Johannesburg - Sibanye Gold’s [JSE:SGL] share-price rally this year provides the company the opportunity to look for acquisitions in base metals and outside of its home country of South Africa, chief executive officer Neal Froneman said.
The miner has climbed 53% this year and touched a record high of R37.35 a share on January 26 at a time when commodity prices are plunging, prompting companies to put assets up for sale.
“With our share price having rallied as hard as it has, we now have a currency that we can look a little bit further than just South Africa,” Froneman said by phone on Monday. “Because of the state of the commodity sector, there’s a lot of opportunity to make entries now through the entire commodity range at very attractive prices. Base metals are giving you those opportunities now.”
Sibanye, the biggest producer of gold in South Africa, has surged this year as the rand’s 9.2% plunge against the dollar since December 1 has increased its profit margins. The company gets its revenue in dollars while its costs are in the local currency.
Froneman, who has been CEO since Sibanye was spun out of Gold Fields [JSE:GFI] in 2013, said the potential acquisitions would be in addition to the purchases of Aquarius Platinum [JSE:AQP] and three Anglo American Platinum mines [JSE:AMS], which were agreed last year and are currently awaiting regulatory approvals.
“Our relative valuation compared to the valuations that are given to assets outside of South Africa has always been a problem in that we’ve never had sufficient premium in our share price to do that,” Froneman said, referring to acquisitions. “Now we’re able to start looking.”
Any purchases would have to be at the right price and in keeping with Sibanye’s strategy of increasing its dividend and sustaining the payout into the long term, Froneman said.