Sibanye secures R1.8bn via gold prepayment deal

Sibanye-Stillwater has improved its cash position after securing a R1.8bn gold prepayment deal that will see the group sell almost 1,500kg of future gold production for upfront cash, which it will use to pay debt.

Group CEO Neal Froneman said the company had reached an agreement to refinance and increase its R5.5bn revolving credit facility to R6bn with SA lenders, which was due to mature in November 2024. Refinancing allows a borrower to replace an existing debt obligation with a new one on more favourable terms.

“The gold prepayment is a proactive, strategic financing alternative that improves the group’s liquidity and strengthens the balance sheet while retaining leverage to potential increases in the gold price,” Froneman said on Wednesday.

“We are also pleased to have refinanced and upsized the rand revolving credit facility, which is a strong signal of confidence and support from our SA lenders.

“These financing agreements significantly mitigate group financial risk and provide additional financial flexibility and optionality. We have also made good progress on other initiatives designed to strengthen our balance sheet without resorting to equity and we look forward to providing the market with more detailed information in due course.”

Sibanye said the R1.8bn would be granted in exchange for delivery of 1,497kg of gold in equal monthly tranches from October 2024 to November 2026. The gold delivered would be subject to a floor price of R1.35m/kg and a cap price of R1.73m/kg.

Froneman said the mining house had also reached agreement to terminate a commercial supply contract at Sandouville refinery at a cost of $37m. The contract termination was to address the Sandouville refinery’s projected losses, among other reasons. 

“Despite the significant operational and cost improvements achieved recently, the Sandouville refinery remains loss making and, as such, we thank our partners for their understanding and consideration in allowing for the consensual cancellation of the supply agreement,” Froneman said.

“We are excited to be progressing with our battery metals strategy of developing downstream exposure to Europe’s battery metals value chain. We look forward to working with all stakeholders, including the French authorities, to build a leading pCAM [precursor cathode active material] facility in Europe.”

khumalok@businesslive.co.za