Harmony Gold Mining, which is led by CEO Peter Steenkamp, intends to place authorised, but unissued, shares in the company to qualifying investors who agreed to subscribe for about $200-million.

The placing is being conducted through an accelerated bookbuild process.

The announcement follows Harmony having entered into a definitive agreement with AngloGold Ashanti to acquire AngloGold’s South African assets, Mponeng and Mine Waste Solutions.

The only remaining condition precedent to the acquisition is to secure Section 11 approval from the Department of Mineral Resources and Energy, and if this condition is fulfilled on or before the twentieth calendar day in any calendar month, then the acquisition will become effective and closing will take place on the last business day of that month.

If fulfilled after the twentieth calendar day in any month, then the acquisition will become effective and closing will take place on the last day of the following month.

The placing shares, when issued, will rank pari passu in all respects with the existing Harmony ordinary shares, including the right to receive all dividends and other distributions declared, made or paid after the date of issue of the placing shares.                                                                    

Harmony has agreed, subject to certain exclusions, to a lock-up of 90 days from settlement of the placing.

OPERATIONAL & BALANCE SHEET UPDATE

Harmony’s Covid-19 mitigating measures, combined with a supportive gold price environment, have supported the company’s viability and the livelihoods of many stakeholders dependent on the company.

The build-up of the company’s South African underground mines to the permitted 50% of labour capacity from mid-April through to May resulted in an increase in gold sales from the South African operations from about 1 t in April to about 1.7 t in May.

The Hidden Valley mine, in Papua New Guinea, continued to operate close to normal during this time, the miner said, adding that management is expecting a return of close to 100% of production by mid-July 2020, assuming there are no further negative impacts owing to the Covid-19 lockdown provisions.

The company’s net debt position through May increased by about R400-million from the R5-billion reported at the end of March to R5.4-billion at the end of May.

Harmony has also reached an agreement with its lenders that the tangible net worth to net debt covenant would be relaxed and maintained at above two times (from four times previously) until December.

The company continues to comply with all debt covenants, and the impact of Covid-19 continues to be “rigorously managed” through application of both the company’s standard operating procedure and the regulated code of practice.