SIBANYE-Stillwater has refinanced its rand revolving credit facility (RCF) increasing it to R6bn and sold R1.8bn of gold forward through a “prepay” arrangement to strengthen its balance sheet.
Announcing this today Sibanye-Stillwater CEO Neal Froneman commented, “the gold prepayment is a proactive, strategic financing alternative that improves the group’s liquidity and strengthens the balance sheet while retaining leverage to potential increases in the gold price.
“We are pleased to have refinanced and upsized the rand RCF which is a strong signal of confidence and support from our South African lenders.
“These financing agreements significantly mitigate group financial risk and provide additional financial flexibility and optionality.
“We have also made good progress on other initiatives designed to strengthen our balance sheet without resorting to equity and we look forward to providing the market with more detailed information in due course.”
These moves follow earlier developments announced in June when Sibanye-Stillwater agreed with its lenders to raise thresholds to above R6.5bn in company debt.
The debt convenants – which if broken would allow lenders to call in their loans – were changed such that Sibanye-Stillwater can register a net debt of up to 3.5 times its adjusted EBITDA (earnings before interest, tax, depreciation and amortisation).
Froneman said at the time that the new covenants ought to provide the market “with increased confidence in the outlook of the group.”
According to today’s announcement the gold prepayment arrangement is for R1.8bn in exchange for delivery of 1,497kg of gold in equal monthly tranches from October 2024 to November 2026.
The gold delivered will be subject to a floor price of R1.35m/kg with a cap price of R1.736m/kg. The gold price is sitting currently around R1.4m/kg.
The RCF of R6bn includes an option for Sibanye-Stillwater to increase it by a further one billion rand through the inclusion of additional lenders “later during the term.”
The facility maturity is three years although Sibanye-Stillwater has the option to request two further, one-year extensions. The interest margin is “based on a sliding scale between Jibar (Johannesburg interbank average rate) plus 2.2% and 2.8% dependent on leverage.”
