Harmony Gold raises R1bn in share placing to buy AngloGold assets

Harmony Gold raised R1bn via a share placement, completing the final tranche of financing needed for the $300m cash purchase of the Moab Khotsong and associated assets from AngloGold Ashanti.

Harmony’s share price fell in line with the discount at which it placed the shares with institutional investors and African Rainbow Minerals, its key empowerment partner.

By the close of trade on Wednesday, Harmony’s share price had retreated 8.6% to R19.80 each, giving the company a capitalisation of R8.8bn. The 55-million new shares were issued at R19.12 each, a 10% discount to a three-day volume weighted average price.

The Moab transaction included the Great Noligwa mine, which has been incorporated into the Moab Khotsong mining complex, as well as tailings dumps containing nearly 900,000oz of gold and 22-million pounds of uranium that Harmony could retreat.

As part of the purchase, Harmony acquired the Nufcor uranium processing plant near Randfontein on the West Rand.

Harmony CEO Peter Steenkamp has hinted that this may not be a core asset and that it could be sold.

While Moab will be a lowcost producer in the short-term for Harmony, the company will have to invest heavily in the Zaaiplaats underground project at Moab to extend the life of the mine and access fresh ore.

An AngloGold prefeasibility study into Zaaiplaats showed the need for R11.6bn of capital over a 12-year period.

A competent person’s report has described Moab as “structurally complex with large faultloss areas between the three mining areas”, meaning there are geological faults in the ore body, making it more difficult to mine.

The sales of the assets to Harmony and the sale of the Kopanang gold mine to China’s Heaven-Sent for R100m has marked the exit of AngloGold from SA, leaving it with a single underground mine, which is the subject of a review process, and a tailings retreatment operation.