Anglo American sells Rustenberg operations to Sibanye Gold

Anglo American’s wholly-owned subsidiary Anglo American Platinum has reached an agreement to sell its loss-making Rustenberg mining and concentrating operations to Sibanye Gold for at least ZAR4.5bn (£0.2bn).

The amount will consist of an upfront payment in cash or Sibanye shares of ZAR1.5bn and a deferred consideration equal to 35% of the distributable free cash flow generated by the Rustenberg operations over a defined period, with a minimum amount payable of ZAR3bn.

Anglo said the sale follows a review of the company’s portfolio in response to the structural changes taking place in the platinum industry, which resulted in the Rustenberg operations being consolidated to three mines from five.

In 2014, the company announced the repositioning of its portfolio to focus on low-cost production through shifting towards mechanized operations.

Given the number of operations within its portfolio, Anglo believed certain operations would receive greater management focus under different ownership where the mines will not be competing for allocation of capital. As a result, it announced its intent to exit from certain non-core operations, including Rustenburg.

Anglo American Platinum’s chief executive officer Chris Griffith said: “We are pleased to announce a significant milestone in the repositioning of our portfolio with the disposal of the Rustenburg operations to Sibanye.

“The Rustenburg operations are quality assets with long-term and sustainable potential under Sibanye's control, given their proven and successful track record of operating conventional mines in South Africa. Our focus from the outset has been to identify the right option for the business, its stakeholders and shareholders and we believe we have concluded a beneficial transaction for both parties, whilst also securing a sustainable future for the Rustenburg operations.”

RBC Capital Markets said that while the financial impact of the sale of the Rustenberg mine may not be large, the deal is positive for sentiment and boosts management’s credibility.

“Coming soon after the sale of Anglo Norte to Audley for at least $300m, the Rustenberg disposal is an important milestone in Anglo's efforts to restructure its portfolio,” the Canadian bank said.

At 1030 BST, Anglo American shares were up 7.1% at 753.90p.