HAR - Harmony Gold Mining Company - Agreement Between Harmony And African Release Date: 03/03/2008 15:17:12 Code(s): HAR
HAR - Harmony Gold Mining Company - Agreement Between Harmony And African
HARMONY GOLD MINING COMPANY LIMITED
Registration number 1950/038232/06
Incorporated in the Republic of South Africa
JSE share code: HAR
AGREEMENT BETWEEN HARMONY AND AFRICAN PRECIOUS MINERALS
Johannesburg. Monday, 3 March 2008. In line with Harmony Gold Mining Company
Limited`s (Harmony) drive to optimise value from its latent and low-priority
assets, the company has entered into two separate transactions with African
Precious Minerals (APM) and its subsidiary Taung Gold Holdings (Pty) Ltd
Freegold, a wholly owned subsidiary of Harmony, holds the prospecting rights on
several farms north of Tshepong and east of Target in the Free State where the
shafts of Jeanette Gold Mines Limited were sunk during the 1950s.
Harmony has entered into a sale agreement in terms of which the prospecting
rights, considered low-priority Harmony assets, is to be acquired by APM.
The purchase consideration payable to Harmony by APM will be as follows:
1. 1 500 000 ordinary APM shares and 1 500 000 half warrants. Based on the
capital raising conducted by APM during the last quarter of 2007, the
shares and warrants to be granted to Harmony are estimated at being worth
US$7,5 million (R52,5million).
2. 1.5% Net Smelter Royalty (NSR) on all minerals extracted from the
prospecting right area, subject to a maximum aggregate amount of R150
In addition to the above transaction, Harmony also entered into earn-in
agreements with APM for the Evander 6 shaft and Twistdraai assets in the Evander
Harmony concluded a strategic review of all its projects in the Evander basin in
the Mpumalanga province during 2007 and concluded that entering into earn-in
agreements with junior exploration companies would move the low ranking projects
in the Evander portfolio up the value curve more rapidly without placing added
pressure on Harmony`s capital expenditure.
The Evander 6 shaft and Twistdraai areas are located on the eastern and south
eastern side of the Evander basin respectively.
The earn-in agreements between Harmony and APM for the Evander 6 shaft and
Twistdraai areas respectively is subject to and conditional upon the fulfillment
of the following significant conditions precedent by APM:
1. Completion of a scoping study within two years with no earn-in.
2. Completion of a pre-feasibility study within three years. At least 70% of
the ounces during the pay-back period in the study must be of the indicated
resource class and three-fifths (3/5) of the agreed minimum requirement
exploration work plan must be completed for APM to earn-in 25%.
3. The completion of a full bankable feasibility study within five years. At
least 100% of the ounces during the pay-back period in the study must be of
the indicated resource class and the agreed minimum requirement exploration
work plan must be completed for APM to earn-in 52%.
4. On completion of the bankable feasibility study, if both parties agree, an
unincorporated joint venture (UJV) will be created and Harmony will share
48% and APM, 52% of the development costs and revenue of the project in
accordance with the economic interests in the project(s).
Harmony will also earn a 1.5% Net Smelter Royalty on all minerals extracted from
the lease area covered by the Evander 6 shaft and Twistdraai earn-in agreements,
subject to a maximum aggregate amount of R500 million.
Harmony`s Chief Executive Officer Graham Briggs says, "The earn-in agreement
with African Precious Minerals is an excellent way of progressing our low
priority projects to bankable feasibility stage in the current positive gold-
price environment. In addition, the formation of strategic alliances with other
companies allows us to optimize the use of our resources without placing
additional pressure on our capital expenditure."
African Precious Minerals Profile
African Precious Minerals was established in 2004 by Rudolph de Bruin, David
Twist and Kweku Awotwi as a gold exploration company seeking early-stage
exploration properties in South Africa, but more specifically in the Free State,
Evander and Balfour regions, as well as Africa.
African Precious Minerals` strategic joint ventures include Taung Gold Holdings
and Sephaku Gold Exploration. It has projects in South Africa, Mali (all of
AngloGold Ashanti`s previously held exploration leases outside Morila and
Sadiola), Mozambique, Tanzania. Its flagship property is the Monarch gold
project in Mozambique, historically the largest gold producing region in that
It purchased all the available exploration data (including drill core) in
respect of the Hilton project from AngloGold Ashanti, which adjoins the Jeanette
lease area, thereby justifying Harmony entering into an agreement with APM.
African Precious Minerals shareholders include very well known resource funds,
including RMB Resources and Investec.
Issued by Harmony Gold Mining Company Limited
3 March 2008
For more details contact:
Chief Executive Officer
on +27 (0)11 411 2012
+27 (0)83 265 0274
Executive, Projects and
on +27 (0)11 411 2000
+27 (0)83 303 9815
General Manager, Investor Relations
on +27 11 411 2314 or
+27 (0)82 654 9241
Randfontein Gold Mine
P O Box 1
South Africa 1796
T +27 (11) 411 2000
Merrill Lynch South Africa (Pty) Limited
Date: 03/03/2008 15:17:11 Supplied by www.sharenet.co.za
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