HomeGoldHarmony sells half share of Papwa New Guinea operations

Harmony sells half share of Papwa New Guinea operations

Harmony’s Hidden
Valley project in
Papwa New Guinea
Johannesburg, South Africa — MININGREVIEW.COM — 22 April 2008 – The world’s fifth-largest gold producer, South African-based Harmony Gold Mining Company Limited and Australasia’s largest gold company, Newcrest Mining Limited, have signed an agreement which will allow Newcrest to earn a half share in Harmony’s Papua New Guinea gold assets.

Announcements from both companies late yesterday confirmed that Newcrest had agreed to buy a 50 % stake in the Hidden Valley gold and silver mine and the Wafi copper and gold deposit for a maximum of US$525 million (R4.2 billion). The joint venture includes:

  • The Hidden Valley mining operation – a gold and silver project expected to produce over 250 000 oz of gold and 3.6 Moz of silver p.a. over a 14-year mine life, peaking at over 300 000 oz of gold pa in 2011. Production is scheduled to commence around mid 2009.
  • The highly-prospective Wafi-Golpu gold/copper deposit and its surrounding exploration tenements.
  • More than 3 000 squ km of Harmony’s exploration tenements in Morobe province, 300 km north-east of Port Moresby.

The PNG assets have a significant resource inventory, with a JORC-compliant resource base of approximately 31 Moz of contained gold equivalent. Current resources total 15.2Moz of gold, 90 Moz of silver, 1,761kt of copper and 22kt of molybdenum.

The announcements add that the Melbourne-based company will pay US$180 million (R1.4 billion) for an initial 30 percent stake by June 30, 2008, and fund the acquisition from cash flows. “Chief executive officer Ian Smith is boosting output from mines in Australia and Indonesia, and has bought projects in Fiji and Papua New Guinea in the past year to take advantage of surging gold prices,” they said.

The second phase will involve a farm-in commitment for the remaining 19.99% of approximately US$300 million (R2.4 billion), to fund project expenditure up to the commencement of mining operations at Hidden Valley. Newcrest will fund the deal from internal cash flows.

Hidden Valley will boost Newcrest’s annual production by about 14 percent based on the company’s forecast of between 1.81 million ounces and 1.89 million ounces for the year to June.