South African executive Neal Froneman’s Sibanye-Stillwater to acquire two mines in Brazil in $1-billion deal

South Africa-based mining behemoth Sibanye-Stillwater has disclosed plans to acquire two mines in Brazil by the end of the year, as the mining company moves forward in its commitment to build an operating portfolio of green metals and related technologies.

The Neal Froneman-led mining giant is the world’s largest primary producer of platinum, second-largest primary producer of palladium and third largest producer of gold.

A market update published this morning, Oct. 26, revealed that the company has signed a definitive purchase and sale agreement to acquire a 100-percent stake in the Santa Rita nickel mine and the Serrote copper mine for a $1-billion cash consideration.

The transaction, which follows the Keliber, Sandouville and Rhyolite Ridge transactions announced earlier this year, is expected to be implemented in Q4 2021, with the cash consideration for the acquisition funded by the company’s internal reserves.

In addition to the $1-billion cash consideration, Sibanye-Stillwater also agreed to pay five-percent royalty to Santa Rita’s owners from the sale of its products over the mine’s production life.

A preliminary economic assessment conducted by mining experts revealed that the five-percent  royalty is valued at $218 million. It is payable once production from the underground mine commences. 

Froneman, the CEO of Sibanye-Stillwater, said the transaction is a significant step in the company’s ongoing strategy to position the business for continued value creation during our transition into a climate change resilient business. 

“The transaction represents a unique opportunity for Sibanye-Stillwater to acquire significantly pre-developed and precapitalised, low-cost, producing nickel and copper assets with strong credentials, which will continue to be managed by a high-quality team with a wealth of operating experience in Brazil,” he said.

Santa Rita is one of the largest nickel-cobalt sulphide open-pit mines in the world. The mine produces a sulphide concentrate suitable for downstream processing to produce battery precursors.

Meanwhile, Serrote is an advanced and pre-developed open-pit copper mine with a reserve life of 13 years and a significant resource and optimization potential.

The combined net asset value of Santa Rita and Serrote, as of December 2020 is assessed at $258 million, while the mines accrued a total loss of $143 million at the end of 2020.

Figures contained in Sibanye-Stillwater’s financial results revealed that the company has a total assets value of $10.26 billion as of June 2021. It also holds $1.83 billion in cash and cash equivalents. This puts the miner in a favourable position to acquire the mines.

Omokolade Ajayi
Omokolade Ajayi
Omokolade Ajayi is a financial reporter at Billionaires.Africa. Previously, he worked as a journalist at Nairametrics. Omokolade is a seasoned financial analyst and reporter with in-depth knowledge of and expertise in equity markets, and financial and economic analysis. He has a degree in economics and is a certificate holder of the CFA Institute’s Investment Foundation Program.

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