Harmony gets green light for AngloGold mines

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Harmony gets green light for AngloGold mines

Published Date: 2020-09-15 | Source: Stephen Gunnion | Author: Stephen Gunnion

Harmony gets green light for AngloGold mines

The Department of Mineral Resources and Energy approved the transfer of the West Wits mineral rights to Harmony with no conditions.

Harmony Gold says it will take effective control of the Mponeng gold mine from AngloGold Ashanti on 1 October after all conditions for the deal were met. The deal consolidates Harmony's position as one of SA's leading gold producers - and marks AngloGold's exit from mining in the country.

The Department of Mineral Resources and Energy approved the transfer of the West Wits mineral rights to Harmony with no conditions, contrary to a month ago when some conditions were attached.

Harmony said the assets, bought in February for $300 million, would improve its portfolio mix between surface and underground operations and had the potential to improve its overall recovered grade and cash flow margins. It would only be in a position to estimate the full benefits of the integration once it had taken ownership of the assets and its planning parameters were applied. When it announced the deal it said it would boost annual gold production by about 350,000 ounces and increase its SA reserves by 8.27 million ounces.

The deal also includes the mothballed Tau Tona and Savuka mines and mine waste recycling operation Mine Waste Solutions. 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.

AngloGold said the deal was in line with its aim to continually improve its portfolio and supported its disciplined approach to the allocation of capital and other resources to ensure maximum value generation for all shareholders. Together with the pending sales of its assets in Mali, it said this would result in a streamlined, high-margin business with quality assets and a robust pipeline for growth. Gross cash proceeds from the transaction would be used to reduce debt.

Harmony's annual results are scheduled for release today. Its shares fell 0.5% to R103.06 yesterday. AngloGold closed 1.2% up at R494.67.





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