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Sibanye Sees Potential for Buying South African Gold Assets

Felix Njini
Sibanye Sees Potential for Buying South African Gold Assets

(Bloomberg) -- South Africa’s biggest gold producer would consider buying more assets in the country after paying off debt from previous acquisitions.

Sibanye Gold Ltd. hasn’t discussed deals, but AngloGold Ashanti Ltd.’s Mponeng mine and Gold Fields Ltd.’s troubled South Deep operation would both fit into the company’s portfolio, Chief Executive Officer Neal Froneman said in an interview in Cape Town. Still, for the next 18 months at least, the CEO -- nick-named “Mr Fix-It” for his turnaround successes in the 1990s -- will be focused on strengthening Sibanye’s balance sheet.

“Could Mponeng fit in with our portfolio? Absolutely,” said Froneman, citing the mine’s proximity to Sibanye’s Driefontein operation. “If it was available at the right price and at the right time.”

The mega deals forged by the world’s biggest gold producers, Newmont Mining Corp. and Barrick Gold Corp., have switched the spotlight onto the strategy pursued by No. 3 AngloGold. CEO Kelvin Dushnisky is looking to sell AngloGold’s non-core assets, but said this week that no decision has been made on whether to invest more in Mponeng. The company is considering hiving off its South African operations and listing in London or Toronto, people familiar with the matter said in December.

Finding Value

Despite the struggle to contain costs in the world’s deepest mines, Froneman said Sibanye could raise its exposure to South African gold after diversifying the company’s business by acquiring platinum and palladium mines at home and in North America.

“There is a lot of value in our gold business and we wouldn’t walk away,” Froneman said. “Negative sentiment doesn’t drive what we do.”

Sibanye has advanced 29 percent this year, outpacing other Johannesburg-listed gold miners. The stock was up 1.2 percent at 2:31 p.m. local time, valuing the company at 29.2 billion rand ($2.17 billion).

Any further deals will have to wait until Sibanye has completed its acquisition of struggling platinum producer, Lonmin Plc. The company would also have to end a two-month strike at its gold operations and return the mines to profit, said Froneman, who is keen for Sibanye to resume paying cash dividends.

As for mega deals, the CEO is unconvinced.

“You don’t create value for your shareholders when it’s a fashion or a feeding frenzy, and that’s why we are not really concerned with what has been happening,” Froneman said.

(Updates with shares in seventh paragraph.)

To contact the reporter on this story: Felix Njini in Johannesburg at fnjini@bloomberg.net

To contact the editors responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net, Dylan Griffiths, Alex Devine

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