By GYNNIE KERO
HARMONY Gold will have full control over the Hidden Valley mine in Morobe after Australian miner Newcrest agreed to sell its 50 per cent stake in the project.
Newcrest in a statement yesterday said it was selling its share in the 50/50 Hidden Valley joint venture to its South African (Harmony) partner.
Harmony will now assume all liabilities and expenses related to the joint venture and mine, including rehabilitation costs and remediation obligations with effect from August 31 this year.
As a result of the exit, Newcrest would recognise a loss on the sale of around US$10 million (K31.2m).
“Consistent with our values, we have funded the PNG subsidiary company that owned Newcrest’s 50 percent interest in Hidden Valley to the amount of US$22.5 million (K70.2 million), as our one-off contribution to Hidden Valley’s future closure liabilities, partially offset by the option value of possible future cash flows of the asset,” it said.
Newcrest has signed a separate agreement to sell its 50 per cent interest in three exploration tenements near the Hidden Valley mine to Harmony.
As a result of the Hidden Valley sale, Newcrest has reduced its 2017 financial year group production guidance from between 2.4 and 2.65 million ounces of gold, to between 2.35 and 2.6 million ounces.
Newcrest managing director and chief executive officer Sandeep Biswas said: “Having completed the strategic review of Hidden Valley, Newcrest was determined that the best outcome was to exit the operation and focus our attention on safe, profitable growth at our other assets.
“We look forward to continuing to work with Harmony on the Wafi-Golpu project.”
Harmony Gold chief executive officer Peter Steenkamp said: “Our acquisition of the Hidden Valley mine is aligned with our overall aspiration to increase our annual production profile to 1.5 millions of ounces within three years.
“We believe that Hidden Valley has the potential to contribute about 180,000oz gold per annum to Harmony’s production profile at an all-in sustaining cost of less than US$950 (K2963) per ounce in the next three years.”
By GYNNIE KERO