Harmony Gold will acquire AngloGold Ashanti’s remaining local assets, including Mponeng mine near Carletonville, west of Johannesburg, which is the world’s deepest gold mine. Photo: Reuters
JOHANNESBURG – Harmony Gold on Wednesday consolidated its position as South Africa’s biggest gold producer by volume after being picked for the $300 million (R4.46 billion) acquisition of AngloGold Ashanti’s remaining local assets, including Mponeng, the world’s deepest gold mine.

The transaction would mark the end of an era for AngloGold Ashanti after operating mines in South Africa for more than 100 years.

AngloGold Ashanti chief executive Kelvin Dushnisky said Harmony was the most suitable candidate to acquire the assets given its financial capacity and proven technical capability in operating ultra-deep South African mines.

“From the beginning of the process, an objective has been to sell our South African assets to a strong, capable and responsible operator that will ensure their long-term sustainability. We believe that this transaction achieves that,” Dushnisky said.

AngloGold, which operates mines in jurisdictions including Australia and Ghana, last year announced the sale of the South African assets, saying it was part of a review of its footprint and a disciplined approach to capital allocation to maximise returns.

The announcement comes nine months after AngloGold Ashanti decided to put its South African assets up for sale as it disinvested from the country.

“This sale helps deliver on our commitment to sharpening our management focus and capital allocation on the highest return investment options available to us,” Dushnisky said.

Harmony chief executive Peter Steenkamp told analysts and journalists that the transaction was a natural fit for the group, given its experience in operating deep-level gold mines.

Harmony, which has been on a growth trail since 2016 and bought AngloGold Ashanti’s Moab Khotsong mine a year later, closed 3.66percent higher at R43.33 yesterday.

Steenkamp said that the company had paid a fair price for the assets.

“Over and above the Mponeng mine, we will also acquire surface resources, which will last for years to come,” said Steenkamp, adding that the deal consolidated its position as South Africa’s leading gold producer.

“We do not think it is a bad thing to be the last man standing in South Africa’s gold-mining industry.”

Steenkamp said Harmony would pay $200m in cash and a deferred $100m if more than 250000 ounces were produced from Mponeng a year.

The deal will be funded from a mixture of cash and debt.

He said no retrenchment plans were on the cards, given that AngloGold restructured its South African operations ahead of the deal.

As part of the deal, Harmony will acquire the TauTona and Savuka mines and tailings storage facilities, together with First Uranium, which owns Mine Waste Solutions. The Covalent Water Company Limited, AngloGold Security Services and Masakhisane Investments are also part of the deal.

The transaction, which was expected to close in June, is subject to regulatory approvals.

The deal will add 350000 ounces a year to the group’s near-term gold production, and boosted its South African reserves by 8.27million ounces.

It received the backing of organised labour, with trade union Solidarity saying Harmony was fully committed to the advancement of the local mining sector.

Solidarity general secretary Gideon du Plessis said Harmony confirmed that it did not envisage any retrenchments at the mining level after the takeover. Harmony will take on nearly 6500 AngloGold employees.

“Although Solidarity is grateful for the takeover by Harmony, the trade union is concerned about the fact that another leading mining company such as AngloGold Ashanti has decided to withdraw from South Africa and rather expand its mining operations outside South Africa,” said Du Plessis.