All conditions relating to Harmony Gold Mining Company’s acquisition of the Mponeng mine and Mine Waste Solutions from AngloGold Ashanti have been met.
Consequently, the transaction is scheduled to close in accordance with the transaction agreement on 30 September 2020, upon which Harmony will assume full ownership and operation of Mponeng, MWS and all other assets and liabilities that form part of the transaction.
Harmony will take effective control of the assets as from 1 October 2020.
Aside from improving Harmony’s portfolio mix between surface and underground operations, the transaction of Mponeng has the potential to improve the group’s overall recovered grade and increase cash flow margins.
The company will however only be in a position to estimate the full benefit of the integration of Mponeng once its planning parameters have been applied and the company has taken ownership of the assets.
“This is a proud moment for Harmony, further demonstrating our well-established belief in and commitment to the sustainability of gold, our confidence in South Africa and our determination to grow value for all of our stakeholders,” says Harmony CEO Peter Steenkamp.
AngloGold Ashanti will now no longer own any mining operations in South Africa and according to the company is well-positioned to safely deliver better returns as its focus narrows on growing free cash flow and shareholder dividends, while investing in its next generation of opportunities.
“While the decision to sell our South African assets was not an easy one, we are pleased that the assets are going to Harmony, a capable and responsible operator that will ensure their long-term sustainability,” says Christine Ramon, Interim CEO of AngloGold Ashanti.
“We can now sharpen our focus to pursue high return projects at several of our key assets, deliver new ounces from the world class Obuasi mine in Ghana, and advance studies in Colombia, a new frontier for our business.”
Consideration for the transaction is in cash and deferred payments with expected proceeds of around $300 million, subject to subsequent performance, and with additional proceeds if the West Wits are developed below current infrastructure.
Harmony will pay US$200 million in cash on completion of the transaction. Furthermore, Harmony has agreed to pay to AngloGold Ashanti:
- a contingent compensation of US$260 per ounce on underground gold production from the Mponeng, Savuka and TauTona mines that exceeds 250 000 ozp for a period of six years commencing on 1 January 2021. This is valued at approximately US$100 million based on AngloGold Ashanti’s current production forecast; and
- a contingent compensation of US$20 per ounce in relation to underground production sourced within the West Wits mineral rights (comprising the Mponeng, Savuka and TauTona mines) below the current infrastructure if it is developed.