Harmony Gold (JSE: HAR) (NYSE: HMY) has emerged as the new top producer of the yellow metal in South Africa, as rival AngloGold Ashanti (NYSE: AU) (JSE: ANG) sells it the last remaining assets in the country.
The $300 million deal, agreed upon Wednesday, marks AngloGold’s exit from its home country to focus on more profitable mines in Ghana, Australia and the Americas.
The acquisition of AngloGold’s Mponeng mine and surface assets will allow Harmony to sustain growth and replace diminished capacity
For Harmony, the acquisition of
AngloGold’s Mponeng mine and surface assets will allow it to sustain
growth and replace capacity currently coming from its Masimong and Unisel
mines, which are running out of ore.
It will also boost gold production
by about 350,000 ounces a year to more than 1.8 million ounces.
The company’s chief executive
officer, Peter Steenkamp, has
repeatedly stated that South Africa is its main investment target, even as the
country’s gold industry faces mounting challenges, including geological and
safety aspects of extracting ore from the world’s deepest mines.
Harmony is betting on recreating the successful strategy applied after it bought Anglo’s Moab Khotsong mine in 2017. Half of that money has already been paid back, Steenkamp said.
End of an era
Mponeng, the world’s deepest mine,
generated 265,000 gold ounces in 2018. Output from the surface operations,
which extract the precious metal from ore dumps, totalled 171,000 ounces. Those
South African assets accounted for about 13% of AngloGold’s production that
year.
AngloGold was born out of the mines bought and built by Anglo American, founded by the Oppenheimer family more than a century ago.
The company was the dominant gold miner for decades, but progressively became weaker as it closed and sold old mines in South Africa, in favour of offshore investments.
