Gold Fields spin-off to woo Chinese investors

JOHANNESBURG (Reuters) - Sibanye Gold will seek Chinese investors and look to acquire other gold assets in South Africa, its chief executive said on Monday, its first day as a listed company.

Shares in Sibanye, a spin-off of two South African gold mines from world No. 4 bullion producer Gold Fields, were trading at 13.61 rand at 1355 GMT, valuing the business at 10.0 billion rand.

Analysts had expected the shares to trade anywhere from 8-52 rand, reflecting uncertainty over how investors would rate the assets, given restive labour relations in Africa's largest economy.

By unloading the assets, Gold Fields hopes to make itself more attractive to investors uncomfortable with the labour and political risks associated with South Africa.

Gold Fields shares were down 0.9 percent, after factoring in the value of the spin-off.

Sibanye chief executive Neal Froneman said diversification from countries such as South Africa - which was pounded by labour strife last year that saw more than 50 people killed and shredded investor confidence - was not the only way to mitigate political risk.

"I think there is other ways of diversifying political risk and one is bringing in politically appropriate strategic partners like the Chinese," he said.

As CEO of junior minor Gold One, Froneman oversaw the company's acquisition by a Chinese consortium that included Baiyin Non-Ferrous Group, a subsidiary of the CITIC Group, which is China's biggest state-owned investment company, and the China-Africa Development Fund.

Asked what Chinese investors or partners he would seek, Froneman said: "Our relationships are established with CITIC. There's absolutely no guarantees, but if you were to talk strategically that would be sort of our thinking."

Chinese companies have invested heavily in African resources but have made few direct forays into precious metals such as gold and platinum, though this is starting to change.

Wesizwe Platinum's Bakubung mine is being bank-rolled by the China Development Bank (CDB) and counts mining giant Jinchuan among its shareholders.

"There are benefits to Chinese partners such as being able to access capital," Froneman said. Wesizwe secured a $650 million from the CDB at Libor plus 350 basis points - an exceptionally low rate for a South African company.

GOLDEN PREY, YIELD PLAY

Froneman, a hunting enthusiast and game farmer, also said he was interested in stalking other South African gold assets but the immediate focus would be the current operations.

There has been speculation among analysts Sibanye acquisitions could include Froneman's old company Gold One.

Froneman said Sibanye aimed to attract investors by positioning itself as a "high-yield" vehicle, which analysts say makes sense as the mines are mature and have no massive capital needs, so money can be returned to shareholders.

The company's aim is to return 25-35 percent of normalised earnings as dividends.

"The anticipation is that this will be a high yield of at least seven percent. They will be returning cash because of the age of the mines, absent any major capital projects," said Paul Miller, an investment banker focusing on resources at Nedbank Capital.

Sibanye's current assets produce about 1.4 million ounces of gold per year so it will rival Harmony Gold for the no.3 ranking in South African gold production.

The old mines spun off by Gold Fields, Beatrix and KDC, were both hit by labour unrest last year. In South Africa Gold Fields is holding on to the South Deep mine, which has avoided such conflict due to its high level of mechanisation.

Source: http://news.yahoo.com/gold-fields-spin-off-sibanye-opens-13-05-071205793--finance.html

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