Sibanye-Stillwater said on Tuesday it will buy back up to 5% of its shares in the market, sending its stock price up sharply.
The buyback amounts to around 10 billion rand given Sibanye’s current market capitalisation of around 191.84 billion rand ($13.94 billion). The company said the buyback would be limited to a maximum of 147.7 million ordinary shares.
Sibanye reported a 78% increase in first-quarter core profit last month, on the back of higher prices for metals, including gold, platinum, palladium and rhodium.
In a statement, Chief Executive Neal Froneman said the board considered the repurchase “the most appropriate and value-enhancing allocation of surplus capital at this stage, to ensure ongoing delivery of superior returns to shareholders.”
Sibanye, which reinstated its dividend in 2020 for the first time since 2017, declared a total dividend for 2020 financial year of 371 cents per share.
Share buybacks decrease the number of outstanding company shares, boosting per share earnings and lowering the price-to-earnings ratio.
Shares in Sibanye rose 7% to $19.65 by 10 am EDT on the NYSE.
Sibanye said the buyback programme was in line with its strategy of investing in operational sustainability, maintaining cash reserves, paying dividends and managing its debt.
The program will be implemented between June 2, 2021 and April 6, 2022, Sibanye said.
($1 = 13.7666 rand)
(By Tanisha Heiberg and Nqobile Dludla; Editing by Jan Harvey and Jane Merriman)