Neal Froneman,
who has been
appointed CEO
of newly-formed
Sibanye Gold
 
Johannesburg, South Africa — 30 November 2012 – New gold mining company Sibanye Gold, formed yesterday from assets previously owned by Gold Fields Limited, could act as a catalyst for change and consolidation in the gold mining industry, according to Gold Fields CEO Nick Holland.

“I think we are all dealing with the same challenge,” he said at a company briefing in Sandton.

“Sibanye Gold will help us to change the future direction of the industry for the benefit of the entire industry and the country.”

Fin24 reports that Holland did not say how Sibanye would catalyse the industry, but its new CEO Neal Froneman said the company would not act as a “pacman” gobbling up other companies in the sector.

Sibanye Gold is currently a subsidiary of Gold Fields and was formerly known as GFI Mining South Africa.

It would now become an independent company with listing planned for mid-February.
Gold Fields has a primary listing in Johannesburg and a secondary listing on the New York Stock Exchange, and Sibanye would do the same.

Gold Fields shareholders would receive shares in Sibanye, but there would be no cross-holding between the two companies. They would be separate and independent, pursuing different strategic goals.

Gold Fields would focus on shallow ore bodies worldwide, retaining South Deep as a flagship deep mine in South Africa. Sibanye would focus on reducing costs in its deep mines and reinvesting cash flow in the business.

Production had declined at Beatrix and KDC, its two large mines which were now part of Sibanye Gold. Gold Fields, an increasingly global company, had to compete for scarce capital and was not able to focus on Beatrix and KDC. Meanwhile, costs at these mines had risen in line with the gold price.

Froneman dismissed suggestions that Gold Fields had unloaded its most problematic mines on his company.

His company was valued at R13 billion at the current gold price of R400 000/kg. It would focus on improving yields while extending the life of its mines, which were currently expected to last until 2034. Drilling could be more efficient, and the possibility of uranium production could reduce costs, he said.

Sibanye would introduce a new profit-share scheme for its 35,000 staff and would spend R700 million over five years to improve employee housing.

He described Sibanye as a new, proudly South African gold mining company. Both Gold Fields and Sibanye Gold would be domiciled in South Africa.

There would be no direct job losses as a result of the creation and unbundling of Sibanye Gold.

The transaction did not require shareholder approval and the listings had been approved by the South African Reserve Bank, the group said.

Source: Fin24. For more information, click here.