Anglo American sells lossmaking platinum mines to Sibanye – by James Wilson and Andrew England (Financial Times – September 9, 2015)

http://www.ft.com/

Abidjan and Johannesburg – Anglo American on Wednesday unveiled plans to offload some of its most problematic assets, striking a R4.5bn ($330m) deal to sell lossmaking South African platinum mines.

The proposed disposal to Sibanye Gold ends Anglo’s long ownership of the mines near Rustenburg and further reduces the global mining group’s ties to South Africa, its historic home.

Selling assets has been a priority for Mark Cutifani, Anglo’s chief executive, as he tries to improve the group’s financial performance amid a deep commodities downturn.

Sibanye, a South African miner, will pay R1.5bn upfront in cash or shares for the Rustenburg operations owned by Anglo American Platinum, an Anglo subsidiary focused on platinum production. Sibanye will also pay Anglo 35 per cent of the mines’ free cash flow over a six-year period, with a minimum amount set at R3bn.

Chris Griffith, Anglo’s head of platinum, said: “We believe we have concluded a beneficial transaction for both parties.”

Anglo had also considered an initial public offering for the Rustenburg operations, but Mr Griffith said a sale was “always first prize”.

In afternoon trading in London, Anglo’s shares were up 6.4 per cent at 748.9p.

Anglo said the Rustenburg operations had a net asset value of R7.7bn at the end of June, and lost R500m in the first half of 2015. Both companies said the deal, which is expected to take up to 18 months to complete, was structured so they shared the risk and any potential upside.

Anglo and other miners are grappling with a prolonged collapse in commodity prices that has added urgency to Mr Cutifani’s restructuring efforts.

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