Harmony’s Hill 50 bid greenlighted

South Africa’s Harmony Gold Mining (HGMCY-Q) has received approval from the South African Reserve Bank for its take-over bid for Australia’s Hill 50 Gold.

The latest approval comes about a week after the Australia Foreign Investment Review Board gave its thumbs up to the bid.

The company has also been assured by Hill 50’s banking counter parties that they will not terminate or suspend their hedging contracts should Harmony’s bid prove successful.

Harmony’s offer is still subject to the acceptance of at least 50.1% of Hill 50’s share and option holders.

Harmony’s CEO Bernard Swanepoel said, “We are very pleased that all regulatory conditions relating to Harmony’s offer to Hill 50 shareholders have now been fulfilled. We therefore encourage shareholders to accept Harmony’s offer which had already been accepted by Hill 50’s largest shareholder who owns 16.3% of the company.”

The largest shareholder, Robert Pittorino, also holds 12.6% of Hill 50’s listed options.

Harmony has offered A$1.35 cash for each Hill 50 share and A65 for each listed option. The offer also includes a cash bonus of A5 per share or option, which would be paid if more than 90% of the Hill 50 shareholders and option-holders accept the offer. The offer represents a 15% premium over the weighted average share price for Hill 50 in the week preceding the offer, and a 35% premium over the month preceding the offer.

Hill 50’s primary assets are the Mt Magnet underground and open-pit gold operations in the Murchison belt of Western Australia and the recently acquired New Celebration operation, south of Kalgoorlie.

The Mt Magnet operations produced 201,675 oz. gold for the fiscal year ended June 30, 2001, at a cash cost of roughly US$166 per oz. (A$330 per oz.), compared with 149,705 oz. in the previous year at A$358 per oz. Reserves are estimated at 12.4 million tonnes grading 4 grams gold per tonne, or 1.6 million contained ounces. The measured, indicated and inferred resource totals 32.4 million tonnes grading 3.9 grams, equivalent to 4 million oz.

At the end of June, Hill 50 purchased the New Celebration gold mine operation from Newcrest Mining for A$10 million, plus a A$10-per-oz. future royalty payment on all production above 400,000 oz. The mine is expected to pour more than 90,000 oz. in the current year, boosting Hill 50’s total production to 300,000 oz. per year.

Proven and probable reserves stand at 2.3 million tonnes grading 4.6 grams, or 337,000 oz., while the overall resource totals 67.8 million tonnes grading 1.6 grams, equal to 3.6 million oz.