The world’s third-largest gold miner AngloGold Ashanti Ltd in other to stem its losses in South Africa and improve their global portfolio, plans to sell its mines for a total of $307.4 million to Harmony Gold Mining Co. and a Chinese investment firm, Heaven-sent SA Sunshine Investment Co.
The sale of Moab Khotsong, which includes the Great Noligwa mine, is sold to Harmony for about $300 million and Kopanang to was sold to heaven sent SA Sunshine Investment Co. for 100 million rand ($7.4 million), the Johannesburg-based company said in a statement on Thursday.
With the agreement came gains for Anglo Gold in the senior mining gauge. AngloGold gained as much as 4 percent to 129.49 rand a share and traded up 2.6 percent while Harmony dropped 1.8 percent to 22.99 rand a share.
According to the company, the sales come after AngloGold put its South African assets under review “given their under-performance leading to heavy, and ultimately unsustainable, losses being incurred”, and the transaction is in line with the company’s capital-allocation strategy.
Aging infrastructure, reserve depletion and accidents have reduced production and increased cost, AngloGold’s South African mines have dragged down the company’s performance in recent quarters.
Irrespective of Moab Khotsong’s sales, AngloGold will still own the West Wits operations near Johannesburg and some waste-dump operations, reducing gold production from South Africa to about 13 percent of its total, from about a quarter previously.
For Harmony, the acquisition will add 250,000 ounces a year at an average all-in sustaining cost of less than $950 an ounce and increase cash flows by 60 percent, the company said in a separate statement. Harmony CEO Peter Steenkamp has spoken of the need for a major acquisition to offset aging mines scheduled to close elsewhere in its South African portfolio.
Harmony will use its revolving credit facility to fund $100 million of the purchase price with the remainder coming from a bridge loan facility that may be repaid through a rights issue, the company said.