US markets slip, May 27-31: Buenaventura, Stillwater-Sibanye, Gold Fields

Trade tensions between the U.S. and China drove the Dow Jones Industrial Average down 3.01% to 24,815.04, while the S&P 500 Index lost 2.62% to finish at 2,752.06. Spot gold rose 1.58% to US$1,304.90 per ounce.

Shares of Buenaventura rose US64¢ to US$15.17. The company reported first-quarter results with net income of US$27.3 million, down from US$28.4 million in the first quarter of 2018, and revenues of US$186.2 million, down from the year-earlier quarter’s US$316.9 million. Earnings before interest, tax, depreciation and amortization came in at US$24.7 million compared to US$99.1 million in the same quarter a year ago, primarily due to lower metal prices and a reduction in volume sold at the company’s Orcopampa, Tambomayo and Uchucchacua mines, in addition to increased inventories of concentrate at Tambomayo.

The approval by both sets of shareholders of Stillwater-Sibanye’s acquisition of Lonmin PLC lifted the former’s shares US62¢ to US$3.87. Once completed, the transaction will make the Sibanye-Stillwater group the largest primary producer of platinum and second-largest primary palladium producer. “The rationale for the transaction remains compelling, and we are convinced the integration of Lonmin’s PGM assets with Sibanye-Stillwater’s adjacent PGM operations will ensure a more sustainable and positive future for all these assets,” said Neal Froneman, Sibanye-Stillwater’s CEO. The offer represented a value of 77.4 pence per Lonmin share and £226 million for the entire issued and to-be-issued ordinary share capital of Lonmin.

Gold Fields reported a buyback of US$250 million of the outstanding 2020 notes at 102% of par, compared with a premium of 101.73% of par on May 24. The company says the rest of the 2020 notes ($600 million), due in October 2020, is expected to be repaid from available cash and bank debt facilities. The buyback announced on May 27 was made possible by two new bonds in May — a US$500-million, five-year bond with a 5.125% coupon, and a US$500-million, 10-year bond with a 6.125% coupon — raising US$1 billion at an average 5.625% coupon. The company plans to refinance its syndicated bank debt in the third quarter, and targets net debt reduction of between $100 million and $150 million in 2019. Gold Fields advanced 14.9% to US$4.46 per share.