Sibanye Completes $101 Million Gold Prepayment Deal and Refinances Credit Facility

South Africa’s Sibanye Stillwater has finalized a 1.8 billion rand ($101 million) gold prepayment agreement to bolster its finances amid declining platinum group metal (PGM) prices. The diversified mining company announced the deal on Wednesday, aimed at repaying loans and strengthening its balance sheet.

The company had previously sought to raise over $500 million through prepayment deals to address the impact of the PGM price slump, which significantly affected its earnings. Metals prepayment agreements involve selling future production for an upfront cash payment, providing immediate liquidity.

Sibanye Stillwater’s profits fell by $2 billion last year, driven by lower metal prices and a $2.6 billion write-down on the value of its U.S. palladium mines, a French nickel operation, and a South African gold mine. CEO Neal Froneman described the prepayment deal as a “proactive, strategic financing alternative” to enhance the company’s liquidity and balance sheet.

Under the deal, Sibanye will deliver 1,497 kg of gold in equal monthly installments from October 2024 to November 2026 in exchange for the prepaid funds, which will be used to repay existing loans.

In addition, Sibanye has refinanced and increased its 5.5 billion rand revolving credit facility with South African lenders. The original facility, set to mature in November 2024, has been replaced with a 6 billion rand facility that will now mature in August 2027, with an option to extend by an additional two years.