Wits Gold has signed an implementation agreement with Sibanye Gold, in terms of which Sibanye will acquire the company’s entire issued ordinary share capital for a cash consideration of ZAR11.55 a share to become the registered and beneficial owner of 100% of Wits Gold shares.
The offer represents a 47.1%premium over the 30 day volume weighted average price (VWAP) of Wits Gold shares traded on the JSE at market close on 9 December 2013 and follows the execution of a non-binding terms sheet between the parties on 7 November 2013 and subsequent completion of a positive due diligence on Wits Gold by Sibanye.
“The Sibanye offer represents significant upside value and provides an opportunity for shareholders to realise immediate value from Wits Gold at a substantial premium to current trading levels,” said Adam Fleming, Chairman of Wits Gold.
“This is a significant deal for the market and a watershed moment for both companies. Wits Gold has, over the past decade, managed to acquire a portfolio of high quality, strategically located assets as we have moved from a junior explorer to emerging gold producer. However, we have reached the point where in order to fully exploit the assets and make them profitable, we require the sort of funding, infrastructure and resources that Sibanye can provide.
“The transaction provides for great synergies,” added Fleming. “Sibanye has a short but excellent track record, and my board is excited at the prospect that one of the world’s top ten gold producers will give life to our assets.”
The transaction, to be funded from Sibanye’s cash resources, is not subject to further due diligence and bears no substantive execution risk. The Wits Gold listing on the JSE Limited and Toronto Stock Exchange, as well as the Wits Gold American Depository Receipt (ADR) programme, will be terminated once the transaction is finalised. Management and staff will be integrated into the Sibanye team and continue to progress the development of the Wits Gold assets.
For Sibanye, the location of Wits Gold’s Southern Free State assets adjacent to Sibanye’s Beatrix operations is strategically important and the recent Burnstone acquisition in Mpumalanga will provide the company with a foothold in a third operating region, in the South Rand Goldfield in Mpumalanga.
The transaction is subject to a number of conditions precedent, including the approval of the Department of Mineral Resources. As part of this process, Wits Gold has convened its independent board to consider the terms of the transaction and to appoint an independent expert to ensure that the interests of the Wits Gold shareholders are protected.