South African gold miner Harmony Gold Mining Company (NAR) said on Wednesday it is considering an equity offering of approximately eight million new shares (4,6% of the issued share capital) to institutional investors in South Africa and internationally.
Harmony said in a statement that the proceeds would be used for general corporate purposes, to build up sufficient funds for its growth strategy in South Africa and internationally and to fund capital projects in South Africa including the Doornkop South Reef Project.
JP Morgan Securities is the lead manager of the placing.
Last week Harmony sold a 26% stake in the Doornkop South Reef project at its Randfontein Operations in Gauteng to black empowerment company Africa Vanguard Resources for R250-million.
AVR paid R140-million in cash with the remaining R110-million being funded with call options to Harmony on 290 000 troy ounces of its production from the project.
The project is expected to create 2 798 jobs, result in capital expenditure of R1,27-billion and have a 20-year life with maximum of 330 000 oz per annum for a period of 12 years.
It is estimated that the South Reef Project has an in-situ resource of 20,1 million tons for a gold content of 6,6 million ounces.
For project purposes, it is estimated that 117 tons or 3,75 million oz of gold will be recovered at a recovery grade of 6,4 g/t.
A joint venture between Harmony and AVR has been established to manage the project.
A feasibility study, to take the project to a definitive level was completed in August 2002. – I-Net Bridge