Neal Froneman’s Sibanye-Stillwater buys back $603.12 million in shares

Sibanye-Stillwater CEO Neal Froneman has classified the company’s recent move to buy back $603.12 million (R10 billion) in shares as a demonstration that it will not waste money on mergers and acquisitions.

The decision is linked to an earlier move in April to consolidate its gold assets in a merger with gold-sector peers AngloGold and Gold Fields. The two companies have divested most of their holdings in South Africa to focus on other markets.

Sibanye-Stillwater currently earns below 20 percent of its revenue from gold and had sought to use the merger to increase its stake in the sector.

Sibanye-Stillwater is the world’s largest platinum producer founded by Froneman in 2012. It is a multinational precious metals mining company with a diverse portfolio of platinum group metals in South Africa and the United States, gold and base metals operations and various mining projects in South Africa and the Americas.

Miningmx reported Froneman as saying: “It demonstrates that our capital allocation framework is real, and everyone thinks we’re just going to waste money on M&A and so on.”

According to Miningmx, shares in Sibanye-Stillwater are trading at R64,78 per share, nearly four-percent higher than 30 days ago and 85-percent higher than a year ago.

“I think we’re the most undervalued PGM stock, and therefore I’m not so sure that it makes sense for others to embark on a buy-back of the scale that we have. When you put all these things together, a buy-back is a really good option for us,” Froneman said

In the wake of the COVID-19 pandemic in March 2020, Sibanye-Stillwater, alongside Anglo American Platinum and Impala Platinum (Implant), declared force majeure on contracts following a three-week national lockdown.

“We are unable to supply (customers) with metal because now our operations have closed down, so we will have to declare force majeure,” Sibanye-Stillwater stated at the time.