| Tue 6 May 2003, 11:07 | | Merger of Harmony and ARMgold creates new growth o |
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Resources Correspondent
THE merger of Harmony Gold and ARMgold and their joint purchase of a 34,5% stake in Anglovaal Mining (Avmin) present significant growth opportunities for the new Harmony.
Avmin, moving to clear its debt after problems at its Zambian copper and cobalt operations, offers through its portfolio of projects avenues for the development of new projects for the company which will emerge once the R4,9bn merger, creating SA's largest gold producer, is completed.
Avgold, in which Avmin has a 42% stake, operates the Target gold mine. This mine and the as yet unexploited Paradise North area have gold reserves of about 80-million ounces.
Paradise North stands out as a possible investment for the new Harmony to pursue in future, providing the new company after significant investment with low-cost gold production.
Avmin has said it was looking for a partner to invest in a project to develop these reserves. Harmony executive Ferdi Dippenaar said yesterday that any decision on investing in Paradise North was some time off.
Analysts are already coming up with other potential scenarios that see the new Harmony focus on projects to further develop Avmin's key assets.
Bernard Swanepoel, CE of Harmony, and Patrice Motsepe, ARMgold chairman, were adamant yesterday that the new Harmony would remain a gold-focused company.
Analysts are not convinced, and believe that the new Harmony is eyeing future ventures involving Avmin's nickel and platinum assets.
"Ultimately Harmony will probably create a precious metals company with gold, and platinum," said an industry source. It was likely that nickel, might be added to the mix.
The new Harmony partners, addressing comments that they had overpaid for Avmin, said there was value in the company that had to be "unlocked".
"In the future you will realise that the Avmin deal is a very significant deal in the long-term," said Motsepe.
Avmin has a 75% stake in the Nkomati Nickel mine, and as well as gold interests it had a 41,3% stake in the Two Rivers Platinum project.
Motsepe, who will be nonexecutive chairman of the new company, said a listing of Arm Platinum was "still a possibility". ARM Platinum's platinum assets include the Madikwa Platinum joint venture with Anglo Platinum. African Rainbow Minerals Holdings owns the assets of ARM Platinum, and is a major shareholder in ARMgold.
He said that Arm Platinum would need to gain critical mass before it could seriously consider such an option. The future of the platinum assets would be closely linked to the development of the new Harmony, said Motsepe.
Avmin chairman Rick Menell said that his group would work with the new shareholders to optimise operations and generate new investment opportunities.
