AfricaBusinessInvestmentOil & Gas/Mining

Harmony poised to take over AngloGold Ashanti assets in South Africa

The planned acquisition in October will enable the gold mining company to concentrate on developing other assets such as Obuasi

AngloGold Ashanti on Monday said all conditions precedent have been met with respect to the sale of its remaining mines in South Africa to Harmony Gold Mining Company Ltd.

This includes unconditional approval by the South African Department of Mineral Resources and Energy for the transfer of mineral rights in West Wits Mining from AngloGold Ashanti to Harmony.

The transaction is scheduled to close in accordance with the agreement on 30 September. At that point, Harmony will assume full ownership and operation of all assets and liabilities which form part of the transaction.

High-return assets

A statement issued by AngloGold Ashanti said the firm is well positioned to deliver better returns safely as it focuses on growing free cash flow and shareholder dividends while investing in its next generation of opportunities.

“While the decision to sell our South African assets was not an easy one, we are pleased that the assets are going to Harmony, a capable and responsible operator that will ensure their long-term sustainability,” said Christine Ramon, interim chief executive of AngloGold Ashanti.

“We can now sharpen our focus to pursue high-return projects at several of our key assets, deliver new ounces from the world-class Obuasi mine in Ghana, and advance studies in Colombia, a new frontier for our business.”

Consideration for the transaction is in cash and deferred payments, with expected proceeds of approximately US$300 million, subject to subsequent performance, and with additional proceeds if the West Wits assets are developed below the current infrastructure.

Compensation

Harmony is expected to pay US$200 million in cash on completion of the transaction.

The firm has also agreed to pay AngloGold Ashanti contingent compensation of US$260 per ounce on underground gold production from the Mponeng, Savuka and TauTona mines which exceeds 250,000 ounces per annum for a period of six years, commencing on 1 January 2021.

This is valued at approximately US$100 million, based on AngloGold Ashanti’s current production forecast. It will also pay contingent compensation of US$20 per ounce in relation to underground production sourced within the West Wits mineral rights (comprising the Mponeng, Savuka and TauTona mines) below the current infrastructure if it is developed.

The transaction is in line with AngloGold Ashanti’s aim to continually improve its portfolio and support its disciplined approach to the allocation of capital and other resources, in order to ensure maximum value generation for all shareholders.

This, together with pending sales of the company’s assets in Mali, will result in a streamlined, high-margin business with quality assets and a robust pipeline for growth.

Fred Dzakpata

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