Sibanye-Stillwater’s off-market takeover bid for New Century Resources may have come as a surprise to some in the industry, but there are clear reasons why the South African-based miner has made the move.
To put it simply: Sibanye-Stillwater is not content with how New Century is being run.
“Sibanye-Stillwater has been concerned about the change in the strategic direction of New Century under current management, with the building of a tailings asset management services business no longer a focus,” the company said in a statement.
“The substantial decline in shareholder value (with the New Century share price down 59 per cent over the last six months) implies that the current strategy has not been well received by shareholders and investors.”
Sibanye-Stillwater said it has expressed its concerns to the New Century board and did not support the proposed election of Nick Cernotta or Robert McDonald, both of whom are no longer at the company, at New Century’s annual general meeting (AGM) in November last year.
The South African miner said New Century is in a spot of bother financially as well.
“Sibanye-Stillwater further considers that New Century’s balance sheet is under strain due to amortisation requirements of the environmental bond facility and potential funding requirements for growth projects (including Silver King and Mt Lyell),” the company said.
“Accordingly, New Century may need to raise additional equity, which could result in a material dilution for existing New Century shareholders, particularly given New Century’s current share price, broader equity market conditions and limited trading liquidity in New Century’s shares.”
Sibanye-Stillwater became New Century’s largest shareholder of 19.9 per cent in December 2021, seeing the potential of the latter’s tailings retreatment business at the Century zinc mine in Queensland.
“Our investment in New Century complements our successful partnership with DRDGOLD Limited, and we look forward to supporting New Century to build a leading global tailings retreatment business, uniquely positioned to play a key role in green metal supply chains,” Sibanye-Stillwater chief executive officer Neal Froneman said at the time of company’s investment.
Sibanye-Stillwater’s offer is priced at $1.10 per share, which reflects a 42.9 per cent premium to New Century’s share price at close on February 20.
Subscribe to Australian Resources & Investment and receive the latest news on commodity prices, resource developments, executive movements and more.