What happened
Shares of Sibanye Stillwater (SBSW -2.35%) jumped 15.1% in October, according to data provided by S&P Global Market Intelligence. Several factors fueled the precious metal mining stock's rally, including acquisition news, earnings, and an analyst note.
So what
Sibanye Stillwater had a busy October. One of the highlights was purchasing two mines in Brazil for $1 billion. The company bought the Santa Rita nickel mine and the Serrote copper mine from a private equity fund. Those mines align with the company's focus of building a portfolio of mines that produce metals vital to cleaner energy. Copper is essential to electric vehicles and renewable energy, while nickel is crucial for battery production.
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The mining company also reported its quarterly financial results last month. Sibanye Stillwater noted that its mines operated at pre-pandemic levels for the second consecutive quarter. Overall, the company's legacy gold and platinum group metals (PGM) operations generated about $1 billion of earnings before interest, taxes, depreciation, and amortization (EBITDA) during the period. While its PGM operations reported lower production, gold output rose year over year. The company also maintained its production guidance for the full year.
Meanwhile, an analyst from Deutsche Bank initiated coverage on Sibanye Stillwater in October. The analyst gave the mining company a buy rating and set a $19 price target. The analyst noted that the company had acquired several assets and companies over the years to build a portfolio aimed at generating free cash flow in the future.
That's giving it the funds to invest in its green metals strategy. In addition to its recent Brazilian copper and nickel acquisitions, Sibanye Stillwater has made three other deals focused on green metals important to the energy transition in recent months. In September, it agreed to invest $490 million in a lithium-boron joint venture in the U.S. Meanwhile, earlier this year, it signed an option agreement to acquire a nickel procession facility in France and invested in a lithium project in Finland.
Now what
Sibanye Stillwater is using the cash flows produced by its precious metals mining operations to expand into green metals. Last month, the company took another step forward on that strategy by agreeing to acquire copper and nickel mines in Brazil. When combined with its other nickel and lithium investments, those deals position the company to benefit from the growing demand for metals to drive the energy transition to cleaner alternative energy sources. This strategy could pay big dividends in the future if demand for green metals grows as the company anticipates.
