Sibanye-Stillwater has upped the ante in its hot pursuit of Australian zinc miner New Century Resources, doubling its shareholding in the company overnight and inviting more shareholders to sell their stock to it.
On Tuesday, Sibanye on Tuesday made an offer to acquire the 80% it doesn’t already own in New Century for $83m. The mining giant moved swiftly and bought a further 27.2-million shares in New Century, increasing its total shareholding and voting power to 40.58% from the 19.9% it previously had.
This is as some New Century shareholders took up Sibanye’s offer to make their shares available on market in an “orderly manner”.
The JSE and New York listed group on Wednesday said it had placed a further buy order on the Australian stock exchange, to snap up a further 13.6-million shares, or another 10% in New Century and gave an opportunity to other shareholders to also sell it their stock.
Sibanye’s CEO, Neal Froneman, painted a gloomy picture of New Century’s balance sheet to its shareholders, warning them that they might be forced to issue a rights offer to raise additional funds for key projects, particularly the Mt Lyell copper mine in Tasmania.
New Century’s prefeasibility study for Mt Lyell released in January showed that the pre‑production capital costs are estimated to be $279m, an increase from the $193m of project capital costs stated in the scoping study released by the company in June 2022.
The Australian company has set a target of 27,000 tonnes of copper per annum (and 16,000oz of gold) for the first 10-years after a restart of Mt Lyell.
Mt Lyell was last mined eight years ago by Indian company, Vedanta Resources, which has signed an option to sell Mt Lyell to New Century on a staggered payment basis and an ongoing royalty on future copper production.
“A company of New Century’s scale and business risk profile may be unable to obtain attractive debt financing to fund its development projects,” Froneman warned shareholders.
Business Day reported on Wednesday that Froneman, renowned for his deal-making skills, had castigated New Century’s management for “losing focus” on their mandate to build a “leading global tailings retreatment business is no longer a focus”.
Sibanye’s play for New Century comes just months after leadership changes at the Australian miner. Its chair, Kerry Gleeson, only came into office in November, while the company’s CEO, Robert Cooper, was appointed six months ago.
With Sibanye closing in on a takeover of New Century, the group explained the risks that shareholders ran if they opted to keep their interest in the company.
“In addition to remaining subject to the risks associated with being a New Century shareholder, if you do not accept the offer, and Sibanye Australia acquires control of New Century but does not achieve compulsory acquisition, you will become a minority shareholder in New Century with limited influence in the running of the business,” Sibanye said.
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