Sibanye gets $500 million upfront in streaming deal with Franco-Nevada

Feyisayo Ajayi -
Key Points
  • Sibanye-Stillwater secures $500 million in non-debt funding through a gold and platinum streaming deal with Franco-Nevada. 
  • The agreement reduces Sibanye's debt ratio and ensures financial flexibility without imposing repayment obligations or minimum delivery requirements. 
  • Franco-Nevada’s involvement highlights Sibanye’s strong PGM asset quality, enabling monetization of future gold production while retaining PGM price leverage.

Sibanye-Stillwater, a precious metals mining company led by South African executive Neal Froneman, has secured a significant R8.8 billion ($500 million) gold streaming agreement with Franco-Nevada (Barbados) Corporation, a subsidiary of Franco-Nevada Corporation.

This milestone marks a strategic step forward, aligning Sibanye’s operations with sustainable practices, market demands, and long-term goals to deliver consistent value to its stakeholders.

Key terms of the $500 million gold-platinum deal

Under the agreement, Sibanye will initially supply 1.1 percent of 4E PGM concentrate until 87,500 gold ounces are delivered, with the rate decreasing to 0.75 percent for up to 237,000 ounces. Additionally, the company has the flexibility to substitute gold with platinum deliveries, contingent on approval from the South African Reserve Bank.

In exchange for gold and platinum streams from its Marikana, Kroondal, and Rustenburg operations, Sibanye receives a $500 million upfront payment. The terms include 80 percent of gold output for the life of the mines, with production payments set at 5 percent of the spot gold price up to 237,000 ounces, increasing to 10 percent thereafter.

Platinum deliveries are capped at 1.0 percent of concentrate for up to 48,000 ounces, rising to 2.1 percent until 294,000 ounces, with payments at 5 percent of spot platinum prices.

Strategic rationale and financial impact

CEO Neal Froneman hailed the deal as "value-accretive," emphasizing its role in bolstering Sibanye’s financial position.

The $500-million upfront payment will reduce the company’s net debt-to-adjusted EBITDA ratio by 0.60x to 0.70x, providing much-needed liquidity without imposing repayment obligations or minimum delivery requirements.

This innovative financing strategy allows Sibanye to capitalize on strong PGM prices while ensuring operational and financial flexibility. It also supports ongoing efforts to enhance the company’s capital structure and maintain its competitive edge in the precious metals market.

Sibanye’s position amid industry challenges

While navigating industry challenges such as job cuts and economic pressures, Neal Froneman continues to solidify Sibanye’s leadership in platinum, palladium, and gold production. The Franco-Nevada deal underscores the strength and longevity of Sibanye’s PGM assets and positions the company to explore cost-efficient brownfield projects across its operations.

Amid a thriving PGM market, the agreement reflects Sibanye’s ability to monetize future gold production while retaining exposure to rising PGM prices. This move enhances the company’s resilience and reinforces its commitment to delivering long-term value to its stakeholders.