HAR - Harmony - The Preferred Bidder For Pamodzi Gold`s Free State Assets Release Date: 26/06/2009 17:20:01 Code(s): HAR HAR - Harmony - The Preferred Bidder For Pamodzi Gold`s Free State Assets
PRESS RELEASE
Harmony Gold Mining Company Ltd
Incorporated in the Republic of South Africa
Registration Number: 1950/038232/06
JSE Code: HAR
NYSE Code: HMY
NASDAQ Code: HMY
ISIN: ZAE000015228
("Harmony")
THE PREFERRED BIDDER FOR PAMODZI GOLD`S FREE STATE ASSETS
Johannesburg, 26 June 2009. Harmony Gold Mining Company Limited ("Harmony") is
pleased to announce that the provisional liquidators of Pamodzi Gold Free
State (Proprietary) Limited (in liquidation) ("Pamodzi Free State") have
chosen Harmony as the preferred bidder of Pamodzi Free State`s assets
("Pamodzi Free State Assets"). The Pamodzi Free State Assets consist of
President Steyn 1 and 2 shafts, Loraine 3 shaft, Freddies 7 shaft and Freddies
9 shaft, a metallurgical gold plant and a dormant tailings storage facility.
The Pamodzi Free State Assets will be purchased free from all liabilities,
save for all rehabilitation and environmental liabilities associated with the
Pamodzi Free State Assets. Harmony`s acquisition strategy has been focused on
acquiring long-life assets that offer higher grades and have potential
synergies with its own assets.
A due diligence investigation has been completed. The outcome of the due
diligence investigation indicates that the Pamodzi Free State Assets are a
good fit with Harmony`s Free State assets for the following reasons:
- the Pamodzi Free State Assets have the potential to generate recovered
grades of approximately 5g/t in the medium term. This will enhance Harmony`s
recovered grade in the Free State;
- the Pamodzi Free State Assets have the potential, in the longer term, to
add 150,000 higher quality ounces per year to Harmony`s production;
- Loraine 3 shaft and Freddies 9 shaft respectively have an estimated life
of mine in excess of 10 years;
- Loraine 3 shaft (including Loraine 1 shaft) has similar geology to that
of Harmony`s Target mine ("Target");
- Loraine 3 shaft and Target can be managed as one unit due to geological
similarities and geographical proximity;
- synergies exist between Freddies 7 shaft and Freddies 9 shaft and
Harmony`s Tshepong Mine from an ore body and mining perspective;
- Harmony`s Target metallurgical gold plant is 10 kilometers from the
Loraine 3 shaft which will have cost benefits;
- the President Steyn 2 shaft pillar can only be optimally extracted from
Harmony`s West Mine shaft (currently on care and maintenance) and part of
Bambanani mine;
- Harmony`s management is very familiar with Pamodzi Free State`s ore
bodies;
- Pamodzi Free State`s dormant tailings storage facility can be cost
effectively processed through Harmony`s Phoenix plant or through Harmony`s St
Helena plant (when completed).
- cash flow can be generated at an early stage from the President Steyn 2
shaft pillar, as well as from the demolition of Pamodzi Free State`s
metallurgical gold plant
- Harmony is familiar with the infrastructure challenges of the Pamodzi
Free State Assets and will implement the same standards as those implemented
in respect of its own assets to ensure the safety of its employees. Some
capital expenditure will therefore be required to make the operations safe for
employees and to optimize the ability to operate the Pamodzi Free State
Assets;
- by purchasing the Pamodzi Free State Assets, Harmony will be able to
better control potential issues which may affect its own mines, such as fires,
flooding and restricting illegal miners gaining access to Harmony`s shafts.
The acceptance of Harmony`s offer by the provisional liquidators is subject to
the approval of the Industrial Development Corporation of South Africa and the
relevant trade unions and the conclusion of definitive written sale
agreements.
One of the essential conditions precedent to the transaction would be the
conversion of Pamodzi Free State`s mining rights and the consent to the
transfer thereof by the Minister of Minerals and Energy. Harmony, together
with the provisional liquidators, has agreed to give this condition precedent
their urgent attention.
"Strategically this transaction is a good fit for Harmony`s Free State
assets. Harmony has excellent synergies that could be leveraged in respect of
tailings disposal, plant processing and management and it would allow us to
control potential issues that could influence our own mines", Chief Executive
Officer, Graham Briggs said.
This acquisition falls below the JSE categorisation thresholds and is for
information purposes only.
Issued by Harmony Gold Mining Company Limited
For more details contact:
Graham Briggs
Chief Executive Officer
on +27(0)83 265 0274
or
Marian van der Walt
Executive: Corporate and Investor Relations
on +27(0)82 888 1242
Corporate Office:
Randfontein Office Park
P O Box 2
Randfontein
South Africa 1760
T +27 (11) 411 2000
www.harmony.co.za
Sponsor
JP Morgan Equities Limite
Financial adviser to Harmony
Deutsche Securities SA (Pty) Limited
Legal adviser to Harmony
Cliffe Dekker Hofmeyr Inc
Date: 26/06/2009 17:20:01 Supplied by www.sharenet.co.za
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