Boston, MA 06/20/2014 (wallstreetpr) – Sibanye Gold Ltd (ADR) (NYSE:SBGL), South Africa’s top gold producer, might acquire three platinum mines in the country, which are currently held by Anglo American.
The move to sell the assets comes at a time when Anglo American is facing widespread challenges in its revenue because of nonstop mining strikes that have become costly to its business. The company is considering a shift from labor intensive underground mining to open-pit mining. The planned sale of platinum properties also comes as the company reviews its global assets. The assets are likely to be sold next year for $1.4 billion.
The fact that Anglo American’s platinum peers are unlikely to make a purchase offer for the assets gives Sibanye Gold Ltd (ADR) (NYSE:SBGL) an acquisition advantage in the properties.
Own Challenges
Although Sibanye (NYSE:SBGL) may welcome the opportunity to acquire platinum assets from Anglo American at a favorable cost, the company has its own challenges. As a matter of fact, the company recently warned over its earnings, saying that it expects at least 20 percent decline in its earnings per share in the six months ending June 2014.
The company explained that the anticipated decline in earnings per share has its roots in the increase in stock issuance. The additional equity issuance supported acquisitions, which the company expects to support higher production, revenue and profits in the future.
Sibanye Gold Ltd (ADR) (NYSE:SBGL) expects gold production in the first half of 2014 to go up 3.6 percent over the same period a year ago.
Focus On The Bottom Line
In seeking to acquire platinum assets from Anglo American, Sibanye Gold Ltd (ADR) (NYSE:SBGL) intends to expand its diversification efforts so that the business can grow with the aim of creating bigger value for the shareholders in terms of higher dividends. Of course, the company is also focusing on its South African operations with the aim of curbing costs and expenses.
