Sept 19, 2016 | Mining.com
Harmony Gold (NYSE:HMY)(JSE:HAR), South Africa’s third-largest producer of the precious metal, has become the sole owner of the Hidden Valley mine in Papua New Guinea after partner Australia’s Newcrest Mining (ASX:NCM) agreed to sell its 50% stake in the joint venture.
Harmony will now assume all liabilities and expenses related to the gold and silver operation, including rehabilitation costs and remediation obligations with effect from August 31 this year, the companies said in the statement.
Both companies will continue working together in their 50-50 Wafi-Golpu copper-gold project, also located in in Papua New Guinea.
Investors reacted positively to the news, with Newcrest shares gaining 2.46% to A$21.64, as many considered Hidden Valley to be the company’s “troubled child.”
Once the deal is approved, Newcrest expects to book a loss on the sale of approximately $10 million. The gold miner also said that as part of the transaction and as a contribution towards the mine’s future closure liability, it was giving Harmony $22.5 million as a one-off cash injection.
Both companies will continue working together in their 50-50 Wafi-Golpu copper-gold project, also located in in Papua New Guinea.
The sale has forced Newcrest to lower its gold output guidance for fiscal 2017 from 2.4 to 2.65 million ounces to 2.35-2.6 million ounces.
After losing money for three years to 2015, Harmony is now focus on finding a mine able to offset falling production at its South African mines. The company’s plan is to build a $2.6 billion mine on Golpu, which should help it reduce costs as well as boost production and reserves.
The South African gold miner has set a goal to increase production to 1.5 million ounces over the next three years.
Production at Hidden Valley began in September 2010 and in the 12 months to June 30 the mine produced 145,132 ounces of gold (on a 100% cent basis).
The operation had an estimated mineral reserve of 1.4 million ounces of gold at 1.6g a tonne and 27-million ounces of silver at 31g a tonne as of June 30 this year, resulting in total gold equivalent ounces of 1.8 million ounces at 2g a tonne.
Image: Newcrest Mining.
