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The market welcomes Amplats R4.5 billion sale of its Rustenburg platinum operations to Sibanye

by , 09 September 2015

Earlier today, Anglo American Platinum (Amplats) announced the sale of its platinum mining and concentrating operations to Sibanye Gold for at least R4.5 billion.

The deal will make Sibanye Gold one of the world's largest platinum producers.

Let's take a closer look at the deal…

Amplats move away from conventional mines is good news for Sibanye

Amplats [JSE:AMS] will sell its “mining and concentrator operations” in Rustenburg to Sibanye Gold [JSE:SGL] for R1.5 billion upfront and a minimum of R3 billion later on, says BDLive. This comes as Amplats turns its focus to “shallower, lower cost and more mechanised operations”.

Sibanye will cover the upfront payment “in shares or cash,” reports the SABC. The remaining dues will comes from “35% of Rustenburg’s free cash flows over the next six years”.

The move by Sibanye will see black economic empowerment partners gain a 26% stake in the assets, says BDLive.

The deal includes the sale of its mining operations Bathopele, Siphumelele, Thembelani, Khuseleka and Khomanani, notes Mining Weekly. This is in addition to its “two concentrating plants, an on-site chrome recovery plant, the Western Limb Tailings Retreatment plant,” along with other relevant infrastructure assets and liabilities.

The CEO of Amplats, Chris Griffith, says that under Sibanye, the operations have “long-term and sustainable potential,” says Fin24. This as Sibanye has a “proven and successful track record of operating conventional mines in South Africa”.

Sibanye will rank as one of the world’s top ten platinum producers

Sibanye is already one of the biggest gold producers in the world, says IOL. The deal will see it become the eighth largest platinum producer.

Shares in both of the companies appeared to respond well to the news. After trading higher intraday, by market close shares in Amplats were trading 3% higher at R323.42 and shares in Sibanye were 5.41% higher at R18.50.

With the market taking the news of the deal well, time will tell how the venture works out for Sibanye over the coming years.

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The market welcomes Amplats R4.5 billion sale of its Rustenburg platinum operations to Sibanye
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