Sibanye-Stillwater Bids for Aussie Zinc Mining Firm, Zinc Prices Weaken
Johannesburg-listed metals and mining multinational Sibanye-Stillwater recently launched a bid to acquire all shares in Australian zinc miner New Century Resources. Sibanye-Stillwater currently holds a 19.9% stake in NCR. Meanwhile, zinc price movements continue to ebb and flow between the A$4400 ($3,000) and A$5200 ($3,500) range per ton.
“The proposed takeover is in line with our strategy to invest in the circular economy and be a global leader in tailings retreatment and recycling,” the company added. Tailings are the materials left over after separating the valuable fraction from the uneconomic fraction of an ore.
The offer currently includes A$1.10 ($0.75) per outstanding share. In a Feb. 21 statement, Sibanye-Stillwater said this would bring its implied equity value in that company to A$149 million ($103 million) on a diluted basis. Sibanye-Stillwater has PGM mines in the United States and southern Africa. The company also has several South African gold mines and a project in Finland to produce battery-grade lithium hydroxide. The South African company originally acquired its New Century stake in October 2021. At the time the zinc price index was on a significant upturn. This ended when prices peaked in April 2022.
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New Century Production Capabilities
Melbourne-headquartered New Century has a site in northwestern Queensland. The company’s website indicates it can produce up to 130,000 metric tons per year of zinc concentrate. While the Australian Securities Exchange will continue listing New Century, its board recommends that shareholders currently take no action.
“The board will consider the offer and the bidder’s statement and provide a recommendation to New Century shareholders in due course,” the company stated. Representatives also warned shareholders about accepting the current offer price. They claimed that doing would exclude them from participating in any increase in offer price or competing proposal.
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Analysts Considering Impact on Zinc Price, Company Value
Some analysts feel particularly positive about Sibanye’s offer. “Sibanye-Stillwater launched the bid to focus on its core business, rather than having to deal with the copper project in Tasmania,” one source told MetalMiner. They later added that New Century has also shown profit potential.
Indeed, the company’s earnings before interest, taxes, depreciation, and amortization for the fiscal year ending June 30 exceeded A$41.5 million ($28.2 million). This represents a drop of 43.5% year on year from A$73.5 million ($50 million). However, New Century’s 2022 annual report revealed that this decline was partly due to increased expenses
“Earnings were impacted by the recognition of A$7.6 million ($5.16 million) of expenses at Mt Lyell,” the company stated, referring to its copper mine project in Tasmania. New Century also recognized A$56.7 million ($38.5 million) of depreciation over that fiscal year, contributing to net losses. Indeed, net losses more than doubled to A$28.3 million ($19.2 million) from A$10.8 million ($7.35 million). That said, the report stated that revenues over the same time were up 47%. This represented a jump from A$278 million ($189 million) to A$408 million ($278 million).
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