Friday, March 16, 2018

A muck truck hauls debris out of the east portal of the Blitz Project shortly after getting underway.

One step left in SMC sale

The Stillwater Mining Company (SMC) is one step closer to being sold to Sibayne Gold Limited of South Africa.
SCM announced Monday morning the pending sale had been cleared by the Committee on Foreign Investment in the United States (CFIUS) — meaning no national security issues exist regarding the merger.
SMC and Sibayne jointly requested the CFIUS review, said SMC Investor Relations Officer Mike Beckstead.
The final piece of the transaction will come April 25 with a vote of shareholders of both companies. A majority of each company’s outstanding shareholders are needed to cement the sale. Also needed is the “approval of the related issuance of shares by Sibayne in a rights offering by the holders of at least 75 percent,” according to SMC.
SMC shareholders consist of approximately 40 percent non-U.S. and Sibanye’s shareholders consists of approximately 40 percent U.S. shareholders.
On Tuesday, SMC notified the New York Stock Exchange of its intent to delist. Should the merger fall through, the company will withdraw its notice of intent to delist from the NYSE.
As of the close of market yesterday, SMC stock was at $17.87 per share.
The $2.2 billion all-cash transaction was unanimously approved by the SMC board of directors and publicly announced in December 2016. SMC CEO Mick McMullen has said the board feels that the merger is attractive to shareholders, citing the $18 per share purchase price as well as the diversification it brings.
Should the merger occur, little change is anticipated. Sibayne officials have been to the Nye mine site and the East Boulder site in Sweet Grass County for on-site visits. Sibanye’s two largest shareholders – Gold One International Ltd. and Public Investment
Corporation Ltd., which in aggregate represent 29 percent of Sibanye’s issued share capital – have confirmed their support of the transaction, with the closing to occur in the second quarter of 2017.

Fourth quarter earnings were favorable with a $6 million net income, PGM mined sales of 134,500 ounces (compared to 120,300 ounces for the same quarter in 2016) and 169,200 recycled PGM ounces, according to SMC’s fourth quarter earnings report.
The fourth quarter’s mined PGM 132,100 ounces was down slightly from the same quarter in 2015 and attributed mainly to lost shifts from weather-related road closures.
For the entire year, it was a $9.5 million net income and a company record was set with 668,300 ounces of recycled PGM ounces. Also, PGM mined sales totaled 549,200 ounces (compared to 507,300 in 2015) and PGM mined production totaled 545,300 ounces (compared to 520,800 in 2015).

The Blitz Project was significantly expanded with minimal costs and now includes the lower Blitz area below 5,000 feet level. The production expectation is now set between 270,000 and 330,000 PGMs per year once the operation is fully ramped up by 2021-2022. It is also running ahead of schedule.

SMC is the only U.S. miner of platinum group metals (PGMs) and the largest primary producer of PGMs outside of South Africa and the Russian Federation. It’s property runs along the J-M Reef, which has the highest PGM grade deposit in the world.

The Committee on Foreign Investment in the United States (CFIUS) is an inter-agency committee authorized to review transactions that could “result in control of a U.S. business by foreign persons, in order to determine the effect of such transactions on the national security of the United States,” according to the Department of Treasurery website.
That authority allows for review, investigation and blocking of any such transactions or investments that could potentially result in the control of any U.S. business or assets by a foreign person who may raise concerns of national security, according to Baker Botts, an international law firm based in Texas that represents more than half of the Fortune 100 companies.
The Secretary of the Treasury is the chairperson of CFIUS, and notices to CFIUS are received, processed and coordinated at the staff level by the staff chairperson of CFIUS, who is the Director of the Office of Investment Security in the Department of the Treasury.
CFIUS is made up of representatives from nine federal agencies, including the Department of Defense, the Department of State, the Department of Homeland Security, the Department of Justice, Department of Commerce, the Department of Energy, the Office of the U.S. Trade Representative and the Office of Science & Technology Policy.
The following offices also observe and, as appropriate, participate in CFIUS’s activities:
-Office of Management & Budget
-Council of Economic Advisors
-National Security Council
-National Economic Council
-Homeland Security Council
The Director of National Intelligence and the Secretary of Labor are non-voting, ex-officio members with roles as defined by statute and regulation.
It’s not mandatory for parties in such a transaction to request a review. However, if a review is not requested and CFIUS subsequently determines the transaction raises a national security or critical infrastructure concern, that agency has the authority to “unwind” the entire transaction. And that “unwinding” cannot be appealed by a U.S. court, according to the Baker Botts guide.
CFIUF was born in 1975 as a means to regulate foreign direct investment (FDI).