Harmony Gold has successfully ended its streaming contract with Franco-Nevada, in which the Canadian investor was entitled to 25% of all gold produced at Harmony’s North West tailings retreatment operation, Mine Waste Solutions (MWS).
The conclusion of the contract meant the average gold price Harmony received from MWS would increase in line with market prices, which would cause MWS’s free cash flow to gain more than R1bn on an annualised basis, the group said on Wednesday.
“The conclusion of the Franco-Nevada streaming contract will allow MWS to fully deliver on the value of its production and contribute meaningfully to the broader Harmony group,” Harmony CEO Peter Steenkamp said.
Further encouragement came as Harmony announced that it had completed the first phase in its expansion project at Kareerand tailings storage facility.
The expansion project will deliver increased storage capacity, enabling the continued remining of old tailings in the region while increasing MWS’s life of mine by 15 years.
In a bid to invest in expanding the operation, Harmony said it had allocated R2.3bn to the expansion project for the next two years, with most of capital expenditure being deployed in the 2025 financial year.
In the expansion project a fourth processing stream will be added to the plant to increase its throughput capacity from 25-million tonnes to 28-million tonnes per year — with MWS’s annual gold production expected to average about 110,000 ounces over the mine’s lifetime.
“This project will be repaid within three years,” Steenkamp said. “The profitability of this operation more than justifies the capital invested at MWS. Expanding our surface retreatment business is in line with our strategy to invest in low-cost, high-margin quality ounces.”
Harmony has been investing in expanding its operations, with 2025 guidance reflecting the higher capital expenditure required to sustain the group’s growth plans.
Last month, Steenkamp told Business Day that its Eva Copper Mine was expected to be bigger than was originally anticipated by its previous owner, with a larger capital spend than predicted.
“Over and above the capex that we have looming, we also have the Eva Copper project. That’s a two-year build, with significant capital,” financial director Boipelo Lekubo said, referring to a project that has a capital expenditure bill of more than $600m.
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