Sibanye raises another R1.7bn in gold prepayment deal with Citibank

A general view of Sibanye Gold mine in September 4, 2015 in Carltonville, South Africa. Sibanye is an independent South African-based mine which is one of the world's 10 largest gold producers. (Photo by Gallo Images / City Press / Elizabeth Sejake).

A general view of Sibanye Gold mine in September 4, 2015 in Carltonville, South Africa. Sibanye is an independent South African-based mine which is one of the world's 10 largest gold producers. (Photo by Gallo Images / City Press / Elizabeth Sejake).

The funding is expected to be accounted for as deferred revenue under International Financial Reporting Standards.

Sibanye-Stillwater on Thursday further enhanced its liquidity position by concluding a forward gold sale arrangement with Citibank.

According to the agreement, Sibanye has received a cash prepayment of US$125 million, approximately R1.75 billion, in exchange for the future delivery of 105,906 ounces, or 3,294 kilograms, of gold during the fourth quarter of 2019.

This is subject to a floor price of US$1,200 per ounce and a cap price of US$1,323 per ounce of gold.

The funding is expected to be accounted for as deferred revenue under International Financial Reporting Standards and will be applied towards the repayment of revolving credit facilities.

Neal Froneman, Sibanye chief executive, said that the transaction complemented the company’s recent equity raise and is specifically designed to enhance our access to liquidity.

On Wednesday, Sibanye raised R1.7 billion, or US$120 million, following the successful completion of the placing of more than 108 million new ordinary no par value shares.

Following the equity raise and this transaction, Sibanye now has liquidity of approximately R10 billion, US$700 million, of undrawn facilities.

“The gold prepayment, in addition to the share placing announced earlier this week, are both strategic and pre-emptive levers to enhance our balance sheet flexibility and ensure that the group is appropriately positioned and sufficiently robust to endure any exogenous challenges,” Froneman said.

– African News Agency

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