Sibanye-Stillwater has backed out of a deal to purchase the Santa Rita nickel mine in Brazil after a “geotechnical event” occurred at the mine. The purchase from Appian Capital Advisory LLP also included the Serrote copper mine.

The company said it assessed the event and its effect and concluded that “it is and is reasonably expected to be material and adverse to the business, financial condition, results of operations, the properties, assets, liabilities or operations of Santa Rita.”

On October 26, 2021, Sibanye-Stillwater entered into purchase and sale agreements with affiliates of funds advised by Appian Capital Advisory LLP to purchase 100% of the Santa Rita nickel mine and the Serrote copper mine, both located in Brazil, for a cash consideration of US$1 billion and a 5% net smelter royalty over potential future underground production at Santa Rita.

Sibanye intended to acquire operating companies Atlantic Nickel, which operates the Santa Rita mine, and Mineracao Vale Verder (MVV), which is developing the Serrote mine.

Appian issued a statement saying the announcement was surprising and there was “no basis” for Sibanye-Stillwater to lawfully terminate the agreements.

“The geotechnical event that Sibanye is referencing amounts to a localized fracture that occurs in normal course open-pit operations,” an Appian spokesperson said. “To remedy the condition of the area in question, some amount of additional waste will need to be mined earlier in the mine plan, which equates to less than 1% of the mine’s volume over a 34-year mine life.”

Appian said it does not agree this constitutes a material adverse event.

Appian said it expects Santa Rita to have strong operational and financial performance in 2022 and generate significant free cash flow.

The company said it is currently assessing all of its legal options.