JSE Limited (“JSE”) after the close of the Bookbuild.

The Placing Shares, when issued, will be fully paid and will rank pari passu in all respects with the existing ordinary shares in the issued share capital of the Company, including the right to receive all dividends and other distributions declared, made or paid after the date of issue of the Placing Shares.

Subject to the approval by the JSE, listing and trading of the Placing Shares on the JSE (“Admission”) is expected to commence at 09h00 Monday, 15 April 2019 (or such other time and/or date as may be agreed between the Company and the Sole Bookrunner). Investors will receive Placing Shares which are listed and trading on the JSE.

Placing Shares purchased in the Placing may not be deposited into the Company’s American Depositary Share program until at least 40 days after closing of the Placing.

Pursuant to the terms of the placing agreement entered with the Manager, Sibanye-Stillwater has agreed, subject to certain exclusions, to a lock-up arrangement in respect of Sibanye-Stillwater’s equity securities for a period of 120 days from the date of the Placing.

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