Just three days after disposing of its 31.7% stake in Russian gold miner Highland Gold, Harmony Gold (HMY-N) has dumped its 16.2% interest in High River Gold Mines (HRG-T).
Harmony, South Africa’s third-largest gold producer, sold about 17.1 million High River shares in a placing arranged by BMO Nesbitt Burns. The shares sold for $1.75 apiece, which represents a 12.5% premium over the closing price on Oct. 15, the day before the sale.
Harmony says the sale generated US$22.5 million in proceeds, representing a 55% return on its original US$14.5 million investment in High River in November 2002. However, with the rand strengthening by about 28% during that period, the net profit comes in a about US$2.25 million.
Harmony said in a prepared statement, "Following the company’s disposal of its 31.7% shareholding in Highland Gold earlier in the week, the board was of the opinion that the relevance of the stake in High River Gold had decreased and a decision to disinvest was taken."
The company had warned in its June-quarter financial statement that it would need to re-assess the relevance of its investment, as it was unable to gain “operational control”.
Earlier in the week, Barrick Gold (ABX-T) picked up a 10% interest in Highland from Harmony for US$43 million; the remaining 21.7% stake was peddled to a group of institutional investors. London-listed Highland has also conditionally agreed to issue the major another 29.6 million like-priced shares to bring Barrick’s stake to 29%.
For its part, Harmony gained some US$73.2 million on its original investment in Highland, netting US$119 million on the sale.
Harmony was under pressure from South Africa’s Reserve Bank to either consolidate ownership of its overseas interest, or dispose of them.
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