Harmony Gold CEO Peter Steenkamp. Picture: MARTIN RHODES
Harmony Gold CEO Peter Steenkamp. Picture: MARTIN RHODES

Harmony Gold received the R3.47bn cash injection it needed from investors to buy AngloGold Ashanti’s last operating assets and mothballed mines in SA.

With a narrow discount of just 3.5% to the trading price of the previous 30 days, Harmony placed 60.28-million shares, slightly more than one tenth of its shares in issue, to raise the cash to pay AngloGold. The placement price was R57.50 per share.

The only outstanding condition needed to conclude the transaction and seal Harmony’s spot as SA’s top producer of domestic gold is approval from the department of mineral resources and energy for the transfer of mining rights from AngloGold.

For AngloGold Ashanti, it is the end of an era in SA where it was  the country’s largest gold miner for decades, and the biggest in the world. With its focus on mines in Africa, Australia and South America, AngloGold remains a heavyweight contender as the world’s number three gold producer.

Harmony, which has been the main beneficiary of AngloGold’s disposal of mines over recent decades, has built its success on an ability to operate old mines that other companies regarded as marginal and near the end of their lives.

“We intend replicating our success in SA, with decades of acquiring, operating, and extending the life of mines, and extracting additional value from mining operations,” Harmony CEO Peter Steenkamp said on Thursday.

The key assets in the AngloGold transaction are the Mponeng mine, the world’s deepest at 4km below surface, and the Mine Waste Solutions tailings retreatment business.

The purchase includes two mothballed mines, the Savuka and TauTona operations, which Harmony is sure to return to production.

In a recent interview with Business Day, Steenkamp was reserved in his comments about the potential that remained in these two mines.

Similarly, he was guarded in his comments about the multibillion rand extension plans AngloGold had for Mponeng to extend its life by two decades from the eight years it has left now.

Mponeng has 8.5-million ounces of gold reserves in a planned extension to the mine that would take its life to 20 years.

Steenkamp said earlier in June that there was no urgency in deciding on the extension project and that Harmony would make a decision in two or three years after closely scrutinising the detailed feasibility studies undertaken by AngloGold.

Steenkamp said one of the most immediate value creators was merging the tailings that came with its $300m Moab Khotsong and Great Noligwa mine purchase from AngloGold into the Mine Waste Solutions business.

The Mponeng deal would include a further $100m coming from a $260/oz of gold mines from Mponeng and the other two mines included in the transaction when output topped 250,000oz a year over a six-year period starting from 2021.

Harmony will pay a further $20/oz on gold output coming from any extensions of mining below existing infrastructure at Mponeng, Savuka and TauTona.


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