Harmony Acquires Mponeng And Mine Waste Solutions

Harmony Gold Mining Company Limited (“Harmony” and/or “the Company”) has agreed to acquire AngloGold Ashanti’s South African business, thereby consolidating its position as South Africa’s primary gold producer.

The acquisition, which will see Mponeng and Mine Waste Solutions incorporated into the Harmony portfolio, enhances Harmony’s near-term production by adding annual gold production of approximately 350 000oz per annum; increases Harmony’s South African reserves by 8.27 million ounces (excluding Mponeng below infrastructure reserves) and improves Harmony’s portfolio mix between surface and underground operations.

Harmony believes that the acquisition is a natural next step following the acquisition of Moab Khotsong in 2018. A natural strategic fit with its existing asset base, the acquisition of Mponeng and Mine Waste solutions represents a compelling opportunity to enhance its position as a robust cash-generative gold mining company.

“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 US$200 million 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:

• US$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 US$100 million
• US$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.

Harmony management will host a conference call pertaining to the acquisition at 10:00am South Africa Standard Time. You can join the call via the phone numbers listed below:

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 US$200 million 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:

• US$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 US$100 million
• US$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.

Harmony management will host a conference call pertaining to the acquisition at 10:00am South Africa Standard Time.

For more information, visit: https://www.harmony.co.za/.