Sibanye-Stillwater Strikes $500 Million Gold, Palladium Deal With Wheaton Precious Metals
July 16 2018 - 8:43AM
Dow Jones News
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)
Copyright (c) 2018 Dow Jones & Company, Inc.
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