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HAR - Harmony Gold And Newcrest Form Papua New Guinea Gold Joint Venture

Release Date: 22/04/2008 07:25:02      Code(s): HAR
HAR - Harmony Gold And Newcrest Form Papua New Guinea Gold Joint Venture        
              And Cautionary Announcement                                       
Harmony Gold Mining Company Ltd                                                 
Incorporated in the Republic of South Africa                                    
Registration number: 1950/038232/06                                             
Share code: HAR                                                                 
ISIN: ZAE000015228                                                              
("Harmony" or the "Company")                                                    
Newcrest Mining Limited                                                         
CAUTIONARY ANNOUNCEMENT                                                         
The world`s 5th largest gold producer, Harmony Gold Mining Company Limited      
("Harmony") and Australasia`s largest gold company, Newcrest Mining Limited     
("Newcrest"), announced today that they had signed an agreement which will      
allow Newcrest to earn a 50% interest in Harmony`s Papua New Guinea (PNG) gold  
The joint venture includes:                                                     
The Hidden Valley mining operation, a gold and silver project, expected to      
produce over 250,000 ounces of gold and 3.6 Moz of silver p.a. over a 14 year   
mine life, peaking at over 300,000 ounces of gold p.a. in 2011.  Production is  
scheduled to commence around mid 2009.                                          
The highly-prospective Wafi-Golpu gold/copper deposit and its surrounding       
exploration tenements.                                                          
More than 3,400 square kilometres of Harmony`s exploration tenements in Morobe  
province, 300 km north-east of Port Moresby.                                    
The PNG assets have a significant resource inventory, with a JORC-compliant     
resource base of approximately 31 million ounces of contained gold              
equivalent(1).  Current resources total 15.2Moz gold, 90Moz silver, 1,761kt     
copper and 22kt molybdenum.                                                     
Hidden Valley Reserves / Resources(2)                                           
Commodity           Reserve      Resource                                       
Gold                2.9 Moz Au   5.7 Moz Au                                     
Silver              42 Moz Ag    90 Moz Ag                                      
Wafi-Golpu Reserves/Resources(2)                                                
Commodity           Reserve      Resource                                       
Wafi Gold                                                                       
Gold                -            6.5 Moz Au                                     
Golpu Copper                                                                    
Gold                1.4 Moz Au   3.0 Moz Au                                     
Copper              800 kt Cu    1,761 kt Cu                                    
Molybdenum          9 kt Mo      22 kt Mo                                       
Newcrest will earn its 50% interest in the new joint venture by contributing a  
maximum of US$525 million(3).                                                   
The commitment will be in two stages:  (i) an initial US$180 million payment    
to acquire a 30.01% interest by 30 June 2008, together with a reimbursement to  
Harmony of US$45 million(3) in project expenditure ("Stage 1 Completion"), and  
(ii) a farm-in commitment for the remaining 19.99% of approximately US$300      
million, to fund project expenditure up to the commencement of mining           
operations at Hidden Valley.  Newcrest will fund the deal from internal cash    
Harmony and Newcrest will jointly operate the PNG assets from the date of       
Stage 1 Completion with voting rights in the operator to be in proportion to    
each joint venturer`s interest.  As a 30.01% interest holder, during the earn-  
in period, Newcrest`s approval will be required for major decisions in the      
joint venture.                                                                  
The deal demonstrates Newcrest`s commitment to and confidence in the Hidden     
Valley development opportunity, as well as the potential of the PNG assets as   
a whole.                                                                        
The structure also provides both parties with the assurance that the            
acquisition funding will be committed and applied directly towards development  
of the assets.                                                                  
Harmony announced some time ago that it was evaluating strategic alliances      
with qualified companies that had relevant experience and resources to help     
develop and optimise the mining of the PNG assets.  For Harmony, the creation   
of a joint venture facilitates significant capital investment into the PNG      
assets and substantially removes Harmony`s obligation to continue funding the   
development of these assets during the farm-in period.                          
Importantly the introduction of a quality partner such as Newcrest with         
significant technical skills, particularly in copper mining and bulk            
underground mining techniques including block caving techniques will provide    
additional expertise to the existing Harmony team in PNG and will add to the    
development potential of the PNG assets.                                        
Harmony`s Chief Executive Officer, Graham Briggs, said the agreement with       
Newcrest represented a landmark event for the development of the assets, the    
region and Harmony.                                                             
"We are pleased to welcome Newcrest as our partner in PNG.  Newcrest`s          
technical and financial capabilities will greatly assist with the ongoing       
development and expansion in PNG," said Mr Briggs.                              
"The combination of Harmony and Newcrest in PNG creates a unique team with the  
right skills, relationships and people to enhance the development of these      
assets.  Both companies are committed to the continued application of industry  
best practice in PNG, which includes bringing new jobs, social benefits and     
sound environmental management to PNG, enhancing the economy in the Morobe      
region and supporting local communities.                                        
"Current stakeholders in our PNG projects will benefit from the alliance        
between Harmony and Newcrest, with both groups having a strong commitment to    
ensure that all agreements and associated benefits for the affected landowners  
and people of PNG are maintained."                                              
He said Harmony`s significant experience on the ground in PNG would be          
critical to ensuring successful development of the Hidden Valley and Wafi-      
Golpu projects, while Newcrest brought substantial technical expertise          
including world leading experience in underground block caving techniques and   
proven metallurgical and marketing skills for copper.                           
Newcrest`s Chief Executive Officer, Ian Smith, said the transaction provided    
Newcrest with the opportunity to enter a new and prospective mining province -  
one of the largest undeveloped gold resources in the Australasian region -      
alongside a respected partner with substantial experience in PNG.               
"The near term production and cashflow from Hidden Valley, combined with the    
significant upside potential of Wafi-Golpu and the regional exploration         
tenements make this portfolio of assets very attractive to Newcrest," said Mr   
"This is a major step forward in the implementation of our growth strategy and  
we are pleased to have secured this alliance with Harmony in the face of        
competition from other major global producers.                                  
"Establishing a significant footprint in a developing jurisdiction, which       
recognises the long term value that responsible miners can bring to a           
community, represents a great opportunity for future growth.  We are            
particularly pleased to be entering into this new province with a partner who   
is a leading global producer with extensive experience in gold mining and in    
Mr Smith said the PNG assets represent a balanced portfolio of near term        
production, advanced stage appraisal and significant exploration potential.     
"In our view these assets have the potential to develop into a major new        
mining province," he said.                                                      
The agreement is a binding agreement and has been approved by the respective    
boards of both Harmony and Newcrest.  It remains subject to relevant PNG        
regulatory approvals and satisfaction or waiver of a small number of            
conditions precedent. Shareholder approvals are not required. Stage 1           
Completion is expected by 30 June 2008.                                         
Harmony and Newcrest have also agreed not to compete with each other in         
relation to mining activities over a significant portion of the Morobe          
province. In effect, this creates a regional alliance between the companies     
which will allow for the most efficient assessment, appraisal and development   
of the PNG assets and any additional assets that may be acquired within the     
A presentation from Harmony, outlining further details on the transaction, has  
been separately released to the JSE and placed on the Harmony website at        
www.harmony.co.za .                                                             
A presentation from Newcrest, outlining further details on the transaction,     
has been released to the ASX.  It is available on the Newcrest website at       
Asset Overview                                                                  
Harmony`s tenements comprise in excess of 3,400 square kilometres of tenure,    
centred on the goldfields district of the Morobe Province. Regionally the       
tenements cover a portion of the Papua New Guinea Orogenic belt which hosts a   
number of world class gold and copper-gold deposits including Porgera, OK Tedi  
and Grasberg.                                                                   
Hidden Valley                                                                   
Hidden Valley is a gold and silver project located approximately 90kms          
southwest of Lae in Morobe province, Papua New Guinea.  Currently under         
construction, commissioning of Hidden Valley is on schedule for around mid      
2009.  Hidden Valley is expected to produce over 250koz of gold and 3.6Moz of   
silver per annum at a cash cost in the lowest quartile over a projected 14      
year mine life.  Hidden Valley contains 2.9Moz of gold and 42Moz of silver in   
reserves (3.6Moz Au equivalent(4)).  Resources contain 5.7Moz of gold and       
90Moz of silver. Exploration potential in the immediate mine area is high and   
Harmony is confident that the mine life can be significantly extended.          
Located approximately 65kms southwest of Lae in Morobe province, Papua New      
Guinea, Wafi-Golpu is a highly prospective region with two advanced staged      
exploration projects - the Wafi gold project and the Golpu porphyry             
copper/gold project.                                                            
Wafi-Golpu comprises two separate mineralised systems in a highly prospective   
region with potential to develop into a major mineralised province.  Wafi-      
Golpu is currently estimated to contain 9.5Moz of gold and 1.76Mt of copper in  
It is believed the defined resources at Wafi-Golpu are part of a larger         
system. An additional porphyry exploration target has been discovered at        
Nambonga North, 2kms northeast of Golpu with drilling returning intersections   
WR262:   178m @ 1.2g/t Au, 0.3% Cu                                              
WR264:   213m @ 1.1g/t Au, 0.3% Cu                                              
WR270:   117m @ 0.73g/t Au, 0.2%Cu                                              
WR272:   168m @ 1.1g/t Au, 0.3% Cu                                              
The tenement package is highly prospective for porphyry and hydrothermal Au     
and Cu/Au deposits. Past production and resources of Morobe goldfields          
district combine for an endowment of some 18 Million ounces of Au, 89 Million   
ounces of Ag, 3.9 Billion pounds of Cu, and 47 million pounds Mo. Drilling      
outside of the historic deposit areas is sparse and the tenement package        
contains a number of grassroots targets which have major geophysical and        
geochemical footprints indicative of porphyry copper-gold systems and           
represent significant exploration opportunity. Currently there are three drill  
rigs operating on exploration tenements.                                        
Cautionary announcement                                                         
A further announcement will be made on SENS and in the press as soon as the     
financial effects are finalised.  Accordingly, Harmony shareholders are         
advised to exercise caution when trading in their securities until such time    
as a further announcement is made.                                              
About Harmony                                                                   
Harmony is the world`s fifth largest gold producer and South Africa`s third     
largest gold producer. Headquartered in Johannesburg, South Africa, Harmony     
operates 22 individual mines and projects in three countries, South Africa,     
Australia and Papua New Guinea (PNG). In FY07 Harmony generated a turnover of   
R9 billion and produced 2.3Moz of gold, primarily from its operations in South  
Africa.  Harmony maintains an extensive global exploration program, focused on  
southern Africa, South East Asia and PNG. The company is listed on the JSE      
Limited (JSE Code: HAR), with a market capitalisation around US$5 billion.      
About Newcrest                                                                  
Newcrest is Australia`s largest gold producer with five operating mines in      
Australia and one in Indonesia. Newcrest`s principal activities are exploring   
for gold and gold/copper deposits, and developing and operating mines.          
Newcrest operates open pit and underground mines in Australia and Indonesia.    
During the financial year ending June 2007, Newcrest produced 1.62Moz of gold   
and 88.9kt of copper. Newcrest is listed on the Australian Stock Exchange (ASX  
Code: NCM), with a market capitalisation around A$15 billion.                   
(1)Equivalents calculated at US$670/oz Au, US$2.30/lb Cu, US$8/oz Ag and        
US$20/lb Mo.                                                                    
(2)Source: Harmony Gold Mining Company Limited. JORC compliant estimate as at   
30 June 2007. Refer Harmony website.                                            
(3)Based on the current estimate of Harmony`s project expenditure of US$150     
million from 1 January 2008 to the expected Stage 1 completion date of 30 June  
(4)Equivalents calculated at US$670/oz Au, US$2.30/lb Cu, US$8/oz Ag and        
US$20/lb Mo                                                                     
For further information, please contact:                                        
Harmony Gold Company Limited                                                    
Graham Briggs            Amelia Soares                                          
Chief Executive Officer  General Manager, Investor Relations                    
+27 (0) 11 411 2023      +27 (0) 11 411 2314                                    
+27 (0) 83 265 0274      +27 (0) 82 654 9241                                    
Newcrest Mining Limited                                                         
Investor Enquiries                      Media Enquiries                         
Karen McRae                             Daryl Corp                              
Telephone:  +61 3 9522 5316             61 3 9522 5376                          
Email: karen.mcrae@newcrest.com.au      daryl.corp@newcrest.com.au              
Sponsor to Harmony                                                              
Merrill Lynch South Africa (Pty) Limited                                        
Date: 22/04/2008 07:25:02 Supplied by www.sharenet.co.za                     
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