Go Back Email this Link to a friend


Harmony Gold Mining Company Limited - News Release From Harmony

Release Date: 09/11/2004 16:14:12      Code(s): HAR
Harmony Gold Mining Company Limited - News Release From Harmony                 
Harmony Gold Mining Company Limited                                             
(Incorporated in the Republic of South Africa)                                  
(Registration number 1950/038232/06)                                            
Share code: HAR     ISIN: ZAE000015228                                          
("Harmony")                                                                     
NEWS RELEASE FROM HARMONY                                                       
9 November 2004                                                                 
Harmony Issues Document                                                         
Corrects claims made by Gold Fields Executives and Illustrates How Harmony Can  
Unlock Greater Value in Gold Fields" Assets                                     
While Harmony Delivers, Gold Fields Dithers                                     
Harmony (NYSE: "HMY"; JSE: "HAR") today took a more aggressive stance behind its
offer by issuing an analysis to Gold Fields Limited"s ("Gold Fields") (NYSE:    
"GFI"; JSE: "GFI") shareholders, the press and the public illustrating the      
sustainable value creation of its offers and correcting the inaccurate claims to
the contrary made by Gold Fields executives. Harmony believes that its report   
demonstrates that the Gold Fields Directors have mismanaged their South African 
assets and their performance has been sub-standard to Harmony"s operations for  
several years.                                                                  
 "If you look beyond all of the lawsuits and other delaying actions by Gold     
Fields management in their effort to delay their shareholders deciding on our   
offers, the simple fact is that the combination of Harmony"s renowned           
efficiencies with Gold Fields" higher grade ore body would bring value to both  
our shareholder bases," said Bernard Swanepoel, Harmony"s Chief Executive.  "We 
firmly believe that the proposed merger is in the best interest of all          
stakeholders, and we are committed to ensuring that they all have the           
opportunity to review the facts of the merger and judge its merit for           
themselves. What we have been hearing from both sets of shareholders confirms   
this."                                                                          
Harmony"s report outlines how the proposed Harmony/Gold Fields combination would
provide immediate and long-term shareholder value through a sustainable cost    
savings with a market value of over R17 billion (USD$2.8 billion).  Harmony"s   
experience with other acquired mines, including two previously acquired from    
Gold Fields, suggests that cost savings could well equate to a market value of  
R23 billion (USD$3.7 billion).                                                  
Among the ways that Harmony can unlock greater value in Gold Fields" existing   
assets, the report cites:                                                       
1. More efficient operations                                                    
Harmony will introduce a more efficient operating structure to the existing Gold
Fields assets. Gold Fields currently disguises its lack of efficiency and the   
high cost of its underground mining operations through the contribution of its  
lower cost international portfolio and surface mines.  Gold Fields also reports 
Rand/kg, rather than Rand/ton, which is a truer metric of mining efficiency.    
For the year ended 30 June 2004, Gold Fields" underground South Africa          
operations cost R546/ton, compared to R413/ton at Harmony. "Gold Fields appears 
to have misled its shareholders for a long time," said Bernard.                 
2. Superior allocation of capital                                               
For the last five years, Gold Fields has spent approximately R4.8 billion       
(USD$785 million) on capital expenditure in South Africa with little visible    
benefit to shareholders.  During that same time, Gold Fields" development,      
underground production levels, and viable reserve base have all declined, while 
the reverse is true for Harmony. Gold Fields" declining cash flow from          
operations puts its historic levels of capital expenditure at risk.             
By contrast, over the last few quarters, investment has been maintained at      
Harmony in order to re-tool the mines for the strong Rand environment.  The vast
majority of this restructuring is complete so that Harmony"s operations are no  
longer absorbing cash. "We will never apologise for investing in assets that    
show a convincing return for shareholders time after time," said Bernard.       
3. Increased reserves                                                           
Harmony"s cost cutting initiatives will enable it to mine previously            
unprofitable reserves by making currently below infrastructure projects, "in the
money".  Harmony estimates that reducing pay limits by 15% should add 36% to    
Gold Fields reserves at a Rand gold price of R90 000/kg.                        
4. Retaining Gold Fields" international operations                              
While Gold Fields" South African production has fallen, its international asset 
portfolio has grown significantly and now accounts for the majority of the      
company"s operating profit. "These are the assets the management of Gold Fields 
is now `contractually bound" to give away at far below fair value to IAMGold,"  
said Bernard.  This unwise transaction dilutes the exposure Gold Fields" own    
shareholders will have to the growth from its offshore mining operations.       
Moreover, the recent elimination of exchange controls for new foreign investment
by South African firms, as announced by the South African Minister of Finance,  
makes the need for this type of offshore vehicle unnecessary.  Harmony has      
stated that it will protect and enhance this value, not give it away, or        
complicate exposure to the profits in a value-destroying holding company        
structure.                                                                      
5. A premium to Gold Fields shareholders                                        
Contrary to the questionable analysis produced by Gold Fields, and unlike the   
proposed IAMGold transaction, Gold fields" shareholders will receive a fair     
premium for their shares from Harmony.                                          
"The Harmony-Gold Fields merger will create the world"s largest gold mining     
company by production value - a benchmark for the industry - with superior      
liquidity, a single listing without a holding company discount, and a management
team known for its ability to inject an empowering, business-savvy culture into 
its acquisitions," said Swanepoel. Clearly, the new Harmony would provide an    
investment vehicle with considerable more investor appeal than the two mid-cap  
gold producers that Gold Fields intends to create.                              
He continued: "There is a clear fit between Harmony and Gold Fields and we have 
identified multiple opportunities to unlock sustainable value.  We hope that all
stakeholders agree with Gold Fields" largest shareholder, Norilsk, and the world
renowned Institutional Shareholder Services (ISS), who both support a           
Harmony/Gold Fields combination, and accept our offers."                        
ENDS                                                                            
Issued by (direct line, mobile, email):                                         
Harmony                                                                         
Ferdi Dippenaar          +27 11 684 0140     +27 82 807 3684                    
Corne Bobbert            +27 11 684 0146     +27 83 380 6614                    
United States - Financial Dynamics Business Communications                      
Hollis Rafkin-Sax   +1 212 850 5789     +1 917 509 0255     hrafkin-sax@fd-     
us.com                                                                          
Torie Pennington    +1 212 850 5629     +1 917 838 1369     tpennington@fd-     
us.com                                                                          
South Africa - Beachhead Media & Investor Relations                             
Jennifer Cohen +27 (0)11 214 2401  +27 (0)82 468 6469  jennifer@bmsa.co.za      
Patrick Lawlor      +27 (0) 11 214 2410      +27 (0) 82 459 6709                
patrick@bmsa.co.za                                                              
United Kingdom - Financial Dynamics Business Communications                     
Nic Bennett         +44(0)207 269 7115  +44(0)7979 536 619                      
nic.bennett@fd.com                                                              
Charles Watenphul   +44(0) 207 269 7216      +44(0) 7866 438 013                
charles.watenphul@fd.com                                                        
US Information Agent - MacKenzie Partners, Inc                                  
Daniel Burch        +212 929 5500            proxy@mackenziepartners.com        
Steve Balet         +800 322 2885                                               
In connection with the proposed acquisition of Gold Fields, Harmony has filed a 
registration statement on Form F-4, which includes a preliminary prospectus and 
related exchange offer materials, to register the Harmony ordinary shares       
(including Harmony ordinary shares represented by Harmony American Depositary   
Shares (ADSs)) to be issued in exchange for Gold Fields ordinary shares held by 
Gold Fields shareholders located in the US and for Gold Fields ADSs held by Gold
Fields shareholders wherever located, as well as a Statement on Schedule TO.    
Investors and holders of Gold Fields securities are strongly advised to read the
registration statement and the preliminary prospectus, the related exchange     
offer materials and the final prospectus (when available), the Statement on     
Schedule TO and any other relevant documents filed with the Securities and      
Exchange Commission (SEC), as well as any amendments and supplements to those   
documents, because they will contain important information.  Investors and      
holders of Gold Fields securities may obtain free copies of the registration    
statement, the preliminary and final prospectus (when available), related       
exchange offer materials and the Statement on Schedule TO, as well as other     
relevant documents filed or to be filed with the SEC, at the SEC"s web site at  
www.sec.gov.  The preliminary prospectus and other transaction-related documents
may be obtained for free from MacKenzie Partners, Inc., the information agent   
for the U.S. offer, at the following address: 105 Madison Avenue, New York, New 
York 10016; telephone 1 (212) 929 5500 (call collect) or 1 (800) 322 2885 (toll-
free call); e-mail proxy@mackenziepartners.com.   Investors and security holders
may obtain a free copy of the Form 20-F filed with the SEC on October 5, 2004,  
as amended, and any other documents filed with or furnished to the SEC by       
Harmony at www.sec.gov.                                                         
This communication is for information purposes only.  It shall not constitute an
offer to purchase or exchange or the solicitation of an offer to sell or        
exchange any securities of Gold Fields or an offer to sell or exchange or the   
solicitation of an offer to buy or exchange any securities of Harmony, nor shall
there be any sale or exchange of securities in any jurisdiction in which such   
offer, solicitation or sale or exchange would be unlawful prior to the          
registration or qualification under the laws of such jurisdiction.  The         
distribution of this communication may, in some countries, be restricted by law 
or regulation.  Accordingly, persons who come into possession of this document  
should inform themselves of and observe these restrictions.  The solicitation of
offers to buy Gold Fields ordinary shares (including Gold Fields ordinary shares
represented by Gold Fields ADSs) in the United States will only be made pursuant
to a prospectus and related offer materials that Harmony expects to send to     
holders of Gold Fields securities.  The Harmony ordinary shares (including      
Harmony ordinary shares represented by Harmony ADSs) may not be sold, nor may   
offers to buy be accepted, in the United States prior to the time the           
registration statement becomes effective.  No offering of securities shall be   
made in the United States except by means of a prospectus meeting the           
requirements of Section 10 of the United States Securities Act of 1933, as      
amended.                                                                        
Forward-looking Statements                                                      
Statements in this announcement include "forward-looking statements" that       
express or imply expectations of future events or results.  Forward-looking     
statements are statements that are not historical facts.  These statements      
include financial projections and estimates and their underlying assumptions,   
statements regarding plans, objectives and expectations with respect to future  
operations, products and services, and statements regarding future performance. 
Forward-looking statements are generally identified by the words "expect,"      
"anticipates," "believes," "intends," "estimates" and similar expressions.  All 
forward-looking statements involve a number of risks, uncertainties and other   
factors, and Harmony cannot give assurances that such statements will prove to  
be correct.  Risks, uncertainties and other factors that could cause actual     
events or results to differ from those expressed or implied by the forward-     
looking statements include, without limitation, the satisfaction of closing     
conditions, the acceptance or rejection of any agreement by regulators, delays  
in the regulatory processes, changes in the economic or political situation in  
South Africa, the European Union, the United States of America and/or any other 
relevant jurisdiction, changes in the gold industry within any such country or  
area or worldwide and the performance of (and cost savings realised by) Harmony.
Although Harmony"s management believes that the expectations reflected in such  
forward-looking statements are reasonable, investors and holders of Gold Fields 
securities are cautioned that forward-looking information and statements are    
subject to various risks and uncertainties, many of which are difficult to      
predict and generally beyond the control of Harmony, that could cause actual    
results and developments to differ materially from those expressed in, or       
implied or projected by, the forward-looking information and statements.  These 
risks and uncertainties include those discussed or identified in the public     
filings with the SEC made by Harmony and Gold Fields, including those listed    
under "Cautionary Statement Concerning Forward-Looking Statements" and "Risk    
Factors" in the preliminary prospectus included in the registration statement on
Form F-4 that Harmony filed with the SEC.  Harmony does not undertake any       
obligation to update any forward-looking information or statements. You may     
obtain a free copy of the registration statement and preliminary and final      
prospectus (when available) and other public documents filed with the SEC in the
manner described above.                                                         
The directors of Harmony accept responsibility for the information contained in 
this press release.  To the best of the knowledge and belief of the directors of
Harmony (who have taken all reasonable care to ensure that such is the case),   
the information contained in this press release is in accordance with the facts 
and does not omit anything likely to affect the import of such information.     
Date: 09/11/2004 04:14:18 PM Supplied by www.sharenet.co.za                     
Produced by the JSE SENS Department                                             
                                                                                
                                                                                
                                                                                



                                        
Email this JSE Sens Item to a Friend.

Send e-mail to
© 2019 SHARENET (PTY) Ltd, Cape Town, South Africa
Home     Terms & conditions    Privacy Policy
    Security Notice    Contact Details
Market Statistics are calculated by Sharenet and are therefore not the official JSE Market Statistics. The calculation/derivation may include underlying JSE data.