Harmony Gold repays further $100m on Moab deal bridge loan

HARMONY Gold said it had repaid a further $100m of the original $200m bridge loan raised for its purchase of Moab Khotsong from AngloGold Ashanti.

The South African gold producer said in October it would buy Moab Khotsong for $300m, a transaction that would increase its production by 250,000 ounces a year, a 25% lift, and grow gold resources 38% to some 17.5 million oz.

“Harmony believes in having a robust and flexible balance sheet that supports its growth ambitions. We have used the proceeds from the over-subscribed share placement on June 6 to repay $100m of the bridge facility,” said Peter Steenkamp, CEO of Harmony Gold.

Steenkamp said production at Moab Khotsong in the past three-and-a-half months supported the company’s view of the mine’s quality and that it would “… strengthen Harmony’s cash flow further”.

The remaining outstanding balance of $50m on the bridge loan was expected to be repaid from operating cash flows as well as the proceeds from the share placement to African Rainbow Minerals (ARM), its 14.29% shareholder.

Harmony said on June 6 it had raised R1.05bn after issuing just over 55 million new shares – about 15% of the company’s issued share capital. The shares were issued at R19.12 each representing an 11.5% discount to the firm’s price on June 5 and a 10% discount to the three-day volume weighted average price. ARM subscribed for 11 million shares in the issue in order to preserve its stake in the company.