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PROPOSED ACQUISITION BY HARMONY

Release Date: 19/12/2000 08:07:28      Code(s): HAR HARO
HARMONY GOLD MINING COMPANY LIMITED
(REGISTRATION NUMBER 1950/038232/06)
("HARMONY" OR THE "COMPANY")
PROPOSED ACQUISITION BY HARMONY OF THE ELANDSRAND AND DEELKRAAL MINES FROM
ANGLOGOLD LIMITED ("ANGLOGOLD") AND FURTHER CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
FURTHER TO THE CAUTIONARY ANNOUNCEMENT DATED 27 NOVEMBER 2000, CHASE IS
AUTHORISED TO ANNOUNCE THAT HARMONY AND ANGLOGOLD HAVE ENTERED INTO AN
IN-PRINCIPLE AGREEMENT IN TERMS OF WHICH RANDFONTEIN ESTATES LIMITED
("RANDFONTEIN"), A WHOLLY OWNED SUBSIDIARY OF HARMONY, WILL, SUBJECT TO THE
FULFILMENT OF CERTAIN CONDITIONS PRECEDENT, ACQUIRE THE ASSETS AND BUSINESSES
OF ELANDSRAND AND DEELKRAAL AS GOING CONCERNS FROM ANGLOGOLD, WITH EFFECT FROM
THE FULFILMENT OF THE LAST OF THE CONDITIONS PRECEDENT REFERRED TO IN 5 BELOW
(THE "ACQUISITION").
2. BACKGROUND AND RATIONALE FOR THE ACQUISITION
ELANDSRAND AND DEELKRAAL ARE CONTIGUOUS GOLD PROPERTIES SITUATED ON THE WEST
WITWATERSRAND LINE, APPROXIMATELY 50 KILOMETRES FROM RANDFONTEIN.  THE MINING
AUTHORISATION AREA COMPRISES, IN AGGREGATE, 4 992 HECTARES.  THE MINING
AUTHORISATION AREA IS UNDERLAIN INTER-ALIA, BY THE VENTERSPOST CONTACT REEF
("VCR") AND THE CARBON LEADER REEF. PRODUCTION FROM ELANDSRAND AND DEELKRAAL IS
SOURCED EXCLUSIVELY FROM THE VCR.
IN THE YEAR TO DECEMBER 1999, 631 000 OUNCES WERE PRODUCED FROM UNDERGROUND
SOURCES AT ELANDSRAND AND DEELKRAAL, WITH A FURTHER 404 000 OUNCES PRODUCED IN
THE NINE MONTHS TO SEPTEMBER 2000. AS AT 30 DECEMBER 1999, THE PUBLISHED
RESERVE STATEMENT REFLECTED 41 MILLION TONS AT AN AVERAGE IN-SITU GRADE OF 7.7
GRAMS PER TON, REFLECTING TOTAL RESERVES OF 10 MILLION OUNCES.
ELANDSRAND AND DEELKRAAL MEET HARMONY'S ACQUISITION CRITERIA IN THAT HARMONY
CAN APPLY ITS PROVEN MANAGEMENT ABILITY OF REDUCING OPERATING COSTS THROUGH THE
TRANSFORMATION OF HIGH COST MARGINAL OPERATIONS INTO LOW COST, HIGH
PRODUCTIVITY PRODUCERS. THE COMPANY EXPECTS TO EXTRACT ADDITIONAL GROWTH AND
SHAREHOLDER VALUE FROM THESE ASSETS. IN ADDITION THE COMPANY EXPECTS TO UNLOCK
SYNERGIES BETWEEN RANDFONTEIN AND ELANDSRAND/DEELKRAAL.
THE BOARD OF DIRECTORS EXPECTS THE ACQUISITION TO RESULT IN THE FOLLOWING
BENEFITS TO THE COMPANY:
- ESTABLISH HARMONY'S PRESENCE ON THE WEST WITWATERSRAND LINE;
- INCREASE HARMONY'S ANNUAL GOLD PRODUCTION FROM APPROXIMATELY 2.2 MILLION
OUNCES TO APPROXIMATELY 2.7 MILLION OUNCES; AND
- PROVIDE HARMONY WITH AN ADDITIONAL 10 MILLION OUNCES OF RESERVES.
3. CONSIDERATION PAYABLE IN TERMS OF THE ACQUISITION
SUBJECT TO THE FULFILMENT OF THE CONDITIONS PRECEDENT REFERRED TO BELOW,
HARMONY WILL PAY TO ANGLOGOLD R1 BILLION, IN CASH, AS CONSIDERATION FOR THE
ACQUISITION.
4. FINANCIAL EFFECTS OF THE ACQUISITION
BASED ON THE ASSUMPTIONS SET OUT BELOW, THE FINANCIAL EFFECTS OF THE
ACQUISITION PER HARMONY SHARE ("HARMONY SHARE") FOR THE FINANCIAL YEAR ENDED 30
JUNE 2000 WOULD HAVE BEEN AS FOLLOWS:
                                      NOTES   BEFORE  AFTER   INC/(DECR)
EARNINGS PER HARMONY SHARE              1        435    376      (13.7%)
HEADLINE EARNINGS PER HARMONY SHARE     1        435    376      (13.7%)
NET ASSET VALUE PER HARMONY SHARE       2      2 953  2 953         -
NOTES:
1. EARNINGS PER SHARE AND HEADLINE EARNINGS PER SHARE ARE CALCULATED USING
HISTORICALLY PUBLISHED NUMBERS FOR HARMONY, DEELKRAAL AND ELANDSRAND, AS IF THE
TRANSACTION TOOK PLACE WITH EFFECT FROM 1 JULY 1999, ADJUSTED FOR INTEREST
CHARGED AT 12% FOR THE FINANCING OF THE DEAL AND DEPRECIATION RELATING TO THE
EXCESS PAID FOR MINING ASSETS COMPARED TO THEIR HISTORICAL NET BOOK VALUE AND
THE RELATED TAX EFFECTS.
2. NET ASSET VALUE IS CALCULATED AS IF THE TRANSACTION OCCURRED ON 30 JUNE
2000. THERE IS NO PRO-FORMA EFFECT OF THE TRANSACTION ON HARMONY'S NET ASSET
VALUE AT 30 JUNE 2000 AS THE ENTIRE PURCHASE PRICE IS FUNDED THROUGH DEBT.
5. CONDITIONS PRECEDENT
THE ACQUISITION IS SUBJECT TO THE FULFILMENT OF THE FOLLOWING CONDITIONS
PRECEDENT, NAMELY:
- THE CONCLUSION OF A FORMAL SALE AND PURCHASE AGREEMENT BETWEEN HARMONY AND
ANGLOGOLD  (THE "FORMAL AGREEMENT"), BY 31 JANUARY 2001;
- THE PASSING OF AN ORDINARY RESOLUTION APPROVING THE ACQUISITION BY THE
SHAREHOLDERS OF HARMONY IN GENERAL MEETING;
- THE APPROVAL OF THE TRANSFER OF THE MINERAL RIGHTS AND TITLES AND CESSION OF
THE MINING LEASES IN RESPECT OF ELANDSRAND AND DEELKRAAL TO RANDFONTEIN BY THE
MINISTER OF  MINERALS AND ENERGY;
- THE GRANTING OF THE NECESSARY MINING AUTHORISATIONS TO HARMONY;
- THE APPROVAL OF THE RELEVANT REGULATORY AUTHORITIES, INCLUDING THE
COMPETITION AUTHORITIES; AND
- THE PROVISION BY HARMONY OF AN UNDERWRITTEN COMMITMENT FROM ITS BANKERS TO
FINANCE THE ACQUISITION, SUBJECT TO SUCH CONDITIONS AS ARE USUAL IN COMMITMENTS
OF THIS NATURE.
6. DOCUMENTATION AND FURTHER ANNOUNCEMENT
SHAREHOLDERS WILL BE NOTIFIED OF THE PROGRESS REGARDING THE FULFILMENT OF THE
CONDITIONS PRECEDENT, INCLUDING INTER ALIA, THE SIGNING OF THE FORMAL SALE AND
PURCHASE AGREEMENT AND THE PROVISION OF THE UNDERWRITTEN COMMITMENT.
DOCUMENTATION REGARDING THE ACQUISITION, INCLUDING A NOTICE OF GENERAL MEETING,
WHICH IS SUBJECT TO THE APPROVAL OF THE JSE SECURITIES EXCHANGE SOUTH AFRICA,
IS IN THE COURSE OF PREPARATION AND WILL BE DISPATCHED TO SHAREHOLDERS OF
HARMONY AS SOON AS PRACTICABLE AFTER THE SIGNING OF THE FORMAL AGREEMENT.
7. FURTHER CAUTIONARY ANNOUNCEMENT
SHAREHOLDERS ARE FURTHER REFERRED TO THE CAUTIONARY ANNOUNCEMENT DATED 27
NOVEMBER 2000. HARMONY IS CONTINUING DISCUSSIONS WITH ANGLOGOLD REGARDING THE
ACQUISITION OF CERTAIN OF ANGLOGOLD'S ASSETS IN THE FREE STATE. ACCORDINGLY
SHAREHOLDERS ARE ADVISED TO CONTINUE TO EXERCISE CAUTION IN THEIR DEALINGS IN
THE COMPANY'S SECURITIES UNTIL A FURTHER ANNOUNCEMENT IS MADE.
VIRGINIA
19 DECEMBER 2000
JOINT CORPORATE ADVISERS TO HARMONY
  CHASE
  (REGISTRATION NUMBER 1995/011812/06)
  BOE MERCHANT BANK
  (REGISTRATION NUMBER 1951/000847/06)
SPONSORING BROKER TO HARMONY
  CHASE
  (REGISTRATION NUMBER 1995/011815/06)
LEGAL ADVISER TO HARMONY
  CDFM
  (REGISTRATION NUMBER 1998/018173/21 )
REPORTING ACCOUNTANTS AND AUDITORS TO HARMONY
  PRICEWATERHOUSECOOPERS
  REGISTRATION NUMBER 1998/012055/21



                                        
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