Latest news with #HarmonyGold
The Herald
12 hours ago
- Business
- The Herald
Harmony's $1bn (R18bn) copper deal a 'sweet spot' for the company
South Africa's biggest gold producer Harmony Gold estimates that by the 2035 financial year, 45% of its production will come from Australasia after agreeing to buy Australia's Mac Copper for $1bn (R18.42bn). The MAC Copper acquisition is its second foray into copper after buying the Eva Copper project in Queensland in 2022, a mine that is likely to produce up to 60,000 tonnes of the metal a year from 2029. CEO Beyers Nel said MAC Copper's CSA Copper mine in New South Wales, which produces 40,000 tonnes of the metal a year, represented a 'sweet spot' for the group. 'There is a scramble for copper mines in the market at the moment, people pay top dollar. But we believe because this mine is a deeper mine — it is more of a mine that suits Harmony's skills set — it potentially kept other bidders out of the mine. 'It is too big for the juniors and probably too small for the majors. The 40,000 tonnes of copper from a size point of view is ideal and a sweet spot for a company like Harmony to take it. It is production from day one because it is an operating mine. It is also in a tier-one mining jurisdiction; New South Wales in Australia is a good place to mine,' said Nel. Nel said the shift enhanced profitability, reduced geographical concentration risks, and positioned Harmony to deliver sustainable long-term returns. He said the mine also presented near-term copper into Harmony's production mix as opposed to its Eva project in Australia and Walfi-Golpu, a gold/copper project in Papua New Guinea (PNG) it jointly owns with Newmont Corp. He said the Walfi-Golpu project had been frustratingly slow. However despite violence at Barrick Gold Corporation's Porgera Gold Mine in Papua New Guinea's Enga province, the area was calm. 'I would not say there are problems there. It is calm. People sometimes throw one blanket over Papua New Guinea and think what is happening at Porgera with Barrick is happening everywhere in Papua New Guinea. That is not the case. Where our mine is, things are calm and the communities are supportive of the mine,' he said. The Harmony share traded 6% lower after the announcement this week. Nel said the market still needs to digest the deal. 'It is still $1bn, it's a lot of money. It is typical that when a big transaction takes place that the buying company's share price comes under pressure. 'We are not fixated about the day trade, we think this is a good asset for Harmony's skills set and we can add a lot of value to it, there is a lot of blue sky, upside potential beyond the current mine life. We are very bullish about the copper price long term. if you think about the global energy transition and supply and demand. We need to look at the long-term perspective.' TimesLIVE
Yahoo
3 days ago
- Business
- Yahoo
Harmony Gold to Acquire MAC Copper in $1.03 Billion Deal, Boosting Copper Exposure
On Tuesday, Harmony Gold Mining Company Ltd. (NYSE:HMY) announced its intent to acquire MAC Copper Ltd. (NYSE:MTAL) in an all-cash deal valued at $1.03 billion. This acquisition aims to increase Harmony Gold's exposure to copper, which is a vital commodity for the ongoing energy transition. An open pit mine with heavy excavation machinery toiling away against the backdrop of a hidden valley. MAC Copper's primary asset is the CSA Copper Mine, which is located ~700 kilometers north-west of Sydney, Australia. In 2024, the mine produced ~41,000 metric tons of copper and has a current reserve life of over 12 years. The acquisition is also structured to include Harmony repaying MAC's existing senior debt and assuming obligations related to silver and copper streams with Osisko Bermuda Limited, as well as royalty arrangements with Glencore Operations Australia Pty Ltd. Harmony will also be responsible for a potential $150 million contingent copper payment to Glencore linked to MAC's previous acquisition of the CSA Copper Mine. Under the terms of the binding scheme implementation deed, Harmony Gold (Australia) Pty Ltd., which is a wholly-owned subsidiary of Harmony Gold, will acquire 100% of MAC Copper's issued share capital at $12.25 per share. This offer price represents a 20.7% premium over MAC Copper's closing share price of $10.15 on Friday, May 23, and a 32.1% premium to the 30-day volume-weighted average price of $9.28 per MAC share on the NYSE up to and including Friday. Harmony Gold Mining Company Ltd. (NYSE:HMY) explores, extracts, and processes gold, uranium, silver, and copper deposits. Whereas MAC Copper Ltd. (NYSE:MTAL) operates and acquires metals and mining businesses in Australia. While we acknowledge the potential of HMY to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than HMY and that has 100x upside potential, check out our report about the cheapest AI stock. READ NEXT: and . Disclosure: None. This article is originally published at Insider Monkey.
IOL News
4 days ago
- Business
- IOL News
Harmony Gold's R18bn acquisition of CSA Copper mine: a strategic move into copper
A Harmony Gold local mine. Harmony Gold's acquisition of the CSA Copper mine in Australia for R18.4 billion has cemented the company's diversification strategy and foray into copper. Image: Supplied Harmony Gold's acquisition of the CSA Copper mine in Australia for R18.4 billion has cemented the company's diversification strategy and foray into copper. Copper, deemed a future proofing mineral, has been the center of merger and acquisition activity among South African and global miners. Now, Harmony Gold, with its diverse footprint of gold in South Africa, is intensifying its exposure in copper. 'The large brownfields projects being pursued by the group are all in copper, signifying Harmony Gold's strategy to diversify away from gold. However, Harmony will predominantly remain a gold producer even after the slated developments are scheduled to come on-stream,' Robbie Proctor, an investment analyst at Anchor Capital, told Business Report on Tuesday. The company entered into a binding agreement acquisition to acquire 100% of the securities in New York listed MAC Copper Limited for $12.25 (R219) per share, implying a total equity value for MAC of $1.03bn, or about R18.4bn. Despite this, shares in Harmony Gold fell by 5.75% in afternoon trade on the JSE to R256.36, erasing the previous seven days' 5.63% appreciation run. Proctor said, 'Copper has the most favourable long-term demand outlook amongst the major commodities while the supply side is just as favourable' at the moment. 'A mine of this size is relatively inconsequential for the large diversified miners like Anglo American, BHP Group and Glencore, providing the opportunity for smaller players to acquire operating copper mines at reasonable valuations. The CSA mine was actually acquired from Glencore in 2023,' added Proctor. Harmony Gold CEO Beyers Nel described the Australian mine Harmony Gold was acquiring as 'a logical fit with the portfolio' as it meets the company's 'core investment criteria, including increasing free cash flow generation while improving margins at long-term expected commodity' prices. He said the acquisition of the CSA Copper Mine in Australia was significant for the company as it introduces a high-quality, established underground producing copper asset to the Harmony portfolio and explained that the CSA mine was one of the highest-grade copper mines in Australia. It produced 41 000 tonnes of copper in calendar year 2024,' said 'We believe that Harmony is well positioned to leverage its expertise in underground mining to further enhance operations. Furthermore, the Transaction represents a significant step forward in transforming Harmony into an increasingly de-risked, higher-quality, global gold and copper producer through disciplined and effective capital allocation,' added Nel. Harmony Gold intends to fund the transaction with a $1.25bn bridge facility together with existing cash reserves. The gold miner has entered into a binding commitment letter with a number of banks that have arranged to underwrite the facility. These include Citibank as global coordinator, initial mandated lead arranger and bookrunner. J.P. Morgan Securities has also been roped in as global coordinator, initial mandated lead arranger while Macquarie Bank Limited will also be involved. The financing facility has a tenure of 364 days plus a 6-month extension, exercisable at the discretion of the company. Earlier this year, Nel said the operating environment in South Africa had started to stabilise, helping the company to lift up earnings for the half year to December although analysts had varying evaluations of the gold miner's diversification strategy into copper.
Daily Maverick
4 days ago
- Business
- Daily Maverick
Harmony Gold strikes R18bn copper acquisition Down Under
Copper is king these days, and the price for such assets is probably only going to keep going north amid warnings about looming shortages of the red metal. With record gold prices filling its sails, Harmony Gold went on a fishing expedition Down Under and landed a big one. The JSE-listed miner said on Tuesday that it had acquired MAC Copper Limited – which has one asset, the high-grade CSA copper mine in Australia – for $1.03-billion (R18.4-billion) in cash. The deal makes sense on a range of fronts. Harmony is on a diversification drive away from gold and its South African base – and copper has long been on its sonar screen. Copper is highly coveted these days because of its applications to the green-energy transition and its older industrial uses. But investors, who have shown themselves wary at times of M&A in mining, did not immediately rise to the bait. Harmony's share price initially sank over 7% on the news – a move that was also partly a reflection of a fall in the gold price overnight – before regaining some of the lost ground. There is often a knee-jerk reaction to the announcement of such deals and this move in that regard is not exceptional for the company that is buying. In 2022, Gold Fields' share price tanked more than 20% after it announced its intention to acquire Canada's Yamana Gold in an all-share deal worth R100-billion – a deal that eventually came unstuck. 'I think the market needs to digest the deal,' Harmony CEO Beyers Nel told Daily Maverick. As the deal is digested, the market may find it more appetising. Strategic boxes ticked Copper these days is king, and the price for such assets is probably only going to keep going north amid warnings about looming shortages for the red metal. For Harmony, it ticks its main strategic boxes: copper exposure and geographical diversification – and the company does not need to build a new mine from scratch. 'This is cash-generative from day one,' Nel said. The CSA mine is one of the highest-grade copper operations in Australia and has a current reserve life of 12 years with what Harmony said was '… significant exploration potential.' At 1.9km deep, the mine is down under in more ways than one. But Harmony owns and operates Mponeng, the world's deepest mine west of Johannesburg, which is more than twice as deep, so its engineers are not intimidated. The deal will also complement Harmony's Eva copper project, which it is aiming to approve this year. Harmony's offer is a 20.7% premium on MAC's closing price on 23 May. The target company's board has unanimously backed the proposal as well as more than 20% of its shareholders. Harmony expects the deal to be finalised by the fourth quarter of this year. The transaction will be paid with $50-million (R893-million) from Harmony's current cash resources. The rest will be financed by a bridging facility, which is effectively a short-term loan to 'bridge' the gap and enable the deal. 'It's an interim arrangement to pay for the transaction. It's just 12 months with an option to extend,' Nel said. Harmony is in a good position for such a financial arrangement. The asset it wants to acquire will generate cash immediately and Harmony is pumping money from its gold operations as the precious metal's price remains elevated and not far off its record peak of around $3,500 (R63,000) an ounce scaled in April. What this means Harmony is raking in cash at the moment, but the price of gold may eventually fall back to earth. Demand for copper, by contrast, looks set to surge as the global economy and the green energy transition will both sink without it. Everyone wants a piece of the copper action these days, and not just South Africa's cable thieves. It's better to secure a copper asset now because down the road, they are likely to be rare and much more costly. For Nel, who has been CEO since only the start of this year, the transaction – if it goes through – will be an ostrich feather in his hard hat. A big, bungled deal can cost a CEO his or her job. By contrast, a blockbuster that delivers long-term value goes down well in the boardroom. DM
Yahoo
4 days ago
- Business
- Yahoo
MAC Copper Stock Soars on $1.03 Billion Buyout by Harmony Gold
MAC Copper shares soared Tuesday after the copper miner agreed to be purchased by Harmony Gold for $1.03 billion. MAC Copper shareholders will receive $12.25 for every share they own, a 20.7% premium from MAC Copper's closing price on Friday. The deal gives Harmony the CSA Copper Mine in Australia, which produced approximately 41 kilotons of copper last of MAC Copper (MTAL) soared Tuesday after the copper miner agreed to be purchased by Harmony Gold Mining Company (HMY) for $1.03 billion, in a move that boosts Harmony's reach into the copper market. MAC Copper said the deal will pay investors $12.25 for every share they own, a 20.7% premium to the stock's closing price on Friday. Shareholders will also have the option to be paid in Australian dollars, which the companies said "will be calculated with reference to the applicable exchange rate published on the website of the Reserve Bank of Australia on the Effective Date.' The agreement gives Harmony MAC Copper's sole asset, the CSA Copper Mine in Australia, which CEO Beyers Nel said 'is significant as it introduces a high-quality, established underground producing copper asset to the Harmony portfolio.' He added that CSA produced about 41 kilotons of copper in 2024, and 'meets Harmony's core investment criteria, including increasing free cash flow generation while improving margins at long-term expected commodity prices.' MAC Copper plans to hold a shareholder meeting to vote on the proposal in the fourth quarter. For the acquisition to be completed, approval by at least 75% of the voting shares is necessary, and various regulatory requirements must be met. MAC Copper shares were up over 22% in recent trading, while Harmony Gold dropped about 9%. Read the original article on Investopedia Sign in to access your portfolio
