Harmony Gold expands into copper with US$230M Eva project buy

South African miner Harmony Gold (NYSE: HMY; JSE: HAR) is expanding into the coveted copper market with the acquisition of Copper Mountain Mining’s (TSX: CMMC; ASX: C6C) Eva project in Australia, in a deal worth US$230 million.

The company said the project, situated in Queensland, adds 1.7 billion lb. of copper and 260,000 oz. of gold to its mineral reserves. It also helps Harmony Gold take a firmer step into the orange metal, which is considered critical to the global energy transition.

Until now, the company’s only exposure to copper was through its stake in the Wafi-Golpu joint venture with Newcrest in Papua New Guinea, where the partners have been waiting for a special mining lease (SML) from the government for more than three years.

The acquisition also opens up a new revenue stream for Harmony as prices and demand for copper remain strong based on an expected supply deficit of the metal in the medium- to long-term.

The Eva open pit copper mine is expected to yield 100 million pounds of copper a year and 14,000 ounces of gold annually over an expected mine life of 15 years.

Getting the project off the ground, according to Copper Mountain, will require a $597 million investment, which Harmony plans to fund with existing cash and available debt facilities.

“Acquiring Eva Copper is strategically important to our growth journey. It opens a new copper/gold frontier for Harmony within a highly attractive Australian mining area,” Harmony CEO Peter Steenkamp in the statement. 

Harmony Gold became South Africa’s biggest gold producer last year after completing the acquisition of the remaining domestic assets of local rival AngloGold Ashanti (NYSE: AU; ASX: AGG; JSE: ANG).

The company expects to close the deal with Copper Mountain in the first quarter of 2023. Copper Mountain will receive US$170 million on closing. Harmony will also pay out a further US$30-million in cash (10% of incremental revenue from Eva above the revenue at a copper price of US$3.80 per lb); and up to US$30 million based on additional copper resources delineated after the asset sale.

Copper Mountain’s flagship asset is the 75% owned Copper Mountain mine located in southern B.C., near the town of Princeton.