Gold One International has entered into an agreement with Sibanye Gold to merge its 74% shareholding in Newshelf 1114 Proprietary, which owns Rand Uranium.Newshelf holds a 100% shareholding in Rand Uranium – being the Cooke 1-3 underground operations and Randfontein surface operations – and, which will also hold 100% of Ezulwini Mining Company after an internal restructuring – being the Cooke 4 underground operation – in exchange for a 17% interest in the fully diluted share capital of Sibanye Gold through the issue of new ordinary shares (the proposed transaction). The consortium of Chinese shareholders, which includes Baiyin Nonferrous Group Company Limited, the China-Africa Development Fund, Long March Capital Limited and CITIC Kingview Capital Management Company Limited and holds 90% of Gold One, considers this a strategic stake in Sibanye Gold and strongly supports Sibanye Gold’s business strategy and objectives. Sibanye Gold is a South African gold mining company which is forecast to produce 1.35 million ounces from its Kloof, Driefontein and Beatrix operations in the West Witwatersrand and Free State Gold Fields in 2013, making it one of the largest gold producers in South Africa and among the top 10 global gold producers. The strong cashflows from Sibanye Gold’s operations will be invested in the existing operations to extend the life of its mines and improve dividend payouts to shareholders. Sibanye Gold has a robust dividend policy to return between 25% and 35% of normalised earnings to shareholders and, subject to debt restrictions and free cashflow, will also consider paying special dividends. The company has a strategy to fully utilise its free cashflows for the benefit of the company and its stakeholders. Since February 2013 Sibanye Gold has restructured its operations and implemented a revised operating strategy that has positively impacted production and cost. The restructuring exercise will continue during the remainder of 2013 to further reduce costs and improve efficiencies. During the first half of 2013 Sibanye Gold produced 20 413kg (656 300 ounces) of gold at a total cash cost of ZAR 289 031/kg (US$1 125/oz). Operating profit of ZAR3.3 billion (US$ 363 million) and available cash of ZAR 2.1 billion (US$206 million) with net debt of ZAR 1.9 billion (US$188 million) was also recorded for the same period. For the 2013 year, gold production is estimated at 42000kg (1.35 million ounces) at a total cash cost of ZAR290 000/kg.
Highlights Gold One to merge its 74% interest in Rand Uranium and Ezulwini for a consideration of 17% of Sibanye Gold ordinary shares Gold One will have the right to nominate three individuals for election to serve as non-executive directors on the Sibanye Gold Board Gold One’s cash inflow is expected to increase as a result of Sibanye Gold’s dividend policy Diversification of risk through exposure to Sibanye Gold’s higher grade mining operations, especially in light of volatile gold price environment Sibanye Gold’s cash generation will be better able to fund the surface tailings retreatment project’s capital expenditure, while Gold One will retain proportionate exposure