JOHANNESBURG Sibanye Gold's (SGLJ.J) $1 billion rights issue, aimed at raising capital to help fund its acquisition of U.S. platinum producer Stillwater, was oversubscribed by almost five-fold, the company said on Monday.
Such capital raising efforts are comparatively rare at the moment in South Africa's troubled mining sector, which is beset by a range of challenges including policy uncertainty and labor and social unrest.
But Sibanye, which has built a reputation on its dividend flow, is diversifying away from its home base with its Stillwater acquisition, reducing its exposure to the risks associated with doing business in South Africa.
Those risks are underscored by a violent, wildcat strike unfolding at Sibanye's Cooke operation west of Johannesburg, which was triggered by worker resentment at the company's drive to root out illegal miners.
"Approximately 97 percent of shareholders subscribed for 1.2 billion new Sibanye shares in terms of the rights offer resulting in ... Excess applications were received for an additional 5.9 billion new shares, almost five times more than the rights offer shares available," Sibanye said.
Offered at a discount of 60 percent to its closing price on May 17, the funds raised will repay a portion of a $2.65 billion loan facility it used to acquire Stillwater.
Sibanye's dividend yield is 5.64 percent, well above the 2.16 average of its South African peers, Reuters data shows.
(Reporting by Ed Stoddard; editing by Jason Neely)