Metals and mining multinational Sibanye-Stillwater’s indirect wholly-owned subsidiary Stillwater Mining Company has launched an offering of $500-million senior, unsecured, guaranteed convertible bonds, due in November 2028 and convertible into new and/or existing Sibanye ordinary shares.

The proceeds are expected to be applied to the advancement of the group’s growth strategy, including funding the acquisition of precious metals refining company Reldan, as announced on November 9, while preserving the current balance sheet for funding existing operations and projects through a lower commodity price environment.

“The convertible bond offering is one of various available financing options, which provides financial flexibility at a reasonable cost under current market conditions, and will enable further delivery on our strategic growth objectives at an opportune time in the commodity cycle, while maintaining balance sheet resilience and liquidity,” CEO Neal Froneman says.

Stillwater Mining Company intends to issue the convertible bonds on or about November 28, while payments in respect of the convertible bonds will be guaranteed, jointly and severally, by Sibanye and its subsidiaries, including Sibanye Gold, Sibanye Rustenburg Platinum Mines, Kroondal Operations, Western Platinum and Eastern Platinum.

The board has adopted a resolution to guarantee the indebtedness of other members of the group under the offering, which guarantee constitutes the giving of direct and/or indirect financial assistance to related and inter-related companies and corporations of Sibanye.

The convertible bonds are expected to pay a coupon of between 4% and 4.5% a year, payable semi-yearly in arrear in equal instalments on May 28 and November 28 of each year.

The initial conversion price is expected to be set within a premium range of 30% to 35% above the volume-weighted average price of Sibanye’s shares listed on the main board of the JSE between opening of trading and close of trading on November 21.

The convertible bonds will be convertible into ordinary shares once certain approvals are received.

Sibanye's share price on the JSE fell by more than 25% after the announcement was made on November 21.