Diversified mining group African Rainbow Minerals (ARM) is confident that gold-miner Harmony Gold, in which it has a 16,2% stake, will take control of Gold Fields, ARM executive chairperson Patrice Motsepe — who is also chairperson of Harmony — said on Tuesday.
ARM continues to support the bid as it has been presented, he added.
The offer by Harmony to Gold Fields shareholders is “extremely generous”, Motsepe stated. Harmony is currently offering Gold Fields shareholders 1,275 Harmony shares for every Gold Fields security held.
A key factor for ARM is the degree to which there could be a significant cut in costs, once a merger between Gold Fields and Harmony takes place, Motsepe added.
ARM CEO Andre Wilkens said the group remains optimistic about the medium-term outlook for commodity prices.
The strong expected increase in the iron-ore price is also likely to boost ARM’s iron-ore expansion plans, he added.
There has been excellent progress to resolve the increase in rail and port capacity with transport parastal Transnet, Wilkens said.
ARM is willing to contribute funding towards upgrading the port and rail infrastructure, ARM executive Jan Steenkamp said.
Resolution is likely within three months, with an announcement from Transnet possible, he added.
At the 50:50 Modikwa joint venture with Anglo American Platinum, ARM isn’t happy with the performance of the joint venture, Wilkens said.
“We are confident of full capacity [at Modikwa] by the end of 2005,” he added.
ARM’s capital expenditure for the second half of its 2005 financial year to June is likely to be double the R286-million spent in the first half of the year, Steenkamp stated.
BHP Billiton is currently in the process of selling its 60% stake in Samancor Chrome. Motsepe wouldn’t comment whether ARM is one of the companies bidding for the stake.
The Two Rivers platinum project in which ARM has a 55% stake and Impala Platinum (Implats) a 45% stake could see total expenditure of R1,2-billion, made up of R600-million in debt, with ARM contributing R350-million in cash and Implats contributing R250-million in cash.
The planned full production from Two Rivers is expected to be 230Â 000 platinum-group metal ounces (oz) of which 120Â 000 oz will be platinum.
It is likely to take 20 to 22 months from the time the mine starts to first metal, Wilkens said. — I-Net Bridge