JSE and NYSE listed Sibanye-Stillwater announced an exciting partnership with Finland-based Keliber Oy, an integrated lithium producer. This comes weeks after CEO, Neal Froneman announced that he would be looking to step down in the coming years with the plan of doubling the value of the company during that period. Froneman is known as one of the best capital allocators on the local bourse, with the Stillwater acquisition being arguably the best deal seen by a JSE-listed company in recent years. Froneman is following the trends, with lithium hydroxide being a key battery metal in the production of electric vehicles. This complements the company’s position as a leading PGM producer, with both PGMs and battery metals essential to achieving a greener future. – Justin Rowe-Roberts
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Sibanye Stillwater SENS announcement:
Sibanye-Stillwater secures entry into the battery metals sector through a partnership with and investment into Keliber, a leading European lithium company
Sibanye-Stillwater is pleased to announce that it has entered into an investment agreement with Keliber Oy (“Keliber”)(the “Transaction”). The Transaction is expected to be implemented in March 2021, subject to the approval by the South African Reserve Bank.
Investment Rationale
Keliber’s wholly owned, advanced lithium project, the Keliber project, is located in the Kaustinen region of Finland, one of the most significant lithium-bearing areas in Europe. Finland represents an attractive low risk mining jurisdiction (top five jurisdiction in the Fraser Institute) and has developed a National Battery Strategy that outlines the objectives for the country to become a competitive, competent and sustainable player in the international battery industry. Europe is rapidly becoming a leading hub for the manufacture of batteries for electric vehicles and Keliber’s location in Finland enables efficient transport of lithium hydroxide to European customers.
The Finnish Minerals Group (“FMG”), which manages the Finnish State’s mining industry shareholdings, is the largest shareholder in Keliber and is focused on creating partnerships and co-investments with a view to developing the Finnish battery electric vehicle supply chain. Sibanye-Stillwater shares this vision and in partnership with Keliber, FMG and other shareholders, will progress the project to be the first vertically integrated lithium producer in Europe.
The Keliber project consists of several advanced stage lithium spodumene deposits, with significant exploration upside in close proximity to the existing project. Based on a feasibility study completed in 2019 and improved in 2020, Keliber currently has 9.3 million tonnes of ore reserves, sufficient for more than 13 years of operation. Planned annual production is 15,000 tonnes of battery grade lithium hydroxide. Production is anticipated to start in 2024. The project includes the development of a chemical plant in Kokkola, approximately 50 kilometres from the mining area, which will produce battery grade lithium hydroxide. Future lithium hydroxide production has not been committed to any offtake party.
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Transaction overview
Sibanye-Stillwater will make an initial phased equity investment of €30m, for an approximate 30% equity shareholding into Keliber. In addition a further €10m equity issuance will simultaneously be offered to the existing Keliber shareholders, on the same terms as Sibanye-Stillwater’s €30m investment.
This financing, together with a combination of Sibanye-Stillwater’s extensive mining expertise that will complement the skills and local knowledge of the experienced Keliber team, will ensure the continued progress of the project to a build ready phase. The EUR40m investment will allow for the completion of further detailed mining optimisation studies, permitting, metallurgical test work and detailed engineering design. In addition, the Kaustinen region is highly prospective and further exploration work to increase the current Mineral Resource and Reserve base will be undertaken. The initial project work will be overseen by a joint technical committee, working under the guidance of the Keliber Board, on which Sibanye-Stillwater will have representation.
An updated and enhanced definitive feasibility study will be completed within 18 to 24 months, with a view to achieving successful project financing of a currently estimated €340m by H2 2022. The project financing would include both a debt and equity component.
In addition to the initial investment, Sibanye-Stillwater has a guaranteed option to achieve a majority shareholding in Keliber, following the completion of the updated feasibility study, should it wish to do so, by contributing further equity financing for the development of the project. This investment into Keliber represents the first strategic step by Sibanye-Stillwater’s into the “battery metals” sector, which is complementary to its leading PGM position, with both battery metals and PGMs essential to achieving a “greener” future.
