Harmony buys AngloGold’s last SA mine


Harmony buys AngloGold’s last SA mine

Published Date: 2020-02-13 | Source: Stephen Gunnion | Author: Stephen Gunnion

Harmony buys AngloGold’s last SA mine

Separately, AngloGold Ashanti said a non-cash impairment charge following the sale of Mponeng would result in flat to lower full-year earnings.

Harmony Gold Mining has bought AngloGold Ashanti's remaining SA gold mine in a $300 million (R4.4 billion) deal it says will consolidate its position as one of SA's leading gold producers. It beat other contenders including Sibanye-Stillwater for the $300 million (R4.4 billion) acquisition.

The transaction includes Mponeng, the world's deepest gold mine, the mothballed Tau Tona and Savuka mines and mine waste recycling operation Mine Waste Solutions. It will boost Harmony's annual gold production by about 350,000 ounces and increase its SA reserves by 8.27 million ounces, improving its portfolio mix between surface and underground operations. Harmony said the assets were a natural strategic fit with its current asset base and would provide opportunities to optimise operational performance, realise synergies and increase cash flow at current gold prices.

In 2018, Harmony also bought the Moab Khotsong mine for $300 million as AngloGold disposed of its SA gold mines to streamline its portfolio and focus on assets that offer better returns. AngloGold will use the proceeds from the latest sale to settle debt.

Harmony will pay $200 million for the Mponeng, as well as deferred compensation of $260 per ounce on any underground gold production from the West Wits mines - Mponeng, Savuka and TauTona - that exceeds 250,000 ounces a year for six years starting from January 2021. On current production forecasts, that's worth an additional $100 million. It will also get deferred compensation of $20 per ounce if Harmony develops the mines below existing mining infrastructure.

In a separate trading statement, AngloGold said it would book a $385 million non-cash impairment following the sale of Mponeng, which would leave 2019 earnings flat to $26 million lower, resulting in basic earnings per share (EPS) of between 0c and a 6c loss, down from 32c in 2018. Headline EPS, which exclude the impairment, would be 62% to 81% higher as a stronger gold prices more than compensated for lower output and a rise in operating costs.

Harmony rose 3.7% to R43.33 yesterday while AngloGold declined 0.8% to R283.87.

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