Harmony Gold takeover target

Business, Main Stories
Source:

The National – Monday, March 28, 2011

SOUTH African gold-miner Harmony Gold may become a takeover target on the back of the outstanding exploration results seen at the Wafi-Golpu deposit in Wau-Bulolo in Morobe, according to the miningweekly.com.
The Royal Bank of Canada’s (RBC) capital markets analysts Leon Esterhuizen and Arnold van Graan last Thursday said the PNG assets could add up to US$2 billion to the value of Harmony, which was some 40% of the current market cap of the company.
Shares in the Johannesburg stock exchange-listed gold miner surged nearly 12% to R98.40 (US$14.36) a share after the RBC takeover comment.
Harmony corporate and investor relations executive Marian van der Walt told Mining Weekly Online the company would not comment on speculation, but added that there was no corporate action that it was aware of.
Esterhuizen and van Graan said that gold major Gold Fields  could be looking at a strategy of making a bid for Harmony with the aim of stripping out the PNG assets and relisting the rump as a separate vehicle.
Gold Fields, AngloGold Ashanti and Newcrest, who owns and operates 50% of the Hidden Valley Mine with Harmony, were cited as possible buyers.
“In a couple of months, Harmony is poised to start delivering on a significant promise.
“We believe this is its most vulnerable moment and potential bidders know this.
“As a result, we recommend buying the story now – delivery also appears to have much better potential to succeed now,” the report stated.
The report pointed out that both Harmony and Gold Fields had for some time been bandying about the idea of assets potentially being listed separately and Harmony even acknowledged that it was actively pursuing the idea of listing Evander as a separate business, but opted against it.
At the same time, Gold Fields’ exposure to the Free State gold field was limited to one mine, surrounded by Harmony property.
The report pointed out that SA companies were trying to expand offshore, as it offered many opportunities to build lower cost mines, and to “escape” the political risk discount associated with operating in South Africa.