Harmony Gold crossed a major hurdle in its $1bn takeover of one of Australia’s highest-grade copper mines, with the deal receiving shareholder approval from the mine’s owner this week.
The gold miner now expects to take control of Australia’s CSA copper mine towards the end of October.
The acquisition promises to add about 40,000 tonnes of annual copper production to Harmony’s portfolio, contributing immediate positive cash flow and taking the SA miner a step further in its drive for diversification.
Record gold prices have allowed Harmony to branch out into new regions and commodities in recent years, using offshore copper mines as a hedge against concentration risk and a downturn in gold prices.
A bigger copper footprint also provides Harmony exposure to energy transition trends, with the shift to electric cars and solar panels as well as the growth of data centres and AI expected to boost copper demand over the next five years.
The latest step in the process comes two weeks after Australian foreign investment regulators gave their stamp of approval to Harmony’s acquisition of MAC Copper, the sole owner of CSA.
With the SA Reserve Bank signing off on the deal earlier this month, all regulatory approvals are now secured. Harmony now awaits a court sanction hearing on October 9, soon after which it expects to take control of the asset.
“This acquisition accelerates Harmony’s strategy of adding to our portfolio of high-margin, long-life ore bodies,” said Harmony CEO Beyers Nel.
“MAC Copper serves as a strategic lever, moving us towards a more resilient, geographically diverse asset portfolio, with copper enhancing cash flow resilience.”
The $1bn (R18bn) deal is being funded through a mix of cash and debt facilities.
It comes after rising gold prices pushed the miner’s revenue up by a fifth to R73.9bn in the year to end-June. The gold miner reported record free cash flow of R11.1bn, driven by higher recovered grades and a higher average gold price received.
Gold prices have rallied more than 30% this year as trade wars and geopolitical tension drive up demand for the metal, which offers an alternative to volatile currency markets.
In recent years, Harmony has acquired a number of offshore operations in an attempt to expand its reach, including the addition of Papua New Guinea’s Hidden Valley in 2016 and Australia’s Eva Copper Project in 2022.
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