Harmony Gold is buying AngloGold Ashanti's Mponeng Mine and Mine Waste Solutions, which will add approximately 350,000oz to its annual gold production.
Image source: Getty/Gallo
The acquisition also enhances Harmony's South African reserves by 8.27-million ounces (excluding Mponeng below infrastructure reserves) and improves its portfolio mix between surface and underground operations.
According to Harmony, the deal is a natural next step following the acquisition of Moab Khotsong in 2018, and is a natural strategic fit with its existing asset base.
"Over the past two years, Harmony has added over 500,000 quality gold ounces per annum through the acquisition of Moab Khotsong and now Mponeng and Mine Waste Solutions. The acquisition has the potential to improve our overall recovered grade and increasing our cash flow margins,” said Harmony CEO, Peter Steenkamp.
“Harmony has demonstrated its ability to increase the life of mines it operates in South Africa – sustaining the mine communities surrounding the mining operations, preserving jobs and further unlocking value for its shareholders through increased grades and stronger margins,” he added.
The acquisition, which is subject to certain conditions, includes:
The Mponeng mine and its associated assets and liabilities
The Tau Tona and Savuka mines and associated rock-dump and tailings storage facility reclamation sites, mine rehabilitation and closure activities located in the West Wits region and their associated assets and liabilities
First Uranium, which owns Mine Waste Solutions and Chemwes, as well as associated tailings assets and liabilities
Covalent Water Company, AngloGold Security Services and Masakhisane Investments
Certain rock-dump reclamation, mine rehabilitation and closure activities located in the Vaal River region and their associated assets and liabilities.
The purchase price comprises three elements including a $200m cash payment, which will be settled utilising available banking facilities and available cash resources, and two deferred considerations.
The deferred components of the agreement are:
$260 per ounce payable on all underground production sourced within the West Wits mineral rights (comprising the Mponeng, Savuka and TauTona mines) in excess of 250,000 ounces per annum for six years (commencing 1 January 2021). Based on AngloGold's current production forecast, the Mponeng Deferred Compensation has a value of approximately $100m
$20 per ounce in relation to underground production sourced within the West Wits mineral rights below the current infrastructure if it is developed.
The acquisition is subject to South African Competition Authority approval and Section 11 approval from the minister of mineral resources.
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