ANGLOGOLD Ashanti is to sell its Mponeng mine and Mine Waste Solutions (MWS) to Harmony Gold for $300m (R4.44bn), the company said in an announcement today.
The R118bn gold producer said that in choosing Harmony Gold it had opted for a long-standing operator of ultra deeps mines.
“From the beginning of the process an objective has been to sell our South African assets to a strong, capable and responsible operator that will ensure their long-term sustainability,” said Kelvin Dushnisky, CEO of AngloGold Ashanti. He said the company’s management focus and capital allocation would be sharper as a result of the sale.
The transaction consists of $200m on deal closure – expected in June – with the balance payable by means of a royalty of $260 per ounce on underground gold mined in excess of 250,000 ounces a year for six years starting January 1, 2021.
In addition, $20 per oz is payable on underground production located at deeper levels of Mponeng but which requires billions of rands in additional development capital. If some 8.53 million oz in reserves located in the deeper areas were mined, it would yield $170m to AngloGold at the stated royalty.
Harmony Gold said absorbing Mponeng and Mine Waste Solutions into its portfolio would add 350,000 oz annually to production which has been guided to about 1.4 million oz in the current financial year.
The deal also increases Harmony’s South African reserves by 8.27 million oz excluding Mponeng’s reserves below existing infrastructure. “Harmony believes that the acquisition is a natural next step following the acquisition of Moab Khotsong in 2018,” it said.
Harmony bought Moab Khotsong for $300m incorporating some 250,000 oz into Harmony’s production for which CEO, Peter Steenkamp, had an aspirational target of 1.5 million oz/year. The group achieved that target last year but given the ageing nature of other mines in its portfolio, production has started slipping again.
Buying Mponeng and MWS, which also incorporates the reserves of other AngloGold ‘mines’ Savuka and Tau Tona, begs the question as to how it will allow Harmony Gold to adjust its portfolio as it has a collective life of mine of five years.
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