Precious metals mining company Sibanye-Stillwater expects Competition Commission finality on its proposed acquisition of platinum company Lonmin in October, following the closure of its transaction with surface gold mining company DRDGold, which is expected to make a positive contribution to Sibanye-Stillwater earnings.

South African Reserve Bank and UK competition approvals have been obtained on the Lonmin transaction and selected surface assets from Sibanye-Stillwater’s gold tailings retreatment project on the West Rand have been vended into DRDGold.

“We’ve had very constructive interactions with the South African Competition Commission on Lonmin. We do believe we’ll probably have finality by October and post that, we’ll then look for shareholder approvals both from Lonmin and from Sibanye-Stillwater,” Sibanye-Stillwater CEO Neal Froneman said in presenting the company’s latest operating and financial results for the six months ended June 30.

Responding to a question by Standard Bank resources equity analyst Adrian Hammond on the length of time the Competition Commission was taking to complete its investigation, Froneman noted that competition approvals invariably took considerable time and that the commission was only about two weeks behind schedule.

“This has been a very complex transaction,” he said, putting the complexity down to the three-year job loss profile based on shafts coming to the end of their life rather than competition and size issues,” Froneman said.

Sibanye-Stillwater’s employee complement will increase from the current 66 000 people to close to 90 000 people with Lonmin, headed by CEO Ben Magara.

“Our interactions with the Competition Commission have been positive. There’s a willingness to address the crisis that Lonmin finds itself in and I think we’re seen as an acceptable solution, especially if you look forward, and you believe in a changing platinum demand scenario, which we do.

“There’s been a lot of interaction between the Competition Commission and the communities and between Lonmin and its communities and there has been a lot of interaction between us and the Lonmin communities.

“I do think we’ve got to a point where there’s recognition that this is a new chapter and, if we’re all responsible and do the right things and create the right platform for profitability, there’s real upliftment potential down the line, and I actually find the Lonmin community quite supportive,” he said.

Sibanye-Stillwater provides affordable home ownership for its employees and has delivered many community projects in fields including agriculture, brickmaking, waste management, hospitality, tourism and clothing manufacture.

Competition Commission approval will be followed by a series of Competition Tribunal hearings and then approvals from Lonmin and Sibanye-Stillwater shareholders.

“From the Sibanye-Stillwater side, it’s really about the issuing of more shares and then final call approval of the scheme. That should happen late this year, very early next year,” Froneman added at the presentation, which was covered by Mining Weekly.

Drdgold Partnership Concluded

Froneman described the DRDGold partnership as setting a path for the company to deal with what it considered valuable but not core assets.

“Importantly, the market should note that DRDGold will be fully consolidated into our operational and financial results going forward. We think it’s a well-run business and should have a positive earnings before interest, taxes, deperciation and amortisation impact,” he said.

Sibanye-Stillwater now owns 38.05% of DRDGold and has an option to subscribe for additional DRDGold shares at a 10% discount to increase its shareholding to a controlling 50.1%.

The partnership with DRDGold is described as ensuring the extraction of value from under-ued infrastructure and gold tailings, while retaining upside to its West Rand Tailings Retreatment Project and future growth in DRDGold, which is headed by CEO Niël Pretorius.