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Harmony seeks new buyer for Mt Magnet mine
Allan Seccombe
Posted: Fri, 01 Aug 2008
[miningmx.com] -- HARMONY Gold has put its mothballed Mt Magnet mine back up for sale after a A$65m deal with Australian junior Monarch Gold collapsed after that company found itself in financial difficulties and placed itself under voluntary administration.
“The Administrator has indicated that Monarch will not proceed with the proposed purchase and consequently the purchase agreement has been terminated,” Harmony said.
Harmony must refund half of the A$5m deposit Monarch paid when negotiating the transaction.
Monarch said it had officially taken over operations at Mt Magnet in April this year in line with the agreement with Harmony struck in November 2007.
Monarch’s shares were suspended on the Australian bourse on 18 June 2008 at the request of the company, and on 10 July it told its shareholders it had appointed Pitcher Partners as the voluntary
administrator. Its share price had virtually collapsed.
Monarch owes its creditors about A$40m and it is unclear if there would be funds available to shareholders even if the administrator can sell the Davyhurst and Mount Ida assets, the Sydney Morning Herald reported on Friday.
The cash would have been a welcome addition for Harmony, which brought in Newcrest as its partner on its Papua New
Guinea projects because it did not have the money or level of expertise to bring the copper porphyry deposits to account.
Harmony has also sold its uranium-rich surface tailings into a company called Rand Uranium in which it holds a 40% stake to raise capital for its growth projects and towards paying a R2bn bond.
Harmony has put up for sale again the Mt Magnet operation, which has a 2.7 million oz resource and a 2.7 million tonne processing plant as well as tenements covering 62,000 hectares and 166 exploration licence blocks.
Harmony has to pay an annual minimum tenement expenditure including rents and rates of A$5m.
“Harmony has resumed management of the operation and has re-commenced the sale process,” the South African miner said.
Monarch had modelled the ore body at A$1,000/oz, showing positive cash flows of A$111.8m. It also did a study on re-opening the Hill 50 underground mine, which at A$957/oz made it feasible to re-open the
mine.
The spot price is around $904/oz.
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