Harmony to buy AngloGold Ashanti’s gold and uranium assets

Harmony Gold has swooped on a set of AngloGold Ashanti gold and uranium assets in a $300m cash transaction that it could partially fund through a rights issue to grow its domestic output by a third and boost cash generation.

AngloGold had wanted to hive its South African assets off in a separate vehicle, but ran into headwinds from shareholders. This transaction goes some way towards realising that ambition and gives AngloGold cash to repay debt and invest in its growth options.

Harmony had set a stated target of 1.5-million ounces of gold in three years, up from its 1-million ounces from mines in SA and Papua New Guinea. The transaction will add 280,000oz of gold output at an all-in sustaining cost of $884/oz, well below the $950/oz target Harmony set for its acquisition aspirations.

Harmony is buying the Moab Khotsong and Great Noligwa mining complexes as well as the entire Nufcor uranium business from AngloGold, assuming all liabilities at the assets excluding those stemming from a silicosis battle with ex-mine workers.

Harmony will also acquire the Mispah tailings dump which has 70-million tonnes of material with a gold grade of 0.3g/tonne that Harmony wants to retreat.

The assets Harmony is buying generated full-year post-tax profit of R852m in 2016.

Harmony will pay $100m by drawing down on debt facilities and the remaining $200m will come from a fully underwritten $200m bridge loan facility. "Harmony is assessing various alternatives to optimally repay the bridge, including a potential rights issue," it said.

Harmony, which believes it is fully empowered under prevailing policies and legislation, said it would work with AngloGold and the Department of Mineral Resources to "ensure that the transaction is implemented in a manner that goes beyond compliance and ultimately to the benefit of SA".

There are a large number of conditions to be met before the transaction is concluded in the first half of next year.