Sibanye has work cut out on platinum goals

There’s a long way for Sibanye Gold to go to realise its platinum ambitions, adding an entire US mining company to its fold, marking yet another deal for the hungry company. Sibanye is undoubtedly the most dynamic mining company on the JSE, with deal after deal announced, but sometimes they do raise an eyebrow. The friendly $2.2bn purchase of Montana-based Stillwater Mining will come at a cost to shareholders who will be asked to stump up between $750m and $1bn, or more, in a rights issue to fund the deal, which will put heavy debt onto Sibanye’s balance sheet. Some analysts, such as Nedbank’s Leon Esterhuizen and Arnold van Graan, argue that the purchase is, among other things, a big bet on prices for platinum group metals (PGMs) and gold. Stillwater’s output is about 77% palladium and the rest platinum, and it is the third-largest source of the metals outside SA and Russia. While South African platinum mines achieve a higher overall price for the basket of PGMs including rhodium a...

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