Harmony Gold buys MAC Copper for $1B

Harmony Gold (JSE: HAR; NYSE: HMY), South Africa’s top gold producer by volume, has agreed to acquire MAC Copper (ASX: MAC; NYSE: MTAL) for $1.03 billion, accelerating its strategic shift into copper through a key Australian asset.

The all-cash deal would give Harmony full ownership of MAC’s only asset, the CSA copper mine in central western New South Wales. CSA is among Australia’s highest-grade and oldest operating copper mines, with a history stretching back nearly 150 years. At 1.9 km deep, it is also one of the country’s deepest underground operations.

Harmony is offering $12.25 per MAC Copper share, representing a 21% premium to the company’s last closing price in New York. MAC shares jumped 22% to $12.39 on Tuesday after the company announced its board unanimously supports the offer. MAC’s market capitalization stands at about $1 billion.

The bid provides “decent value for MAC shareholders,” BMO Capital Markets mining analyst Matthew Murphy said Tuesday in a note.

“We think the company arguably could have captured more value in time, given upside opportunities not currently captured in guidance, however, we see the attractiveness in a cash offer that immediately captures some of that upside,” he added.

Harmony shares dropped 8.2% on the NYSE to $14.53 for a total value of $8.85 billion.

Strategic shift

Harmony, like industry peers Newmont (NYSE: NEM) and Barrick (TSX: ABX; NYSE: B), is diversifying into copper – a metal critical to electric vehicles and power grid infrastructure. 

MAC’s acquisition is a “significant step forward in transforming Harmony into an increasingly de-risked, higher-quality, global gold and copper producer through disciplined and effective capital allocation,” CEO Beyers Nel said in the statement.

The deal expands Harmony’s copper footprint in Australia, where it entered in 2022 with the Eva copper project in Queensland. The Johannesburg-based miner expects to begin production at Eva by 2028. With CSA and Eva combined, Harmony aims to produce 100,000 tonnes of copper annually within five years. Last year, CSA alone produced about 41,000 tonnes.

Outside Australia, Harmony also owns the Hidden Valley gold mine and jointly holds the Wafi-Golpu copper-gold project with Newmont in Papua New Guinea. The company is increasingly steering away from gold-only operations as mining the metal becomes more complex and costly in South Africa.