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Sibanye now the world's no. 1 platinum miner following M&A spree

  • Sibanye Gold (SBGL -0.3%) has become the world's biggest platinum miner with its acquisition of Lonmin, surpassing Anglo American Platinum (OTCPK:AGPPF), as well as ranking second to Russia's MMC Norilsk Nickel PJSC for palladium production.
  • The Lonmin deal could add ~$150M to SBGL's annual cash flow, Morgan Stanley analysts say, which the company will need to start paying down debt which mounted during a string of acquisitions that extended the miner's platinum group metals empire from South Africa to Zimbabwe and the U.S.
  • The deal also gives SBGL political clout in South Africa's mining industry as it owns metal processing facilities in the country for the first time, which could be helpful as platinum miners start negotiations with labor unions on a three-year wage agreement.
  • While the deal looks like a good value, bigger is not necessarily better, says analyst Peter Major at Cape Town-based Mergence Corporate Solutions, who also warns the Lonmin acquisition "could possibly break the company if PGM prices tank and or the [South African] rand really strengthens."

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