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Sibanye doubtful of imminent platinum purchase as Anglo stalls

Kevin Crowley

The gold miner is interested in buying troubled platinum operations but has found Anglo American to be moving at a slower-than-anticipated pace.

Anglo American Platinum is aiming to sell as many as four mines and two joint ventures by the end of 2015, said Anglo American chief executive Mark Cutifani.

Sibanye Gold, the world’s best-performing major producer of bullion in 2014, is doubtful it will make its first platinum-asset purchase this year as sellers such as Anglo American are slowing the process. 

“What’s clear is that Anglo is going to move at a much slower pace than what we were anticipating,” Sibanye chief executive officer Neal Froneman said on Thursday in a phone interview. “Due to the much slower movement by other companies I’m becoming very doubtful something will happen this year.” 

Froneman plans to buy platinum assets in South Africa to sustain the company’s dividend as its gold mines reach the end of their lifespans. While he’s seeking operations valued by their owners at about R5-billion to R10-billion, he doesn’t plan to pay that much, he said in July. Anglo American Platinum is aiming to sell as many as four mines and two joint ventures by the end of 2015, Mark Cutifani, chief executive of parent company Anglo American, said July 25. 

Sibanye’s stock has more than doubled this year, making it the best performer in the Bloomberg Industry Senior Gold Index, as the company cut costs while increasing production at its three mature mines in South Africa. Froneman said platinum could make up 50% of the company’s revenue in the “medium term.” Sibanye increased the quantity of metal produced 8.5% to 711 900 ounces in the first half from a year earlier while reducing all-in costs 16%. 

Shares increase
The shares rallied as much as 5%, the most since June 20, and traded 4.6% higher at R26.68 at 9.16am in Johannesburg. Headline earnings dropped 36% to $61.2-million on the lower gold price and an impairment on its investment in Africa’s biggest refinery, the Westonaria, South Africa-based company said on Thursday in a statement. 

The company will pay a half-year dividend of R0.5 a share. Gold production is forecast to increase to about 1.61-million ounces this year, higher than the previous estimate of 1.4-million ounces, because of the acquisition of the Cooke operations, Froneman said. 

All-in costs will range from $1 070 an ounce to $1 085 an ounce, the company said. Capital spending is estimated at $320-million. – Bloomberg

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