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Sibanye gets positive boost from ratings agencies

JOHANNESBURG – JSE-listed platinum and gold miner Sibanye on Wednesday received a Ba2 rating from Moody’s Investors Service with a stable outlook and a B+ rating with a positive outlook from Standard & Poor’s (S&P’s) Global Ratings.

In assigning the Ba2 corporate family rating to Sibanye, Moody’s noted that it reflected Sibanye’s solid business profile underpinned by diversified metal production revenues, as well as the company’s record of setting and sticking to conservative financial policies.

The ratings outlook assumes Sibanye will “deleverage as planned following the addition of the Stillwater acquisition debt and the successful integration of [its] new mining assets”.

S&P’s noted that the assigned B+ rating reflected its view that Sibanye would “generate positive discretionary cash flow after the Stillwater acquisition that should enable it to gradually reduce leverage in line with its stated financial policy”.

The ratings agency further outlined that the business risk profile assessment of Sibanye reflected a company with an ambitious growth strategy. “Its portfolio of assets is spread across the cost curve, with high exposure to labour-intensive South African mining operations, some of which are high cost and in need of restructuring,” it stated.

However, it added that Sibayne’s management team had a good record of cost reduction and reserve extension of its South African gold assets and, following the Stillwater acquisition, the company will rank as the world’s third-largest platinum and palladium producer and a top-ten gold producer, with a growing presence outside of its home market.

“We could revise the outlook to stable as a result of lower-than-expected metal prices, a stronger rand exchange rate, or unexpected operational issues that lead to weaker or more volatile earnings and cash flow than we anticipate in our base case,” it added.

Sibanye CEO Neal Froneman said the affirmative credit ratings endorsed the miner’s maturing business model and the value it created. “Refinancing the Stillwater acquisition bridge facility is a key focus area of ours and, hence, these ratings are a positive step forward in establishing an appropriate long-term capital structure,” he added.

Sibanye also announced it has mandated Citi, HSBC and Barclays, as global coordinators and book runners, as well as Credit Suisse and Standard Bank, as book runners, of a proposed $1-billion bond offering, the rating of which is expected to be in line with the newly obtained corporate ratings.

The proceeds of the issuance will be used to refinance part of the bridge loan facility obtained by Sibanye to finance the acquisition of Stillwater.

Source : Mining Weekly