Sibanye Gold Ltd (NYSE: SBGL) may raise $1.3 billion to contribute to a $2.2 billion acquisition of Stillwater Mining Company (NYSE: SWC), the only U.S miner of palladium and platinum. The company initially said it would raise $750 million to help funds the deal. Shareholders were concerned of the company’s debt levels so Sibanye had reconsidered.
“Sibanye believes that increasing the equity component would be prudent in the current strong rand environment, allowing the company to maintain a strong balance sheet,” it said in a statement accompanying a half-year trading update. Sibanye’s proposition will also offer Stillwater an opportunity to increase South Africa’s influence on global platinum and palladium supply.
The platinum and bullion producer has agreed to 765,000 ounces of gold production over the course of six months. The company said that the outlook for precious metal prices in the short term was subdued and further sustained rand strength would impact on operating margins in its gold and platinum divisions.