Dual-listed Sibanye-Stillwater’s subsidiaries, Western Platinum, Eastern Platinum and Lonmin – collectively known as the Marikana operations – have entered into a release and cancellation agreement with RFW Lonmin Investments regarding the early settlement of a prior streaming agreement.
The long-term streaming facility, which is valued at $81-million, was settled by a cash payment of $50-million, funded through a new short-term platinum prepay facility secured from Merrill Lynch International.
Sibanye on Wednesday noted that the transaction would “extinguish a high-cost, secured, long-term financing instrument, and replace it with a significantly lower-cost, unsecured, short-term facility”.
This would provide operational flexibility for the Marikana operations while enabling the immediate sale of uncommitted palladium and rhodium metals to realise “optimal pricing opportunities”.
The early settlement has been financed using a forward platinum group metals sale agreement with Merrill Lynch whereby Western Platinum would receive a prepayment amount of $50-million, or about R764-million, in exchange for delivering 72 886 oz of platinum between June and December this year.
The funding is expected to be accounted for as deferred revenue.
The delivery obligation amounts to about 10% of Western Platinum’s, and 3% of the Sibanye Group’s planned 2020 platinum, palladium, rhodium and gold production.
The early settlement extinguishes Western Platinum’s commitment to deliver about 62 000 oz of platinum, palladium, rhodium, iridium, ruthenium and gold over the next six years, at an estimated price of about $255/oz.
The prepay facility is only linked to platinum, and the Marikana operations are released of all security obligations to RFW.