Harmony buys Avmin's stake in Avgold
Posted Thu, 13 Nov 2003
World number five gold miner Harmony on Thursday announced that it had reached an in-principle agreement regarding the acquisition of Avmin's 42.2 percent interest in Avgold at 10.11 rand per share.
The consideration of R2.894-billion will be settled by the issue of 28.631 million new Harmony shares.
On July 15, Harmony announced that it had acquired 11.5 percent or 77.541 million shares in Avgold at a consideration of 7.91 rand per Avgold share.
If the acquisition of the Avgold shares becomes unconditional, the company will own about 54 percent of Avgold, and a mandatory offer of one Harmony share per 10 Avgold shares will be made to Avgold minorities.
On an assumption of a 100 percent acceptance of the offer a total of 60.059 million Harmony shares will be issued.
At a Harmony share price of 98.50 rand per share the company will have a market capitalisation of R31.3-billion.
Avgold owns the Target mine in the Free State.
The mine is expected to produce 350 000 ounces per annum at a cash cost of $180 per ounce over a life of mine of 18 years.
Avgold also owns the prospective Target North project area that has a resource of some 59.6 million ounces.
"Harmony has over the past three years upgraded its production base with a range of value enhancing acquisitions. This has resulted in the company being in a fortunate position compared to its peer group in that it is currently developing five mines, which should result in the company's underground recovery grade increasing by some 13 percent over the next four years. The acquisition of the Target mine will further enhance the overall quality of the company's production base," said Harmony chief executive Bernard Swanepoel.
Harmony owns South African gold operations and mines in Australasia.
The company already has a significant operational presence in the Free State, and with the inclusion of the Target mine, sees this position increasing and realising a range of synergistic benefits.
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