Harmony Gold raises US$200M to buy AngloGold assets

Harmony Gold (NYSE: HMY) said on Thursday it had raised $200 million from a planned shares placement to partly fund its acquisition of rival AngloGold Ashanti’s (NYSE: AU)  assets in South Africa.

The Randfontein-based gold producer issued more than 60 million new ordinary shares at a price of 57.50 rand apiece on June 24. Harmony said it represented roughly 11% of its issued ordinary share capital before the placement.

The company agreed in February to buy AngloGold’s Mponeng mine, the world’s deepest gold mine, as well as its Mine Waste Solutions assets for US$300 million.

The deal marked AngloGold’s exit from its home country to focus on more profitable mines in Ghana, Australia and the Americas.

For Harmony, the acquisition will allow it to sustain growth and replace capacity coming from its Masimong and Unisel mines, which are running out of ore.

It will also boost gold production by about 350,000 oz. per year to more than 1.8 million ounces.

Harmony Gold chief executive officer Peter Steenkamp has repeatedly stated that South Africa is its main investment target.

The country’s gold industry, however, continues to face mounting challenges, including geological and safety issues from extracting ore in the world’s deepest mines.

Harmony is betting on recreating the successful strategy applied after it bought Anglo’s Moab Khotsong mine in 2017. Half of that money has already been paid back, Steenkamp said.

Mponeng, the world’s deepest mine, generated 265,000 oz. gold in 2018. Output from the surface operations, which extract the precious metal from ore dumps, totalled 171,000 ounces. South African assets accounted for about 13% of AngloGold’s production that year.

AngloGold was born out of the mines bought and built by Anglo American, founded by the Oppenheimer family more than a century ago.

The company was the dominant gold miner for decades but progressively became weaker as it closed and sold old mines in South Africa in favour of offshore investments.

— This article first appeared in MINING.com. The Northern Miner and MINING.com are part of Glacier Resource Innovation Group.