Sibanye-Stillwater Strikes $500 Million Gold, Palladium Deal With Wheaton Precious Metals

By Carlo Martuscelli

Sibanye-Stillwater Ltd. (SBGL) said Monday that it had entered an agreement to provide a subsidiary of Wheaton Precious Metals Corp. (WPM.T) with its gold production and a percentage of its palladium production and from its U.S. operations in exchange for a $500 million up-front payment.

Under the terms of the deal, the miner will be paid 18% of the spot palladium and gold prices delivered to Wheaton Precious metals until the advanced payment has been paid back. After that, it will receive 22% of the spot palladium and gold prices, it said.

Sibanye-Stillwater said that it will deliver to Wheaton all the gold from its U.S. operations over the course of their lifetime. It will also deliver 4.5% of annual palladium production, until 375,000 ounces are delivered and the portion of the up-front payment attributable to palladium has been paid. Afterward, 2.25% of palladium production will go to Wheaton, until 175,000 ounces has been delivered as well as the up-front payment has been completely paid off. For the remainder of operations, 1% of palladium produced will be delivered, it added.

Sibanye-Stillwater said that there was no minimum production amount included in the deal, nor was there any obligation to pay down the advanced amount beyond production delivery.

Explaining the rationale for the deal, the miner said that the deal will reduce its net debt to adjusted Ebitda ratio by between 0.6x and 0.7x.

"The transaction results in a significant reduction in group leverage, improving flexibility and reducing financing costs and risk," said Chief Executive Neal Froneman.

Sibanye-Stillwater also said that the deal allows it access to a diversified source of funding.

Write to Carlo Martuscelli at carlo.martuscelli@dowjones.com

(END) Dow Jones Newswires

July 16, 2018 08:28 ET (12:28 GMT)

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