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Sibanye Says AngloGold, Gold Fields Fit Acquisition Strategy

A pedestrian walks along a road as the Sibanye-Stillwater Khuseleka platinum mine, operated by Sibanye Gold Ltd., stands beyond in Rustenburg, South Africa, on Wednesday, April 22, 2020. South Africa allowed mining companies to resume operations at half their normal capacity as the government takes its first steps to ease a nationwide coronavirus lockdown.

Sibanye Stillwater Ltd. said Johannesburg-based gold miners AngloGold Ashanti Ltd. and Gold Fields Ltd. would both fit with the company’s acquisition strategy.

“They fit into the category of gold producers we have publicly been saying we are looking at,” said James Wellsted, a spokesman for Sibanye. He declined to say whether Sibanye was preparing to make an offer for either company.

Combining with AngloGold and Gold Fields would create a rival to the world’s largest producers, Newmont Corp. and Barrick Gold Corp., Sibanye Chief Executive Officer Neal Froneman told Johannesburg-based Business Day earlier on Monday. The veteran dealmaker has acquired platinum and palladium assets since Sibanye was formed by spinning off Gold Fields’ oldest South African mines in 2013. In January, Froneman said he would like to double the size of Sibanye before he retires in two to three years time.

A spokesman for Gold Fields declined to comment. AngloGold said the company is focused on its plan to unlock value from its portfolio of gold assets.

Sibanye's value soars past Gold Fields, AngloGold

Sibanye’s market value has jumped to about 216 billion rand ($14 billion) as the price of platinum-group metals surged over the past two years. AngloGold and Gold Fields are currently valued at about 140 billion rand and 124 billion rand, respectively. Both gold producers have shifted their focus away from South Africa’s deep-level mines to more profitable operations in Australia, the Americas and the rest of Africa.

AngloGold climbed 5.5% and Gold Fields rose 2.9% in Johannesburg trading, while Sibanye was little changed.

A deal with Sibanye may not be attractive to AngloGold or Gold Fields investors, especially after the two companies sought to limit their presence at high-cost operations in South Africa, said Mandi Dungwa, an analyst at Kagiso Asset Management Ltd. in Cape Town. Sibanye shareholders may not like the high-risk perception in Tanzania and Democratic Republic of Congo, where AngloGold in particular has some of its key operations, she said.

“It doesn’t quite make sense why the shareholders in the gold companies would want this, the value proposition is not clear,” Dungwa said. “I don’t think the transaction would be right unless there is a significant premium. There is no real value except you get a bigger Sibanye.”

Sibanye is targeting companies with annual gold output of more than 1 million ounces, Wellsted said. The company has various options for financing a deal, including offering shares or cash, or using debt, he said.

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“We have been looking into this space for a long time but haven’t done deals because it got too expensive last year after Covid-19,” Wellsted said. “Obviously now the gold shares have pulled back quite a lot in the last six months, so we are starting to see value again.”


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