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JOINT ANNOUNCEMENT BY ANGLOGOLD LIMITED AND HARMONY GOLD MINING COMPANY LIMITED NEWS RELEASE ANGLOGOLD CORPORATE COMMUNICATIONS DEPARTMENT 12TH FLOOR, 55 MARSHALL STREET JOHANNESBURG 2001 TELEPHONE: (+27 11) 637 6385/6160 FAX: (+27 11) 637 6399/6400 CDR/CCD/AG023.98 10 SEPTEMBER 1998 SALE OF MASIMONG MINE TO HARMONY
ANGLOGOLD AND HARMONY TODAY ANNOUNCED THAT THE COMPANIES HAVE REACHED AGREEMENT IN PRINCIPLE ON THE SALE OF MASIMONG MINE (FREEGOLD 3) AND THE FREE STATE THREE (SAAIPLAAS) GOLD PLANT TO HARMONY FOR A CONSIDERATION OF R127 MILLION. THIS CONSIDERATION IS REDUCED BY CERTAIN LIABILITIES TO R110 MILLION. SUBJECT TO CERTAIN CONDITIONS, THE SALE WILL BE WITH EFFECT FROM 20 SEPTEMBER 1998. THE NET CONSIDERATION WILL BE SETTLED BY A R45 MILLION UP-FRONT CASH PAYMENT, TOGETHER WITH R42,45 MILLION TO BE PAID IN 15 EQUAL MONTHLY INSTALMENTS COMMENCING ON 31 DECEMBER 1998. AS PART PAYMENT HARMONY WILL CEDE ITS
PARTICIPATION RIGHT OF 25,93 PER CENT IN THE GENCOR ONE EAST PROJECT AREA, WHICH IS DEEMED TO HAVE A MONETARY VALUE OF R22,75 MILLION.
HARMONY WILL ASSUME ALL ENVIRONMENTAL REHABILITATION LIABILITIES FOR THE SALE AREA (SAAIPLAAS).
THE SALE FOLLOWS PREVIOUS STATEMENTS BY ANGLOGOLD THAT DESPITE THE BEST EFFORTS OF BOTH MANAGEMENT AND EMPLOYEES MASIMONG IS NOT ABLE TO ACHIEVE PROFITABILITY ON A SUSTAINABLE BASIS WITHOUT SIGNIFICANT CAPITAL EXPENDITURE. CURRENT CASH COSTS ARE IN THE REGION OF $300 PER OZ.
THE SALE OF MASIMONG WILL RESULT IN A DECREASE IN ANGLOGOLD'S ANNUAL PRODUCTION OF 161 000 OZ OF GOLD AND A REDUCTION OF RESOURCES AND RESERVES IN THE REGION OF 5,1 MILLION OZ. OVERALL, THE SALE WILL HAVE A MARGINAL POSITIVE IMPACT ON THE PERFORMANCE OF ANGLOGOLD.
A KEY COMPONENT OF THE SALE HAS BEEN THE NEED TO PRESERVE JOBS AND, IN THIS REGARD, HARMONY HAS AGREED TO PURCHASE THE MINE AS A GOING CONCERN. NO EMPLOYEES WILL LOSE THEIR JOBS AS A RESULT OF THE SALE.
HARMONY'S LOW COST OVERHEAD STRUCTURE WILL ALLOW MASIMONG TO OPERATE PROFITABLY WHILST CAPITAL IS SPENT ON ADDITIONAL DEVELOPMENT DURING THE FIRST 18 MONTHS. FURTHER SYNERGISTIC BENEFITS WILL BE ACHIEVED BY USING THE FREEGOLD 3 PLANT TO TREAT MASIMONG AND HARMONY TONNAGES, AS THIS PLANT IS BETTER SITUATED AND MORE COST EFFICIENT THAN HARMONY'S EXISTING MERRIESPRUIT PLANT. THIS WILL ADD AN ADDITIONAL 150 000 OZ OF ANNUAL PRODUCTION TO HARMONY'S EXPECTED PRODUCTION BASE OF 1,3 MILLION OZ. ENDS QUERIES: ANGLOGOLD: CHARMANE RUSSELL (+2711) 637 6160 (W) 082 895 3162 (MOBILE) (+2711) 486-3615 (H) HARMONY: BERNARD SWANEPOEL (+2711) 802 1822 (W) 083 303 9922 (MOBILE)
