Harmony Gold聽(JSE: HAR) (NYSE: HMY) has emerged as the new top producer of the yellow metal in South Africa, as rival AngloGold Ashanti (NYSE: AU) (JSE: ANG) in the country.聽
The $300 million deal, agreed upon Wednesday, marks AngloGold鈥檚 exit from its home country to focus on more profitable mines in Ghana, Australia and the Americas.
The acquisition of AngloGold鈥檚 Mponeng mine and surface assets聽will allow Harmony to sustain growth and replace diminished capacity
For Harmony, the acquisition of AngloGold鈥檚 Mponeng mine and surface assets聽will allow it to sustain growth and replace capacity currently coming from its Masimong and Unisel mines, which are running out of ore.
It will also boost gold production by about 350,000 ounces a year to more than 1.8 million ounces.
The company鈥檚 chief executive officer, Peter Steenkamp, has repeatedly stated that South Africa is its main investment target, even as the country鈥檚 gold industry faces mounting challenges, including geological and safety aspects of extracting ore from the world鈥檚 deepest mines.
Harmony is betting on recreating the successful strategy applied after it bought Anglo鈥檚 Moab Khotsong mine in 2017. Half of that money has already been paid back, Steenkamp said.
End of an era
Mponeng, the world鈥檚 deepest mine, generated 265,000 gold ounces in 2018. Output from the surface operations, which extract the precious metal from ore dumps, totalled 171,000 ounces. Those South African assets accounted for about 13% of AngloGold鈥檚 production that year.
AngloGold was born out of the mines bought and built by Anglo American, founded by the Oppenheimer family more than a century ago.
The company was the dominant gold miner for decades, but progressively became weaker as it closed and sold old mines in South Africa, in favour of offshore investments.