JOHANNESBURG (miningweekly.com) – Gold mining company Harmony Gold will be conducting a virtual extraordinary annual general (EGM) meeting on Thursday, June 11, to gain shareholder approval for the raising of $200-million equity capital.
The equity capital raised will be used to fund the first tranche payment of its acquisition of the remaining South African assets of AngloGold Ashanti, which includes Mponeng, the world’s deepest mine. Collectively, the assets add more than 350 000 oz/y to Harmony's portfolio.
The Johannesburg- and New York-listed company stated that the EGM would be conducted entirely through electronic communication in view of the Covid-19 pandemic and related restrictions issued under the Disaster Management Act.
To vote, shareholders and proxies complete the electronic participation application forms and once registration is completed, email invitations are sent.
Shareholders elected to vote have an additional unique link sent to them.
EGM proceedings will be broadcast on a Zoom video call and shareholders registered to vote at the meeting will vote through a separate voting platform.
Although Harmony had intended to pay for the AngloGold Ashanti assets using cash or debt or a combination of both, uncertainty arising from the Covid-19 pandemic had resulted in the board deciding to shore up the balance sheet to cash preservation.
“It was for that reason that we have opted instead to do a capital raise through a share issue to fund the first tranche of payment of the $200-million,” Harmony Gold CEO Peter Steenkamp stated.
“We believe it is a most appropriate alternative to the cash or debt or cash/debt mix we envisaged earlier given the uncertainties posed by Covid-19. Our ability to preserve cash and maintain the strong flexible balance sheet, with low levels of debt, will allow the company to emerge from these uncertainties in a much stronger position.
“Furthermore, a share issue presents an incredibly attractive opportunity for investors to invest in a robust cash-generative gold mining company while rand gold prices are trading at near all-time highs,” Steenkamp said.
AngloGold last year decided to dispose of its last remaining South African assets, principally comprising the Mponeng underground mine, where further capital, necessary to extend the mine life was in competition with other, higher-return AngloGold Ashanti priorities. Also forming part of the transaction are Mine Waste Solutions (MWS), the mine waste retreatment operation, and a surface rock dump processing business.
In April, the Competition Tribunal has unconditionally approved the transaction, the purchase price for which includes $200-million in cash, plus a deferred payment of up to $100-million.
As Mining Weekly has reported, the deferred payment will include $260/oz payable on all underground production sourced within the West Wits mineral rights, comprising the Mponeng, Savuka and TauTona mines, in excess of 250 000 oz/y for six years from January 1, 2021.
A further deferred payment of $20/oz is payable for underground production from the West Wits mineral rights below the current infrastructure, if it is developed.
Besides Mponeng mine and its associated assets and liabilities, the transaction takes in the TauTona and Savuka mines and associated rock-dump and tailings storage facility reclamation sites, mine rehabilitation and closure activities located in the West Wits region and their associated assets and liabilities; First Uranium, which owns MWS and Chemwes, as well as associated tailings assets and liabilities; Covalent Water Company, AngloGold Security Services and Masakhisane Investments; and certain rock-dump reclamation, mine rehabilitation and closure activities located in the Vaal river region and their associated assets and liabilities.
AngloGold would retain its interest in Rand Refinery, as well as its obligations relating to the post-retirement medical cost for its applicable retired and remaining employees and its obligations under the Silicosis Class Action Settlement Agreement.
Harmony Gold conducts gold mining and exploration in mines in South Africa and primarily produces gold. Silver and uranium are by-products of its gold production. Of relevance to this transaction are Harmony Gold’s wholly owned subsidiaries, Harmony Moab and Golden Core, the tribunal stated in a release to Mining Weekly.
The tribunal added that AngloGold was not controlled by any firm. Of relevance to this transaction were AngloGold’s wholly owned firms and assets grouped into two “packages”, the West Wits package comprising shares in and claims against three Gauteng mines, Water Company, AGA Security Services and Masakhisane Investment, all proprietary companies. The Vaal Reef Package, it said, comprised shares in and claims against First Uranium, Chemwes and assets not bought in Harmony Moab’s 2018 acquisition of AngloGold’s Vaal River mining business comprising buildings, Kopanang Gold Plant and equipment.
The Competition Commission, which assesses large mergers before referring them to the tribunal for a decision, concluded the relevant market as being the international markets for the production and supply of gold and silver. A lessening of competition in either market was found to be unlikely.
In relation to public interest concerns, the merging parties undertook that there would be no merger-related retrenchments. The commission recommended that the proposed transaction be approved without conditions.
The acquisition follows Harmony’s purchase of Moab Khotsong from AngloGold in 2018.
Harmony has 13 gold operations in South Africa and three in Papua New Guinea.
The result of the EGM will be released on Friday, June 12.