Santa Rita & Serrote, Brazil

Overview

• Transaction rationale

  Please refer to announcement made on January 24, 2022, relating to the proposed acquisition of the Santa Rita and Serrote mines in Brazil

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  In line with Sibanye-Stillwater’s strategy to build an operating portfolio of green metals and related technologies, this Transaction is a further meaningful step – adding two low-cost, producing assets to its green metals portfolio. Both assets have been substantially pre-capitalised and as a result the Transaction will be immediately accretive to Sibanye-Stillwater’s cash flow and earnings.

  Santa Rita is one of the largest nickel-cobalt sulphide open pit mines in the world, located in the State of Bahia, Brazil and includes a preliminary economic assessment (PEA)-stage underground project. The mine produces a sulphide concentrate suitable for downstream processing to produce battery precursors and has outstanding infrastructure resulting from significant historical investment.

  Serrote is a producing open pit copper mine, currently in ramp up, located in the State of Alagoas, Brazil and developed at a cost of US$195 million, on time and under budget.

  Santa Rita and Serrote are both low-cost and low carbon intensity operations with strong cultural alignment with Sibanye-Stillwater’s focus on health and safety, the environment and local communities. In addition, each asset has a well-defined pipeline of organic growth opportunities including mine optimisation, on site resource potential and regional exploration opportunities.

  The Transaction represents an attractive opportunity to acquire two pre-developed and cash flow generating open pit nickel and copper mines. In addition to generating a strong return on investment based on current operations, there is substantial long-term upside from the potential development of the underground mine at Santa Rita, with this project to be further studied and evaluated over the next 18 months.

  The Brazilian based Santa Rita and Serrote management teams are led by CEO Paulo Castellari (previously CEO of Mubadala’s bauxite operation in Guinea and CEO of Anglo American’s phosphates and niobium business in Brazil). The teams, which have a well-established track record of operating in Brazil and have been responsible for successfully developing and optimising the assets, have committed to joining Sibanye-Stillwater ensuring continuity of expertise, knowledge, and proven mining experience. Santa Rita and Serrote, alongside the world-class management team, represent a strong platform for Sibanye-Stillwater to explore further growth opportunities in Brazil and throughout the Latin America region.

• Transaction overview

  Please refer to announcement made on January 24, 2022, relating to the proposed acquisition of the Santa Rita and Serrote mines in Brazil

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  Sibanye-Stillwater has entered into two separate inter-conditional Transaction Agreements for the acquisition of 100% of the shares in, and Appian group loans against, the 100% owned Appian subsidiary companies which are the sole owners of Santa Rita and Serrote, for a purchase price to be settled as follows:

  • US$1.0 billion to be settled in cash on closing (Upfront Purchase Price). The Upfront Purchase Price is subject to customary adjustments for net debt and working capital on implementation of the Transaction
  • A life of mine 5.0% NSR which will come into effect following the cumulative production of 252 million pounds of nickel equivalent metal, which is only expected to be payable once production from the underground mine commences. The 5.0% NSR is currently valued at US$218 million based on a preliminary economic assessment stage underground project which may be advanced by Sibanye-Stillwater in the future following the completion of further detailed studies

  Financial Information

  The combined net asset value of Santa Rita and Serrote, in the accounts, as at the year ended December 2020 is US$258 million. The Combined profit / (loss) attributable to Santa Rita and Serrote, in the accounts, for the year ended December 2020 is US$(143) million.

  Implementation of the Transaction

  Implementation of the Transaction is expected in the fourth quarter of 2021, being the effective date and will be funded from internal reserves.

  Conditions Precedent

  The Transaction is both subject to and conditional on the fulfilment of conditions precedent customary for a transaction of this nature, including approval of the Financial Surveillance Department of the South African Reserve Bank.

  Categorisation of the Transaction

  The Transaction constitutes a Category 2 transaction for Sibanye-Stillwater in terms of Section 9 of the JSE Limited Listing Requirements and accordingly no Sibanye-Stillwater shareholder approval is required.