Multinational metals and mining group Sibanye-Stillwater has entered into a $500-million streaming agreement with Franco-Nevada (Barbados) Corporation, a subsidiary of Franco-Nevada Corporation.

The deal grants Franco-Nevada access to gold and platinum streams from Sibanye-Stillwater’s Marikana, Kroondal and Rustenburg operations, in South Africa, in exchange for an upfront payment of $500-million.

Under the terms of the agreement, Sibanye-Stillwater will deliver 1.1% of platinum, palladium, rhodium and gold (4E) platinum group metals (PGM) ounces contained in concentrate as gold until 87 500 oz of gold are delivered; 0.75% of 4E PGM ounces until 237 000 oz are delivered; and 80% of gold production thereafter.

For platinum, Sibanye-Stillwater will deliver 1% of platinum ounces until 48 000 oz are delivered, increasing to 2.1% until 294 000 oz are delivered, with no further obligations beyond that point.

The company will also receive a production payment equal to 5% of the spot price of the respective metals during the initial delivery periods, increasing to 10% for gold once 237 000 oz have been delivered.

The transaction, which is subject to approval by the South African Reserve Bank, includes an agreement to convert Franco-Nevada’s 5% net profit interest on the Pandora property to a 1% net smelter return royalty.

Sibanye-Stillwater CEO Neal Froneman describes the agreement as a value-accretive transaction that raises non-debt capital at a competitive cost. He emphasises that the deal monetises gold, a minor component of the company’s metal production, and a finite amount of platinum without significantly impacting its exposure to future price increases.

The financial support from Franco-Nevada, he says, validates the quality and long-term viability of Sibanye-Stillwater’s PGM assets, which continue to generate value for stakeholders.

The funds will bolster Sibanye-Stillwater’s capital structure, improve liquidity and reduce the net debt-to-adjusted earnings ratio by up to 0.7 times. The transaction strengthens the company’s financial position without imposing repayment obligations or minimum delivery requirements.

The streaming agreement applies to production from the Marikana, Kroondal and Rustenburg operations, including potential underground growth and replacement projects.

These operations have extensive underground resources that could support low-cost brownfield developments and extend the life of the mines.

Feasibility studies are under way for several projects within the stream area, including the Kroondal depth extension projects and the Saffy and E3/E4 initiatives.

The development of these projects is contingent on achieving commercially viable outcomes, with further updates expected after the studies are completed.

Sibanye-Stillwater highlights that the agreement provides long-term financing while retaining upside leverage to rising PGM prices.

“This strategic partnership marks a significant step for the company as it continues to optimise its financial structure and advance long-term growth opportunities within its South African PGM operations,” the company concludes.