Answer to Harmony Gold’s growth ambitions may still be best found on its doorstep


HARMONY Gold’s declaration that it would re-tool its African growth strategy seems interestingly timed as executives throughout the industry have adopted a position of ‘watchful, but doubtful’ over merger and acquisition activity. That’s because the current price of gold means this might be the top of the market, making potential targets very expensive to buy.

That would ruin Harmony’s recent track record. Its purchase of Mponeng and Mine Waste Solutions from AngloGold Ashanti for a total cash and revenue share of $470m was equal to $83 per equivalent gold ounce reserve. This compares to $98 per oz reserve paid by Newmont Mining, a US company, for Goldcorp and $277/oz paid by Chinese firm, Zijn for Continental Gold.

According to a report by McKinsey & Co, a consultancy, top amongst the CEO in-tray in the gold sector is ‘innovations in organic growth exploration’ above the imperative of ‘inorganic growth acquisitions’.

The report recommends the use of “advanced analytics to assess a wide range of data sources, including drill logs, geological models and unstructured map analysis’.

That sounds very much like consultancy-speak, but the benefit of looking closer to home in a brownfields expansion won’t be lost on Harmony which has ample gold resources on its doorstep. South Africa has significant gold, at a very deep level, that could be nonetheless incentivised by the gold price.

According to Harmony’s latest reserve and resource statement, it has 22.2 million oz in measured resource demonstrating a high level of economic confidence compared to the 18.5 million oz in ‘total’ mineral resources in its Papua New Guinea portfolio which includes the categories of indicated and inferred mineral resources about which there is less economic confidence.


  1. Mckinsey – experienced geologists laugh at this approach – “advanced analytics to assess a wide range of data sources, including drill logs, geological models and unstructured map analysis’.

    No AI, advanced analytics, machine learning will never replace geologists with years of looking rocks, acquiring data, going through the analytical and interpretation process to develop geological models.

    Regrettably the younger geologists eschew experience gained in the field / mines. It is much easier to work on computers.

  2. Great to see Steenkamp playing from the front foot.
    The problem with Wafi-Golpu is that it’s a binary decision that’s way too big for a company of Harmony’s size.
    The proposed Africa strategy is a great concept from a risk management perspective, as it provides a more managable bite-sized growth plan.

    With Unisel, Masimong and Bambanani closing down over the next few years, these African acquisitions will diversify economic and geographical risk, while retaining critical mass at group level.

    These surface assets will also increase the percentage of surface production in the group.


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