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
HARMONY GOLD AND NEWCREST FORM PAPUA NEW GUINEA GOLD JOINT VENTURE AND
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
assets.
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
flows.
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
Smith.
"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
PNG."
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.
Completion
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
region.
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
www.newcrest.com.au.
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.
Wafi-Golpu
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
resources.
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
including:
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
Exploration
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
2008.
(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
Produced by the JSE SENS Department .
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
|
