Wrap Text
Harmony creates long-term value for its stakeholders through two responsible stewardship transactions
Harmony Gold Mining Company Limited
Registration Number: 1950/038232/06
Incorporated in the Republic of South Africa
JSE Share Code: HAR
ISIN: ZAE000015228
("Harmony" or "Company")
HARMONY CREATES LONG-TERM VALUE FOR ITS STAKEHOLDERS THROUGH TWO RESPONSIBLE STEWARDSHIP
TRANSACTIONS
Proposed specific issue of shares to the Harmony Gold Community Trust and the ESOP Trust
1. INTRODUCTION
Harmony shareholders ("Shareholders") are advised that the Company is proposing two broad-based
black economic empowerment ("B-BBEE") transactions involving:
- the specific issue of no par value convertible preference shares ("Preference Shares") by Harmony
to the trustees for the time being of the Harmony Gold Community Trust ("Harmony Community
Trust") ("Harmony Community Trust Share Issue"); and
- the specific issue of no par value ordinary shares ("Ordinary Shares") by Harmony to the trustees
for the time being of the Harmony ESOP Trust ("ESOP Trust") for the benefit of Eligible Employees,
as defined below ("ESOP Trust Share Issue"),
(together, the "B-BBEE Transactions"). A circular setting out the full details of the B-BBEE Transactions, the
proposed amendment to the memorandum of incorporation of Harmony ("MOI") and a notice
convening the extraordinary general meeting ("EGM") will be distributed to Shareholders on or about 18
December 2023.
"Our employees and host communities are the cornerstone of our success. We believe in shared value
and partnership in order to grow our business and develop thriving communities where we operate. This
is mining with purpose. We continue to illustrate our firm commitment towards long-term value creation
and responsible stewardship through these transactions", said Peter Steenkamp, CEO.
2. BACKGROUND AND RATIONALE FOR PROPOSED B-BBEE TRANSACTIONS
On 12 February 2020, the board of directors of Harmony ("Board") announced that Harmony had entered
into a definitive agreement with AngloGold Ashanti Limited to acquire its remaining South African assets,
being Mponeng and related assets. The acquisition represented an opportunity to acquire a portfolio of
South African gold assets which have an excellent strategic, financial, operational and geographical fit
with Harmony's operations, in line with its stated merger and acquisition criteria. In addition, Harmony
believed it was best placed to acquire Mponeng and related assets given its existing gold mining assets
in South Africa, its relationship with key stakeholders in South Africa and its acquisition of the Moab
Khotsong mine from AngloGold Ashanti Limited in 2018.
Shareholders were further advised in the announcement referred to above, that Harmony supports the
South African government's B-BBEE initiatives and remains committed to promoting social and economic
transformation in the South African mining environment. Furthermore, Harmony recognises the
importance of sustainable and meaningful participation by historically disadvantaged South Africans in
the mainstream economy and in the South African mining environment. In this regard, Harmony has
successfully concluded a number of B-BBEE transactions that have resulted in empowering a
broad-based group of South African citizens. As a result, Harmony has gone beyond the minimum
empowerment compliance requirements contemplated by the Mineral and Petroleum Resources
Development Act, No. 28 of 2002 ("MPRDA") and the broad-based socio-economic empowerment
charter for the South African mining and minerals industry published, in terms of section 100(2) of the
MPRDA from time to time ("Mining Charter") and is continuously contributing to the transformation of the
South African mining industry.
Consistent with the foregoing, the Harmony Community Trust was registered for the purpose of
administering benefits that flow from the Company's operations for and on behalf of all relevant
communities. Accordingly, in 2018 the Harmony Community Trust was issued 4,400,000 Preference Shares.
In addition, the Sisonke ESOP Trust ("Sisonke Trust") was established for the purpose of administering an
employee share ownership plan which would enhance B-BBEE ownership and align the interests of
employees with those of the Shareholders. Accordingly, in 2018 the Sisonke Trust was issued 6,700,000
Ordinary Shares. The employee share ownership plan administered under the Sisonke Trust has expired
and the underlying Ordinary Shares have vested in the beneficiaries. The Sisonke Trust is in the process of
settling the entitlement of the remaining beneficiaries.
In light of the imperatives outlined above and the associated commitments in terms of section 11 of the
MPRDA pertaining to the acquisitions of Mponeng and related assets, Harmony proposes to:
- issue a further 2,466,103 Preference Shares to the Harmony Community Trust ("Harmony
Community Trust Shares"), which, on conversion into Ordinary Shares in accordance with the terms
of the Preference Shares prescribed in the MOI, would constitute approximately 0.4% of the issued
Ordinary Shares as at the date of this announcement; and
- issue 12,651,525 Ordinary Shares to the ESOP Trust ("ESOP Trust Shares"), which would constitute
approximately 2% of the issued Ordinary Shares as at the date of this announcement.
Following the issue of the aforementioned Harmony Community Trust Shares to the Harmony Community
Trust and ESOP Trust Shares to the ESOP Trust, the Harmony Community Trust shall hold 6,866,103 Preference
Shares and the ESOP Trust shall hold 12,651,525 Ordinary Shares.
3. DESCRIPTION OF THE PROPOSED B-BBEE TRANSACTIONS
Harmony Community Trust Share Issue
Pursuant to the Harmony Community Trust Share Issue, Harmony will issue Harmony Community Trust Shares
to the Harmony Community Trust in accordance with the terms of the amendment and subscription and
relationship agreement entered into between Harmony and the Harmony Community Trust
("Subscription and Relationship Agreement"), to further assist the Harmony Community Trust in pursuing its
goal of benefiting the relevant communities.
The Subscription and Relationship Agreement is an amendment and restatement of the subscription and
relationship agreement which Harmony and the Harmony Community Trust entered into in 2017 (in terms
of which, amongst other things, 4,400,000 Preference Shares were issued to the Harmony Community
Trust). The Subscription and Relationship Agreement regulates the ongoing relationship between the
Harmony Community Trust and Harmony for so long as the Harmony Community Trust holds shares in
Harmony. The terms of the Subscription and Relationship Agreement include, amongst other things: (i) a
lock-up undertaking relating to the Harmony Community Trust Shares for a period of 10 years; (ii) the
Harmony Community Trust Call Option (as defined below); and (iii) the Harmony Community Trust Pre-
Emptive Share Buy-Back Right (as defined below).
The Harmony Community Trust Shares are being issued to the Harmony Community Trust: (i) in
consideration for the undertakings and commitments given by the Harmony Community Trust in terms of
the Subscription and Relationship Agreement (including, amongst other things, an undertaking to comply
with the requirements of the Broad-based Black Economic Empowerment Act, No. 53 of 2003, as
amended ("B-BBEE Act") and not to do anything that would negatively impact on the Company's status
as contemplated by the B-BBEE Act); and (ii) not for monetary consideration.
In order to implement the Harmony Community Trust Share Issue, Harmony is required to increase the
number of its authorised Preference Shares. In order to give effect to such increase of authorised
Preference Shares, the Company must amend its MOI in accordance with section 16 of the Companies
Act No. 21 of 2008 ("Companies Act").
The proposed Harmony Community Trust Share Issue is not a pre-emptive share issue. Therefore, the Board
has considered the pre-emptive rights of the Shareholders and believes that the issue of the Preference
Shares to the Harmony Community Trust may be implemented without having to offer the Harmony
Community Trust Shares proportionally to all Shareholders, but rather by the Shareholders waiving their
pre-emptive rights.
The Preference Shares proposed to be issued to the Harmony Community Trust are convertible securities,
in that the terms set forth in the MOI provide that the Company shall be entitled, at its election, by way of
Board resolution to convert each Preference Share into an Ordinary Share (on a 1:1 basis) in the following
circumstances:
- after the 10th anniversary of the date on which the Preference Share in question was issued; or
- if the Company reasonably anticipates that an "affected transaction" (as defined in the
Companies Act) or delisting will take place in respect of the Company.
In terms of the Subscription and Relationship Agreement, the Company will be entitled to repurchase the
shares issued to the Harmony Community Trust from the Harmony Community Trust pursuant to a call
option in certain circumstances ("Harmony Community Trust Call Option").
In terms of the Subscription and Relationship Agreement, the Company will also be entitled to repurchase
the Harmony Community Trust Shares ("Harmony Community Trust Repurchase Shares") from the Harmony
Community Trust pursuant to a pre-emptive right in the event that the Harmony Community Trust elects
to sell their Harmony Community Trust Repurchase Shares after the lock in period (being 10 years after the
date on which the Harmony Community Share Issue is implemented) ("Harmony Community Trust
Pre-Emptive Share Buy-Back Right").
ESOP Trust Share Issue
Harmony will issue the ESOP Trust Shares to the ESOP Trust for the benefit of current and future permanent
employees of Harmony and its direct and indirect subsidiaries from time to time (whether such employees
are physically rendering their services in relation to Harmony or any of the Harmony subsidiaries)
(together, the "Harmony Group"), as it may be applicable from time to time, as envisaged in the
Subscription and Contribution Agreement (as defined below)) as selected by Harmony to obtain vested
rights in the ESOP Trust, (specifically excluding employees on fixed term contracts, independent
contractors or any person who renders services at any time through the involvement of a labour
brokerage or otherwise by way of a temporary contract other than as a permanent employee of
Harmony, and/or specifically excluding any employee whose prior participation in the ESOP Trust as a
beneficiary terminated as a result of such employee leaving the employ of Harmony or any company in
the Harmony Group on a no fault basis (so called "good leavers"), who: (i) are at all relevant times hereto
employed by Harmony in South Africa; (ii) fall below the level of "management" (in accordance with
Harmony's recognised employment/occupational levels), as ordinarily understood and applied by
Harmony including those employees who become eligible by reason of being demoted to below level
of "management"; and (iii) who do not participate in any other share incentive schemes offered by
Harmony ("Eligible Employee").
Pursuant to the ESOP Trust Share Issue, Harmony will issue ESOP Trust Shares to the ESOP Trust in accordance
with the terms of the subscription and contribution agreement entered into between Harmony and the
ESOP Trust ("Subscription and Contribution Agreement").
In addition to regulating the ESOP Trust Share Issue, the Subscription and Contribution Agreement
regulates the contribution to be made by the Harmony Group to the ESOP Trust for an amount equal to
ZAR1,273,502,506.50, which is equivalent to 12,651,525 multiplied by ZAR100.66 per ESOP Trust Share, being
the 30-day volume-weighted average price of the Ordinary Shares as at the last business day prior to the
signature date of the Subscription and Contribution Agreement ("Contribution Amount"), which the ESOP
Trust will utilise to subscribe for the ESOP Trust Shares by paying to the Company a subscription
consideration amount equal to the Contribution Amount.
The trustees of the ESOP Trust shall have the discretion to allocate "Participation Units" (being the vested
rights of employee beneficiaries to inter alia a number of the ESOP Trust Shares held by the ESOP Trust)
from time to time provided that:
- only Eligible Employees may be appointed as beneficiaries through the allocation of Participation
Units; and
- the trustees apply the criteria for allocation of the Participation Units (in terms of the ESOP Trust
Deed) in order to determine the number of Participation Units to be allocated to each Eligible
Employee.
In broad terms, the criteria for the allocation of Participation Units provides that initially each Eligible
Employee that joins/qualifies upon the formation of the ESOP Trust, including any Eligible Employee that
joins/qualifies within 6 months after the formation of the ESOP Trust shall receive an equal number of
Participation Units resulting in each employee beneficiary receiving 360 Participation Units upon the initial
allocation of Participation Units by the ESOP Trust which are directly attributable to approximately 360
ESOP Trust Shares.
Participation Units will be allocated by the trustees of the ESOP Trust through the issuing of an allocation
notice to Eligible Employees.
4. SUSPENSIVE CONDITIONS
The Harmony Community Trust Share Issue is subject to the fulfilment or waiver of the following suspensive
conditions contained in the Subscription and Relationship Agreement:
- the Shareholders passing all resolutions necessary to implement the Harmony Community Trust
Share Issue contemplated in the Subscription Agreement in accordance with the Companies Act,
the listings requirements of the JSE Limited ("JSE Listings Requirements") and the MOI;
- the trustees of the Harmony Community Trust passing all resolutions necessary to implement the
transactions contemplated in the Subscription and Relationship Agreement;
- the filing of the amended MOI (or the amendments to the MOI, as applicable) for registration with
the Companies and Intellectual Property Commission ("CIPC") incorporating the amendments
approved by the Shareholders of the Company, including to reflect an increase in the total
number of authorised Preference Shares, and the CIPC confirming registration of such amended
MOI; and
- the Harmony Community Trust Deed is amended on the basis determined by the Company and
such amendments are filed with the Master of the High Court in accordance with the terms of the
Trust Property Control Act, 57 of 1988.
The ESOP Trust Share Issue is subject to the fulfilment or waiver of the following suspensive conditions
contained in the Subscription and Contribution Agreement:
- the Shareholders passing all resolutions necessary to implement the ESOP Trust Share Issue in
accordance with the Companies Act, the JSE Listings Requirements and the MOI; and
- the trustees of the ESOP Trust passing all resolutions necessary to implement the transactions
contemplated in the Subscription and Contribution Agreement.
5. PRO FORMA FINANCIAL EFFECTS OF THE PROPOSED B-BBEE TRANSACTIONS
The table below sets forth the pro forma financial information of the ESOP Trust Share Issue and Harmony
Community Trust Share Issue. This is based on the published audited annual financial statements of
Harmony for the financial year ended 30 June 2023.
The pro forma financial information has been prepared for illustrative purposes only and because of its
nature, may not fairly present the Company's financial position, changes in equity, results of operations
or cash flows, nor the effect and impact of the ESOP Trust Share Issue and the Harmony Community Trust
Share Issue going forward.
The pro forma financial information has been prepared to assist Shareholders in assessing the impact of
the ESOP Trust Share Issue and the Harmony Community Trust Share Issue on the Company's earnings per
share ("EPS"), diluted earnings per share, headline earnings per share ("HEPS"), diluted headline earnings
per share, adjusted headline earnings per share, diluted adjusted headline earnings per share, net asset
value ("NAV") per share and tangible net asset value per share ("TNAV"), based on Harmony's results for
year ended 30 June 2023.
The pro forma financial information is presented in a manner that is consistent with: (i) Harmony's
accounting policies for the year ended 30 June 2023; and (ii) the relevant provisions of the JSE Listings
Requirements and the Guide on Pro Forma Financial Information issued by the South African Institute of
Chartered Accountants.
The Board is responsible for the compilation, contents and preparation of the pro forma financial
information. Their responsibility includes determining that the pro forma financial information has been
properly compiled on the basis stated, which is consistent with the accounting policies of Harmony and
that the pro forma adjustments are appropriate for purposes of the pro forma financial information
disclosed pursuant to the JSE Listings Requirements. Consistent with the foregoing, the pro forma financial
information presented in the table below is based on available information and certain assumptions and
estimates, which the Board believe, are reasonable.
Before1 Pro forma after the % change
B-BBEE Transactions2
Basic EPS (cents) 780 738 (5%)
Diluted EPS (cents) 777 735 (5%)
HEPS (cents) 800 758 (5%)
Diluted HEPS (cents) 796 754 (0%)
NAV (cents) 5,624 5,629 0%
TNAV (cents) 5,588 5,593 0%
Weighted average number of or ordinary shares ('000) 617,597 617,597 0%
Weighted average number of shares for diluted 620,474 620,474 0%
earnings ('000)
Number of shares in issue for NAV and TNAV ('000) 618,025 618,025 0%
Notes to the pro forma financial effects:
1. The Harmony information reflected in the "Before" column has been extracted from Harmony's audited
consolidated financial statements for the year ended 30 June 2023.
2. The Harmony information reflected in the "Pro Forma after the B-BBEE Transactions" column has been calculated
on the basis that the B-BBEE Transactions were effective 1 July 2022 for income statement purposes and as at 30
June 2023 for balance sheet purposes.
6. SHAREHOLDER APPROVAL AND CIRCULAR
In terms of paragraph 5.51(g) of the JSE Listings Requirements, the Harmony Community Trust Share Issue
and ESOP Trust Share Issue require the approval by way of ordinary resolutions (requiring at least a 75%
majority of the votes cast in favour of such resolution) by Shareholders voting in person or by proxy at an
EGM to be convened in order to obtain such approvals.
In addition to the foregoing, the Shareholders are also required to pass the following special resolutions
(requiring at least a 75% majority of the votes cast in favour of such resolution by Shareholders voting at
the EGM) authorising:
- the creation of additional Preference Shares and the requisite amendments to the Company's
MOI to reflect such increase in the number of authorised Preference Shares;
- the issue of the Preference Shares to the Harmony Community Trust, even if such number of
Preference Shares have voting power equal to or in excess of 30% of the voting rights of all the
Preference Shares in issue immediately before the implementation of the Harmony Community
Trust Share Issue, and including to the extent that the Harmony Community Trust is a related or
inter-related person to the Company as contemplated in section 41(1) of the Companies Act;
- the Company, should it elect to exercise the Harmony Community Trust Pre-Emptive Share Buy-
Back Right or the Harmony Community Trust Call Option, to acquire the Harmony Community Trust
Repurchase Shares; and
- the granting of financial assistance to the ESOP Trust in terms of section 44 of the Companies Act
for the purposes of the subscription of the ESOP Trust Shares by the ESOP Trust on the terms set out
in the Subscription and Contribution Agreement.
The Shareholders will also be required to pass an ordinary resolution (requiring more than 50% majority of
the votes cast in favour of such resolution by Shareholders voting at the EGM) approving the waiver of all
and any pre-emptive rights to which the Shareholders may be entitled under the MOI in connection with
ESOP Trust Share Issue and the Harmony Community Trust Share Issue.
The EGM is planned to be held on Wednesday, 31 January 2024. Further details relating to the salient
dates and times will be contained in the aforementioned circular and published on the Stock Exchange
News Service of the JSE on or about 18 December 2023.
For more details contact:
Jared Coetzer
Head of Investor Relations
+27(0) 82 746 4120
Johannesburg, South Africa
11 December 2023
Corporate Advisor to Harmony in respect of the ESOP
Tamela Holdings Proprietary Limited
Independent Reporting Accountants and Auditors
PricewaterhouseCoopers Incorporated
Legal Advisor to Harmony in respect of the Transactions
Bowman Gilfillan Incorporated
Transaction Sponsor
J.P. Morgan Equities South Africa Proprietary Limited
Disclaimers
The release, publication or distribution of this announcement in certain jurisdictions may be restricted by law and
therefore persons in such jurisdictions into which this announcement is released, published or distributed should
inform themselves about and observe such restrictions. This announcement is for information purposes only and
does not constitute or form part of an offer to sell or the solicitation of an offer to buy or subscribe to any securities
of Harmony. The securities referred to herein have not been and will not be registered under the United States
Securities Act of 1933 (the "Securities Act") or with any securities regulatory authority of any state or other
jurisdiction of the United States and may not be offered, sold, resold, transferred or delivered, directly or
indirectly, in the United States except pursuant to registration under, or an exemption from the registration
requirements of, the Securities Act. There will be no public offering of securities in the United States or any other
jurisdiction.
Forward-looking Statements
This announcement contains forward-looking statements within the meaning of the safe harbour provided by
Section 21e of the Exchange Act and Section 27a of the Securities Act, with respect to our financial condition,
results of operations, business strategies, operating efficiencies, competitive positions, growth opportunities for
existing services, plans and objectives of management, markets for stock and other matters. Forward-looking
statements are preceded by, followed by or include the words "may", "will", "should", "expect", "envisage",
"intend", "plan", "project", "estimate", "anticipate", "believe", "hope", "can", "is designed to" or similar
phrases. These forward-looking statements involve a number of known and unknown risks, uncertainties and
other factors, many of which are difficult to predict and generally beyond the control of Harmony.
These forward-looking statements, including, among others, those relating to our future business prospects,
revenues, and the potential benefit of acquisitions (including statements regarding growth and cost savings)
wherever they may occur in this announcement, are necessarily estimates reflecting the best judgment of our
senior management and involve a number of risks and uncertainties that could cause actual results to differ
materially from those suggested by the forward-looking statements. As a consequence, these forward-looking
statements should be considered in light of various important factors, including those set forth in our Integrated
Annual Report. Important factors that could cause actual results to differ materially from estimates or projections
contained in the forward-looking statements include, without limitation: overall economic and business
conditions in South Africa, Papua New Guinea, Australia and elsewhere; the impact from, and measures taken
to address, Covid-19 and other contagious diseases, such as HIV and tuberculosis; high and rising inflation, supply
chain issues, volatile commodity costs and other inflationary pressures exacerbated by the Russian invasion of
Ukraine and subsequent sanctions; estimates of future earnings, and the sensitivity of earnings to gold and other
metals prices; estimates of future gold and other metals production and sales; estimates of future cash costs;
estimates of future cash flows, and the sensitivity of cash flows to gold and other metals prices; estimates of
provision for silicosis settlement; increasing regulation of environmental and sustainability matters such as
greenhouse gas emission and climate change, and the impact of climate change on our operations; estimates
of future tax liabilities under the Carbon Tax Act (South Africa); statements regarding future debt repayments;
estimates of future capital expenditures; the success of our business strategy, exploration and development
activities and other initiatives; future financial position, plans, strategies, objectives, capital expenditures,
projected costs and anticipated cost savings and financing plans; estimates of reserves statements regarding
future exploration results and the replacement of reserves; the ability to achieve anticipated efficiencies and
other cost savings in connection with past and future acquisitions, as well as at existing operations; fluctuations
in the market price of gold and other metals; the occurrence of hazards associated with underground and
surface gold mining; the occurrence of labour disruptions related to industrial action or health and safety
incidents; power cost increases as well as power stoppages, fluctuations and usage constraints; ageing
infrastructure, unplanned breakdowns and stoppages that may delay production, increase costs and industrial
accidents; supply chain shortages and increases in the prices of production imports and the availability, terms
and deployment of capital; our ability to hire and retain senior management, sufficiently technically-skilled
employees, as well as our ability to achieve sufficient representation of historically disadvantaged persons in
management positions or sufficient gender diversity in management positions or at board level; our ability to
comply with requirements that we operate in a sustainable manner and provide benefits to affected
communities; potential liabilities related to occupational health diseases; changes in government regulation
and the political environment, particularly tax and royalties, mining rights, health, safety, environmental
regulation and business ownership including any interpretation thereof; court decisions affecting the mining
industry, including, without limitation, regarding the interpretation of mining rights; our ability to protect our
information technology and communication systems and the personal data we retain; risks related to the failure
of internal controls; our ability to meet our environmental, social and corporate governance targets; the
outcome of pending or future litigation or regulatory proceedings; fluctuations in exchange rates and currency
devaluations and other macroeconomic monetary policies, as well as the impact of South African Exchange
Control Regulations; the adequacy of the group's insurance coverage; any further downgrade of South Africa's
credit rating and socio-economic or political instability in South Africa, Papua New Guinea, Australia and other
countries in which we operate; changes in technical and economic assumptions underlying our mineral reserves
estimates; geotechnical challenges due to the ageing of certain mines and a trend toward mining deeper pits
and more complex, often deeper underground, deposits; and actual or alleged breach or breaches in
governance processes, fraud, bribery or corruption at our operations that leads to censure, penalties or negative
reputational impacts.
The foregoing factors and others described under "Risk Factors" in our Integrated Annual Report
(www.har.co.za) and our Form 20-F should not be construed as exhaustive. We undertake no obligation to
update publicly or release any revisions to these forward-looking statements to reflect events or circumstances
after the date of this annual report or to reflect the occurrence of unanticipated events, except as required by
law. Although Harmony believes that the expectations reflected in any such forward-looking statements (or this
announcement) are reasonable, the information has not been reviewed or reported on by the reporting
accountants and auditors and no assurance can be given by Harmony that such expectations will prove to be
correct. All subsequent written or oral forward-looking statements attributable to Harmony or any person acting
on its behalf are qualified by the cautionary statements herein.
Date: 11-12-2023 11:22:00
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