Keliber

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• Investment rationale

  The lithium battery market is growing worldwide as traffic is becoming increasingly electric and the battery needs of several industries are increasing. The growing demand for batteries results in substantial demand for raw materials such as lithium.

  The importance of Europe in the lithium-ion value chain is expected to increase during the 2020’s. Keliber is expected to be the first vertically-integrated lithium producer in Europe.

  
• Transaction overview

  p>Following Sibanye-Stillwater’s initial investment, a definitive feasibility study (DFS) was completed that confirmed the quality and inherent value of the Keliber project. This positive DFS is underpinned by the 31% increase in Mineral Reserves announced by Keliber on 15 September 2021.

  At 31 December 2021, Keliber had an attributable Mineral Resource of 42,500 tonnes at 1.1% lithium oxide (Li₂O), and a lithium carbonate equivalent (LCE) Mineral Resource of 105,100 tonnes. In addition, there has also been a significant improvement in the fundamental outlook for the lithium market.

  Subject to the receipt of outstanding permits, Keliber aims to be the first fully integrated lithium producer in Europe with full production of approximately 15,000 tonnes of lithium hydroxide annually and direct market access to European markets from the Port of Kokkola where its fully permitted¹ lithium chemical plant is based.

  Finland is an attractive, low-risk mining jurisdiction – it is included in the top five jurisdictions in the Fraser Institute rankings. A National Battery Strategy is in place that outlines Finland’s objective to be a competitive, competent and sustainable player in the international battery industry. Europe is rapidly becoming a leading hub for the manufacture of and market for batteries and electric vehicles. Keliber’s location in Finland enables efficient transport of lithium hydroxide to European customers.

  ¹ Fully permitted, but stakeholders have the right to appeal the permit approval process

• Transaction overview and terms

  The Transaction sequence for Sibanye-Stillwater and the Finnish Minerals Group achieving this dual proposed shareholding in Keliber comprises:

  As per the Keliber shareholders agreement, the fair market value (”FMV”) of the Keliber Project was determined by the average valuation of two independent investment banks namely BMO Capital Markets Ltd and RBC Capital Markets LLC
  Sibanye-Stillwater implementing the Pre-emptive Offer to increase its shareholding in Keliber to 50% plus 1 share for a cash consideration of €146 million, being the FMV (less 5%) of the Keliber project

  Sibanye-Stillwater intends to implement the Pre-emptive Offer on 11 July 2022 following an Extraordinary General Meeting (“EGM”) which is required to approve the issue of shares to Sibanye-Stillwater for both the Pre-emptive Offer and the Capital Raise.

  Simultaneously, Sibanye-Stillwater will launch the Voluntary Offer
  If all minority shareholders (save for the Finnish Minerals Group) accept the Voluntary Offer, the total consideration for the Voluntary Offer will amount to €196 million (excluding transfer tax which is payable by Sibanye-Stillwater)(based on 1,258,901 Keliber shares held at the FMV per share), with Sibanye-Stillwater’s shareholding increasing to 86.1% and the Finnish Minerals Group retaining a shareholding of 13.9%

  Subsequent to the Voluntary Offer, the Capital Raise will be executed to achieve a circa 50:50 debt to equity ratio. The maximum possible total cost of the Capital Raise to Sibanye-Stillwater is around €104 million and will be dependent on the extent to which minorities accept the Voluntary Offer made by Sibanye-Stillwater and the extent to which minorities and the Finnish Minerals Group participate in the Capital Raise

  The Transaction therefore entails a maximum possible cost to Sibanye-Stillwater of €446 million (excluding transfer tax), of which a possible maximum of €250 million in equity will be contributed by Sibanye-Stillwater.

  Conventional debt facilities are currently being advanced with third party lenders to at least match the €250 million equity contribution to fund construction of the project.

  Sibanye-Stillwater anticipates that all aspects of the various transactions described above will be completed by 13 February 2023, being the effective date.

  Conditions precedent

  The following are the conditions precedent in respect of the various aspects to the Transaction:

  • Approval by the South African Reserve Bank of the Transaction
  • 50% of Keliber shareholders (including Sibanye-Stillwater and the Finnish Minerals Group) voting in favour of the project financing, including both the equity and debt components, to be proposed by the Keliber board at the EGM
  • The Voluntary Offer is subject to the passing of resolutions at the EGM approving the Pre-emptive Offer and the Capital Raise
  • The absence of a material adverse change
  • The Capital Raise is subject to the successful exercise of the Pre-emptive Offer by Sibanye-Stillwater

  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.

• Keliber’s lithium project in a nutshell

  The Keliber project consists of several advanced stage lithium spodumene deposits, with significant exploration upside in close proximity to the existing project. Based on a feasibility study completed in 2019 and improved in 2020, Planned annual production is 15,000 tonnes of battery grade lithium hydroxide. Production is anticipated to start in 2024. The project includes the development of a chemical plant in Kokkola, approximately 50 kilometres from the mining area, which will produce battery grade lithium hydroxide. Future lithium hydroxide production has not been committed to any offtake party.

  

  

  At 31 December 2021, Keliber had an attributable Mineral Resource of 42,500 tonnes at 1.1% lithium oxide (Li₂O), and a lithium carbonate equivalent (LCE) Mineral Resource of 105,100 tonnes.

  For more information, visit https://www.sibanyestillwater.com/business/europe/keliber