Harmony Gold Mining Co. Ltd. - Harmony Announces Recommended Takeover Offer
Release Date: 10/12/2001 15:58:55 Code(s): HAR
For Hill 50
HARMONY ANNOUNCES RECOMMENDED TAKEOVER OFFER FOR HILL 50
Johannesburg, 10 December 2001 - Harmony Gold Mining Company Limited
("Harmony") today announced a takeover offer of R1 327 million for Hill 50
Limited ("Hill 50") in Australia.
Harmony intends to make a cash offer of A$1.35 for each Hill 50ordinary
share and an offer of A$0.65 for each of the listed options in Hill 50. In
addition, Harmony will pay a further A$0.05 in cash for each ordinary share
and listed option in the event that its offer is accepted by holders of at
least 90% of Hill 50 shareholders and option holders respectively. This
translates into a total offer of potentially $1.40 per share and $0.70 per
listed option giving a transaction value of A$237 million.
Harmony has been advised that the directors of Hill 50 intend to recommend
Harmony's offer to shareholders, in the absence of a higher offer, and to
accept Harmony's offer in respect of their own shareholdings. The offer will
also include a minimum acceptance condition of 50.1% of Hill 50 shares on a
fully diluted basis.
The share offer represents a premium of approximately 15% at A$1.35 and 19%
at A$1.40, based on the volume weighted average share price for Hill 50 over
the week preceding the announcement of the offer.
Hill 50 is one of Australia's premier mid-cap gold producers which principal
assets are the Mt Magnet operations in the Murchison Belt of Western
Australia and the recently acquired New Celebration operation south of
Kalgoorlie. In addition, Hill 50 owns the Maud Creek advanced exploration
project and is acquiring the Brocks Creek assets in the Northern Territory.
Hill 50's management anticipates total gold production of 300 000 ounces
from its operations in the year ending June 2002. As at 30 June 2001, Hill
50 had in excess of 1.9 million ounces of gold reserve, and 8.1 million
ounces of resource.
The acquisition of Hill 50 represents an important next step in the
development of Harmony's Australian gold mining business. Hill 50's major
operations are the nearest neighbours to Harmony's New Hampton operations at
Big Bell and Jubilee respectively.
The completion of the acquisition of Hill 50 will provide Harmony with
further high quality cash generative assets for its Australian portfolio and
enable Harmony to participate further in the logical rationalisation of the
highly prospective area south of Kalgoorlie.
Harmony's Australian asset base will constitute proven long-life and cash
generating mines and prospective exploration ground in Australia's premier
gold producing regions. Harmony's New Hampton assets currently produce
approximately 220,000 ounces per annum. Hill 50's management believes that
its combined assets, currently producing at the annualised rate of
approximately 300,000 ounces per annum, have the capacity to produce in
excess of 400,000 ounces per annum.
The combination of Hill 50's New Celebration and Harmony's Jubilee gold
operations would create operational, information sharing and exploration
synergies, providing a platform to develop new opportunities and to
rationalise the combined milling capacities.
The management of the high-grade Bendigo development project (in which
Harmony expects shortly to acquire a 31.1% interest - with the right to
acquire up to 50.1%) believes that its has the potential to reach a
sustainable production level of 400,000 ounces per annum. Should this be
achieved Harmony will have the potential to control annual production in
Australia in excess of 1 million ounces - representing a substantial
proportion of Harmony's global annual production.
Commenting on the transaction, Mr. Bernard Swanepoel, chief executive of
Harmony, said, "We have for some time admired the achievements of the Hill
50 management team in identifying and developing growth opportunities whilst
generating profits for its shareholders. We believe that there exists a
strong match in corporate cultures and are delighted that this successful
management team have agreed to stay with the company. Harmony is pleased to
be able to provide its financial strength and international resources to
back the Hill 50 growth story in Australia".
"For the past six years Harmony has been a vigorous proponent and key
participant of rationalisation of the gold industry. Our strategy of growth
through acquisitions has delivered significant returns for our shareholders,
and we see strong future returns for our investors as this trend continues.
Following our achievements in South Africa, Harmony is pleased to give its
shareholders a logical and larger exposure to the ongoing consolidation of
the Australian gold industry."
Harmony's offer is subject to receiving customary regulatory approvals from
the Australian Foreign Investment Review Board ("FIRB") and the South
African Reserve Bank ("SARB").
The takeover offer will be financed from Harmony's existing cash resources
and a debt facility if necessary.
For more detail on the transaction please visit our web site at
Summary of Conditions to Harmony's offer
- Before the end of the offer period, Harmony's offer either receives
notice from the Australian Treasurer to the effect that there is no
objection to the offer under the Foreign Acquisitions and Takeovers Act 1975
(the "FATA"), or the period provided under the FATA lapses without an order
being made that prohibits the acquisition of Hill 50 by Harmony.
- Before the end of the offer period, if required by law, the Exchange
Control Board of the South African Reserve Bank gives its unconditional
approval to the offer and to the financing of the offer.
- Before the end of the offer period, Harmony and its associates have a
relevant interest in the number of Hill 50 shares equal to at least 50.1% of
the aggregate number of Hill 50 shares which are on issue at the end of the
offer period and options over Hill 50 shares which are on issue at the end
of the offer period.
- That between the announcement date and the end of the offer period, none
of the usual prescribed occurrences (as defined under the Corporations Act
2001 Cth, 652C(1) and (2)) occurs.
- That between the announcement date and the end of the offer period, no
event or events occur which affect the production of gold by Hill 50 or its
subsidiaries, and which alone or in aggregate have, or are likely to have,
one or more of the following effects:
(a) A reduction in the value of the net assets of Hill 50 and its
subsidiaries taken as a whole by A$12 million or more; or
(b) A reduction in the net profit before tax of Hill 50 and its
subsidiaries taken as a whole by A$12 million or more.
- That prior to the end of the offer period, each party to a hedge
contract, or contract of similar nature, with a member of the Hill 50 group
that is entitled to terminate, suspend or rescind that contract as a result
of or in relation to the Offer, or a change of control in Hill 50 which may
arise in relation to the offer, agrees with the relevant member of the Hill
50 group that it will not terminate, suspend or rescind that contract as a
result of or in relation to the offer, or a change of control in Hill 50
which may arise in relation to the offer.
Harmony Fact Sheet
Harmony is one of the world's leading gold producers, with production in the
year to June 2001 of 2.1 million ounces and production for Harmony Fact
- Harmony is one of the world's leading gold producers, with production in
the year to June 2001 of 2.1 million ounces and production for 2002 likely
to exceed 3 million ounces including its share of production from the
recently announced Free State acquisition.
- Harmony has shown steady growth in its profits and has increased its
reserve base from 8 million ounces in 1996 to in excess of 40 million ounces
today. Acquisitions, and Harmony's ability to drive down costs while
increasing productivity, have played a central role in these achievements.
- In South Africa, Harmony operates underground mines in the Freestate,
Evander, Randfontein and West Rand gold fields of the Witwatersrand basin as
well as the Kalgold open pit greenstone hosted mine.
- In Australia, Harmony operates the Big Bell and Jubilee operations.
Subject to Bendigo shareholder approval, Harmony will have a 33% interest
(with the right to increase to 50.1%) in the high-grade Bendigo project in
Victoria. Harmony also owns a 23% investment in Goldfields Limited.
- Harmony, which is capitalised in excess of US$850 million, is listed on
the Johannesburg, London, Paris and Brussels stock exchange and Harmony ADRS
are listed on the NASDAQ exchange.
For immediate release
10 December 2001
For further details contact:
Issued by Harmony Gold Mining Company Limited
Tel +27 11 412 1450
Fax +27 11 692 3879, Mobile +27 83 380 6614
For more detail on the transaction please visit our web site at