Johannesburg - Harmony Gold Mining Company [JSE:HAR]
said on Monday it would sell Evander Gold Mines for R1.7bn to junior miners Pan African Resources [JSE:PAN]
and Witwatersrand Consolidated Gold Resources [JSE:WGR]
Evander, based in Mpumalanga, is seen as having the potential to produce 85,000 to 90,000 ounces of gold a year for at least a decade.
For Pan African the deal should boost gold output to 140,000 ounces a year from 95,000 ounces. For Wits Gold, it is the first foray into production from exploration.
The transaction is part of Harmony’s strategy to reduce its dependence on its South African base as it focuses attention on developing mines elsewhere, including Papua New Guinea.
“We have taken the strategy to diversify,” Harmony Chief Executive Graham Briggs said.
But he said the group had no plans to sell off any other significant South African assets.
“Selling more South African assets is not on our radar, unless it’s odds and ends and maybe mineral rights,” he told Reuters in a telephone interview.
Harmony is South Africa’s third-largest gold miner and depends on the country for 90% of its production, a far higher percentage than bigger rivals AngloGold Ashanti and Gold Fields, which have global footprints.
Gold miners are keen to move beyond South Africa in the face of rising labour and power costs and the growing depths of its mines - already the world’s deepest and among its most dangerous.
The Pan African/Wits Gold consortium will settle the transaction through a combination of debt, equity and operational cash flows.