Key Points
- Sibanye-Stillwater signs $500M streaming deal with Franco-Nevada.
- Deal strengthens finances and supports underground PGM growth.
- Agreement provides long-term financing with no repayment obligations.
Franco-Nevada (Barbados) Corp., a division of Franco-Nevada Corp., a Canadian company, has inked a $500 million streaming agreement with multinational metals and mining conglomerate Sibanye-Stillwater.
Sibanye-Stillwater secures $500M streaming deal with Franco-Nevada
The deal gives Franco-Nevada access to the gold and platinum streams from the South African operations of Marikana, Kroondal, and Rustenburg owned by Sibanye-Stillwater. In return, $500 million will be paid up front to Sibanye-Stillwater.
As per the agreement, Sibanye-Stillwater would supply 87,500 ounces of gold until 1.1% of platinum, palladium, rhodium, and gold (4E) platinum group metal (PGM) ounces are supplied as gold. 80% of the gold production will then be supplied once it delivers 0.75% of 4E PGM ounces till 237,000 ounces are delivered.
As stated by Mining weekly, Sibanye-Stillwater pledges to deliver 1% of platinum ounces until 48,000 are delivered, followed by 2.1% until 294,000 ounces are delivered.
Additionally, during the first delivery periods, the company will receive a production payment equivalent to 5% of the spot price for each metal; when 237,000 ounces of gold are delivered, this payment will increase to 10%.
The South African Reserve Bank must approve the transaction. A deal to change Franco-Nevada’s current 5% net profit stake in the Pandora property into a 1% net smelter return royalty is also included.
The sale is a “value-accretive transaction” that raises non-debt capital at a competitive cost, according to Neal Froneman, CEO of Sibanye-Stillwater.
The quality and long-term potential of Sibanye-Stillwater’s PGM assets, which continue to provide value for stakeholders, are highlighted by Franco-Nevada’s financial support, according to Froneman.
By making the $500 million payment, Sibanye-Stillwater will increase liquidity, enhance its capital structure, and lower its net debt-to-adjusted earnings ratio by up to 0.7 times.
Production from Sibanye-Stillwater’s Marikana, Kroondal, and Rustenburg operations—including possible subterranean expansion and replacement projects—is covered by the streaming agreement.
Long-term financing deal supports Sibanye-Stillwater’s PGM growth strategy
According to the corporation, low-cost brownfield redevelopment might be supported by its subsurface resources, potentially extending the mines’ lifespan. Several subterranean growth projects in the stream area, such as the Saffy and E3/E4 initiatives and the Kroondal depth extension projects, are undergoing feasibility assessments.
Commercially feasible results are necessary for the development of these initiatives, and Sibanye-Stillwater intends to release more information after feasibility studies are finished.
Sibanye-Stillwater claims that the deal protects the company’s exposure to growing PGM prices while offering long-term financing.
In a statement, the business said, “This strategic partnership represents a notable step for the company as it continues to optimize its financial structure and advance long-term growth opportunities within its South African PGM operations.”
