Harmony Gold’s MAC Copper takeover OK’d

Harmony Gold’s (JSE: HAR; NYSE: HMY) acquisition of MAC Copper (NYSE: MTAL; ASX: MAC) has cleared the final regulatory hurdle after Australia’s Foreign Investment Review Board gave its approval of the $1-billion (C$1.38-billion) deal.

The board approval, says MAC Copper CEO Mick McMullen, is “another significant step towards implementation of the transaction as all requisite regulatory approvals have now been obtained.” It follows last week’s consent by the South African Reserve Bank.

The acquisition of MAC represents a strategic shift by South Africa’s leading gold producer to diversify its portfolio with critical minerals such as copper. With MAC’s CSA mine in New South Wales combined with Harmony’s Eva project in Queensland, it aims to produce 100,000 tonnes of copper annually within five years.

Shares in Harmony closed less than 1% lower in Johannesburg on Tuesday at 269 rand apiece for a market capitalization of 171 billion rand ($9.7 billion). They’ve risen more than two-thirds this year. 

20% premium

As disclosed in its announcement in late May, the Johannesburg-based miner would pay $12.25 apiece for MAC’s common shares, a 20% premium at the time, for a total transaction value of $1.03 billion. MAC’s shares rose on the deal and on Tuesday traded at $12.13 apiece on the NYSE, with a market capitalization of $1 billion. 

The transaction still requires approval from investors, satisfaction of certain restructuring conditions, and sanction by the court. Shareholders of MAC are expected to cast their votes at meetings scheduled for August 29 in Jersey and online.

MAC’s main asset, CSA, ranks amongst the highest-grade copper mines in Australia and is one of its oldest copper operations, with a history stretching back nearly 150 years. At 1.9 km, it is also one of the country’s deepest underground operations.

The mine and facility were previously held by Glencore (LSE: GLEN). In March 2022, MAC won a bid to acquire the asset for $1.1 billion. Harmony entered Australia in 2022 with the Eva copper project which it expects to begin production by 2028.