South Africa’s third-largest gold producer,
The offer represents a 14% premium over Abelle’s closing price prior to the bid announcement and values the Aussie gold miner and explorer at A$115 million. Harmony’s bid includes an agreement to subscribe to 35 million shares (about 18% of the company’s share capital) at A75 apiece. The placement is expected to wrap up in early May.
Harmony will also look to take up all of Abelle’s listed options for A45 apiece. It will offer a price equal to the difference between A75 and the exercise price for each of the unlisted employee options.
The deal has yet to be approved by regulators and Abelle shareholders. Harmony has already sewn up an irrevocable pre-bid acceptance with Abelle’s major shareholder, Guiness Peat Group, which has a 19.9% stake.
Says Harmony Gold CEP Bernard Swanepoel: “Our offer for Abelle represents the next step in our strategy of creating a significant gold business in Australasia, combining producing assets with high-quality and prospective growth projects.
Abelle’s key assets include a half-interest in the Morobe gold-silver project and a 100% interest in the Wafi gold-copper project, both of which are in Papua New Guinea. It also owns the Gidgee gold project in Western Australia.
About 20 km from Wau, Morobe is home to an estimated resource of 73.9 million tonnes grading 2.2 grams gold and 30 grams silver per tonne. In late 2002, an independent feasibility study pegged reserves at 41.5 million tonnes running 2.06 grams gold and 35.9 grams silver.
Over eight years, the project is expected to produce 300,000 oz. gold and 4.5 million oz. silver annually from a single open pit. A 5-million-tonne-per-year processing plant will handle the free-milling ore at a cash operating cost of US$165-175 per oz.
Abelle will use proceeds from the share placement to help exercise an option on the remaining half of Morobe. The company can acquire a 45% stake from CDC Financial Services and another 5% from privately held Kula Fund for US$10 million plus 12 million unlisted Abelle options priced at A$1 per share.
Some 60 km to the north, the Wafi project comprises two large deposits about 1 km apart. One, a porphyry copper-gold deposit, contains an estimated resource of 100 million tonnes running 1.3 % copper and 0.6 gram gold. A gold discovery on the margins of the Wafi diatreme is estimated to contain 26 million tonnes averaging 3.5 grams gold. The deposit remains open in all directions.
A 5,000-metre diamond-drilling program is to begin at Wafi in the weeks ahead. As well, Abelle plans to use some of the placement proceeds to complete optimization studies on both projects.
The Gidgee project is 650 km north-northeast of Perth, and covers the historic Jonesville and Gun Creek mining centres. During the past six months of 2002, Gidgee produced 23,769 oz. gold from the Swan Bitter underground mine. While production is currently coming from lower-grade and higher-cost development ore, the focus will soon shift to the first high-grade lode.
Harmony’s existing Australian’s operations — Hill 50, Mt Magnet and South Kalgoorlie — churn out more than 500,000 oz. of gold annually. The company also holds a half-interest in a joint venture that is developing several gold projects in the Pine Creek area in the Northern Territory, and has a 31.8% interest in the high-grade Bendigo project, which is expected to pour more than 400,000 oz. a year at full steam.
Harmony plans to bankroll the Abelle acquisition with proceeds from its recent sale of
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