Sibanye Gold proposed acquisition of Wits Gold
Securing the future of Beatrix
Westonaria, 11 December 2013: Sibanye Gold Limited (JSE: SGL & NYSE: SBGL) today announced that it had offered to acquire the entire issued share capital of Witwatersrand Consolidated Gold Resources Limited (“Wits Gold”) for a cash consideration totaling approximately R407 million (the “Proposed Transaction”). The Proposed Transaction is subject to various conditions precedent including inter alia: Wits Gold Board and shareholder approval; third party financier approvals and other regulatory approvals.
Wits Gold is a South African gold and uranium exploration company operating in the Witwatersrand Basin (“Wits Basin”) of South Africa. Wits Gold was formed in 2003 with the aim of acquiring properties adjacent to operating mines within the goldfields of the Wits Basin, in order to quantify their exploitable resources.
This exclusive focus on exploration served to build a comprehensive and unique geological understanding of the Wits Basin and led to the development of two high-quality projects, namely the De Bron Merriespruit and Bloemhoek projects, strategically located in the Southern Free State and with potential to deliver both short and long term value. Wits Gold also holds uranium resources at Beisa North and South, adjacent to Beatrix West, which has potential to be converted into a uranium producer.
Neal Froneman CEO of Sibanye Gold commenting on the Proposed Transaction said: “Wits Gold owns significant exploration and project areas in the Wits Basin, containing approximately 157 million ounces of gold Resources. More importantly, its advanced De Bron Merriespruit and Bloemhoek projects in the Southern Free State, are adjacent to Sibanye Gold’s Beatrix Operations and offer an opportunity to extend the operating life of Beatrix and unlock significant value in the region. This is consistent with Sibanye Gold’s strategy of extending its life of mine production profile in order to sustain its industry leading dividend yield in the long term.”
“Leveraging Beatrix’s existing infrastructure should significantly reduce the projected capital expenditure, thereby enhancing the already attractive economic potential of these Southern Free State projects and realising meaningful value for shareholders. The high uranium grade Beisa North and South properties are also adjacent to Beatrix West Section and may provide critical mass for the possible development of Beatrix West Section into a uranium mine in future.”
In addition to its existing assets, on 4 July 2013, Wits Gold submitted a binding offer for the acquisition of Southgold Exploration (Pty) Limited (“Southgold”), which owns the Burnstone Mine (“Burnstone”) on the South Rand Goldfield. Southgold is currently subject to business rescue proceedings following the commencement of the liquidation of Great Basin Gold Limited (“Great Basin”) in September 2012. Wits Gold has since advanced a suite of agreements, including transaction and refinancing agreements, which are expected to be executed shortly.
Burnstone is a shallow, semi-mechanised mine (360m below surface) containing a 6.4 Moz Reserve and 21.7 Moz Resource. Mine construction started in 2006 and mine infrastructure is 90% complete, with approximately US$800 million already spent on establishing the mine.
Froneman commenting on Burnstone said: “Burnstone potentially secures an additional source of low cost production, thereby enhancing Sibanye Gold’s existing production profile and shifting its operating profile towards shallower operations, as well as establishing a new operational base in the South Rand Goldfield.”
Sibanye Gold’s final decision to invest in Burnstone is subject to the implementation of the Proposed Transaction and the outcome of a final due diligence investigation over Burnstone.
Management will host a briefing and conference call at 15:00 CAT (08:00 EST).
The briefing will be held at: Macquarie Capital, The Place, South Building, 1 Sandton Drive, Sandton, Johannesburg. The detailed announcement and dial-in details for the conference call are available on the company website www.sibanyegold.co.za.
James Wellsted Head of Corporate Affairs Sibanye Gold Limited +27 83 453 4014 firstname.lastname@example.org