South Africa-headquartered Harmony Gold is extending its diversification drive, announcing on Thursday that it would buy a copper/gold project in Australia for up to $230-million.

The JSE- and NYSE-listed gold miner will buy the Eva Copper project and its 2 100 km² exploration land from TSX- and ASX-listed Copper Mountain Mining for $170-million in cash and up to $60-million in contingent payments.

Eva will add 1.718-billion pounds of copper and 260 000 oz of gold to Harmony’s mineral reserves and extend the company’s diversification into copper, a future-facing metal critical to the energy transition.

The project is envisioned to be a conventional openpit operation, which will produce more than 100-million pounds a year of copper production and 14 000 oz/y of gold over a 15-year mine life. 

“Acquiring Eva Copper is strategically important to our growth journey. It opens a new copper/gold frontier for Harmony within a highly attractive Australian mining area, supplementing our 50% interest in the Tier 1 copper/gold Wafi-Golpu project.

"Eva Copper lowers our risk profile, providing additional scale and meaningful diversification that positions Harmony for the future," said Harmony CEO Peter Steenkamp in a statement. 

Harmony will fund the transaction, which already received approval from the South African Reserve Bank, with existing cash and available debt facilities.

Studies conducted by Copper Mountain estimate development capital of $597-million will be required to build Eva Copper. Harmony said that, over the next 12 months, it would undertake a detailed review and optimisation of the existing feasibility study.

Timing of the development capital will dovetail with Harmony’s current capital expenditure profile. The peak brownfield expansion, namely Mine Waste Solutions, will be almost complete by the time construction of Eva begins. 

The construction of Eva will take between two and three years to complete. Ramp-up to full production will be quick, owing to the shallowness of the orebody. 

Speculation has been rife for months that Copper Mountain, which focuses on its namesake mine in Canada, is planning a project sell-off. In June, it hired Macquarie Capital to evaluate its strategic options.

Copper Mountain president and CEO Gil Clausen said that the transaction demonstrated the value that the company had developed in the Eva project since its acquisition of Altona Mining in 2018.

The closing of the transaction is subject to certain customary conditions, including approval from the Foreign Investment Review Board in Australia and Copper Mountain bondholder approval.

The transaction is expected to close in the first quarter of 2023.