Sibanye-Stillwater has struck a R1.8 billion gold prepayment arrangement and concluded a refinancing transaction for its R5.5bn rand-denominated revolving credit facility from Nedbank CIB and RMB that it has now resized to R6bn.
Hard done by currently depressed platinum group metals (PGM) prices, and bracing for intense capital requirements for its lithium projects, Sibanye-Stillwater has also been roiled by a $2 billion loss (R35.6bn) in 2023. The company has had to cut capital and retrench from its South Africa operations.
Sibanye-Stillwater CEO, Neal Froneman, said yesterday the gold prepayment arrangement it had secured would be helpful for the company from a strategic financing perspective.
The gold prepayment is a proactive, strategic financing alternative that improves the group’s liquidity and strengthens the balance sheet, while retaining leverage to potential increases in the gold price,” he said.
Under the arrangement, Sibanye-Stillwater’s South African gold-producing unit, Sibanye Gold Proprietary Limited will deliver up to 1 497kg of bullion in monthly tranches between October, 2024 and November, 2026.
“The gold delivered will be subject to a floor price of R1 350 000 per kilogram and a cap price of R1 736 000 per kilogram. The funding will be applied towards partially repaying the group’s rand revolving-credit facility,” the company said.
Apart from this, Sibanye-Stillwater had also concluded a refinancing transaction for its R5.5bn revolving-credit facility. After concluding the refinancing transaction, the company has bumped up the facility to R6bn.
Froneman said the transaction, backed by Nedbank CIB and RMB was a reflection of South African lenders’ “confidence and support” for the company.
“These financing agreements significantly mitigate group financial risk and provide additional financial flexibility and optionality. We have also made good progress on other initiatives designed to strengthen our balance sheet without resorting to equity, and we look forward to providing the market with more detailed information in due course,” he explained.
The refinanced and upsized credit facility for Sibanye-Stillwater will mature in August, 2027. New terms for the refinanced R6bn facility include an option for Sibanye-Stillwater to increase the amount by a further R1bn later through inclusion of additional lenders.
There is also an option to extend the facility’s three-year tenor through two further one-year extensions.
The interest margin for the facility would also be based on a sliding scale between 2.20% and 2.80%. In addition to Sibanye-Stillwater and its subsidiaries acting guarantors against the credit facility, Keliber has also been roped in as a guarantor.
In June, South African banks rescued the loss-making PGM and gold miner after agreeing to extend debt covenant limits for the period June 30 to June, 2025 giving the company immense respite.
As at the end of December, 2023 Sibanye-Stillwater had a debt of R11.9bn against the backdrop of a debt leverage that was below the required 2.5x covenant limit. Lenders in Sibanye-Stillwater consisting of four South African banks and 11 international finance institutions, “agreed to uplift the leverage covenant limit” for all of the miner’s credit facilities – “from the current 2.5x net debt to adjusted earnings before interest, taxes, depreciation, and amortisation to 3.5x for the period from June 30, 2024 to June 30, 2025.
The additional headroom resulting from the uplift provided Sibanye-Stillwater with further financial flexibility and enhanced market confidence in the outlook for the group, Froneman said at the time.
Analysts said the gold prepayment arrangement and the refinancing as well as resizing of the company’s credit facility “demonstrate Sibanye-Stillwater’s proactive approach to managing their finances and improving their financial” health.
BUSINESS REPORT