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ANGGOLD/HARMONY - SALE OF MASIMONG MINE TO HARMONY

Release Date: 10/09/1998 17:54:54      Code(s): ANG HAR HARO
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)



                                        
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