Sibanye shareholders vote overwhelmingly for Lonmin deal

Sibanye-Stillwater CEO Neal Froneman. Picture: MARTIN RHODES
Sibanye-Stillwater CEO Neal Froneman. Picture: MARTIN RHODES

Sibanye-Stillwater shareholders voted overwhelmingly in favour of the all-share takeover of the world’s third-largest platinum miner.

In a brief extraordinary shareholder meeting ahead of the group’s annual general meeting, 99.65% of Sibanye shareholders present voted in favour of the Lonmin deal.

Sibanye CEO Neal Froneman said his “only surprise” was the 0.35% of shareholders who voted against the deal.

Lonmin shareholders will vote in London at around midday on their decision on the deal.

Lonmin needs 75% approval for the transaction to go ahead.

Its biggest shareholder, the state-owned Public Investment Corporation (PIC), which holds 30% of Lonmin’s stock, has come under pressure from a number of analysts to hold out for a higher offer than the one-for-one share offer from Sibanye.

Analysts have said the offer undervalues Lonmin’s assets.

However, with the PIC holding 9% of Sibanye and considering the overwhelming vote in favour of the Lonmin deal, it is highly likely that SA’s largest fund manager will vote in favour of the deal.

 Froneman told Business Day in an interview that the deal was “highly likely” to secure Lonmin shareholder approval, with the “downside risk” to the platinum miner a major factor that would have to be considered.

Lonmin has noted that it had lost a number of senior employees in the wait for the Sibanye transaction and had low staff morale, leading to a softening of its full-year production target to about 640,000oz of platinum and sharply higher costs. 

The lack of a better offer from any other company and the feedback from shareholders with stakes in both companies underscored Sibanye’s confidence in the success of the deal, Froneman said.

“If, for some reason, the Lonmin shareholders vote against this deal, then that’s it. We walk away and each goes our separate ways,” he said, adding there was a provision in the original agreement that would allow Sibanye to buy certain Lonmin assets.

Sibanye has a vast swathe of mines and concentrators bordering Lonmin’s assets that made Sibanye the only logical buyer for those assets to bring down costs and fill the entire processing pipeline, which is not operating at full capacity, he said.

The transaction, which was unveiled in December 2017, will make Sibanye one of the world’s largest producers of platinum group metals (PGMs), with a rare mine-to-market set of assets, including the base and precious metals refineries that will come with the Lonmin transaction.

The price of the four PGMs, when the deal was announced, was about R13,000/oz. It is now R17,000/oz.

Froneman said Sibanye would have to revisit job cut plans from the 12,600 retrenchments Lonmin announced at the time and the 890 extra cuts that Sibanye expected.

Sibanye had yet to become involved in the management of Lonmin’s mines as would have normally been the case once the Competition Tribunal gave its approval for the deal last November because of an appeal against the decision by the Association of Mineworkers and Construction Union (Amcu).

Amcu lost that appeal two weeks ago, clearing the way for the shareholder votes. 

Lonmin shareholders will own about 11% of the enlarged group if the deal goes ahead.