Sibanye’s move to ditch $1bn deal is disputed by seller

The deal was terminated after a ‘geotechnical event’ at Santa Rita, Sibanye said.
Image: Andrey Rudakov/Bloomberg

Sibanye-Stillwater Ltd. is facing a potential legal challenge to its decision to cancel its $1 billion acquisition of nickel and copper mines in Brazil.

When the deal was announced three months ago, it was the biggest yet in Sibanye’s drive to join the stampede for metals that are key to powering electric vehicles and the wider green revolution.

Sibanye said on Monday it had terminated the deal after a material “geotechnical event” at the Santa Rita nickel mine. The severity of the event is disputed by the sellers of the assets, which are held by affiliates of funds advised by Appian Capital Advisory LLP. Appian said a localized fracture at Santa Rita wasn’t a “material adverse event” and occurs in the normal course of open pit operations.

Appian believes “there to be no basis for Sibanye-Stillwater to lawfully terminate” the deal, it said in a statement. “Appian is currently assessing all of its legal options and will take all necessary action to enforce its legal rights.”

James Wellsted, a spokesman for Sibanye, said the company will respond once it sees what action Appian plans to take.

Sibanye shares extended losses after the statement from Appian, dropping 8.2% by the close of trading in Johannesburg.

Dealmaking Chief Executive Officer Neal Froneman wants to make battery metals a third pillar of the company’s operations, alongside gold and platinum-group metals. While he expanded the company’s platinum business in South Africa by buying cheaper mines when metal prices were lower, a sharp rally in commodities may make it difficult to find similar opportunities in battery metals.

When Sibanye first announced it was in talks to buy the Santa Rita nickel and Serrote copper mines on Oct. 25, its shares fell 5.1% as some investors feared it might overpay for the assets. The stock rebounded 2.6% the next day when the terms of the deal were published.

“To me it was a very expensive deal that they were looking at,” said Rene Hochreiter, an analyst at Noah Capital Markets Ltd. “The geological issues also confirm that the property wasn’t worth the asking price.”

Sibanye’s Wellsted said the termination of the deal has nothing to do with cost, but is because of a “material adverse event.”

“The company has assessed the event and its effect and has concluded that it is and is reasonably expected to be material and adverse to the business, financial condition, results of operations, the properties, assets, liabilities or operations of Santa Rita,” Sibanye said in a statement earlier Monday.

Wellsted said Sibanye will continue searching for new opportunities in battery metals. The company acquired lithium assets in Europe and the U.S. last year and a nickel-processing facility in France.

© 2022 Bloomberg L.P.


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