What’s Next for Sibanye after the Aquarius Platinum Acquisition?



Aquarius Platinum acquisition completed

Sibanye Gold (SBGL) completed its Aquarius Platinum acquisition on April 12, 2016. Aquarius Platinum’s operations will be consolidated starting in the June 2016 quarter.

The company also disclosed Aquarius’s operational details for the quarter, and its production increased to 90,843 ounces.

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More acquisitions in store?

During its 4Q15 results, Sibanye’s management had mentioned that it sees numerous consolidation opportunities in platinum. The gold prices remain buoyant and Sibanye has a relatively ungeared balance sheet. Moreover, the shareholder support seen for the platinum transactions should encourage Sibanye to pursue similar acquisitions in the future.

In terms of timing, Sibanye’s management mentioned during its 4Q15 results call that it doesn’t need to bid down the Aquarius and Rustenburg acquisitions before making the next move. According to the company’s management, it had an organizational structure in place to facilitate further acquisitions and that they have a “limited window of opportunity.”

Speaking at the European Gold Forum in Zurich on April 20, Sibanye’s CEO, Neal Froneman, reiterated that the company is actively considering acquisitions.

Froneman added, “There are some seriously distressed companies out there. I don’t think we’ll be going to Australia or North America. We are sub-and southern-African focused when we talk of outside South Africa, and we’d want to buy producers.”

Sibanye’s outlook on PGM prices

Sibanye Gold (SBGL) believes that the PGM (platinum group metals) fundamentals remain positive. It flagged substantial industry-wide capex and production cuts, which should keep the supply in check.

Despite the diesel market concerns, the company believes that globally, autos still support PGM (PALL) (PPLT) demand. The company contends that in the near-term, the PGM pricing headwinds could persist. Limited trading liquidity, Volkswagen (VLKAY) fallout and excess above ground PGM stocks could impact the prices in the short-term.

Stillwater Mining (SWC), on the other hand, is more positive on palladium than platinum.


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