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 on
Wednesday, marks AngloGold exit from its home country to focuses on more
profitable mines in Ghana, Australia and the Americas
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.
Steenkamp 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, he said.
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.
More to come…