HARMONY Gold today announced terms of a $500m convertible bond amid a major increase in capital expenditure during its 2027 financial year.
The gold miner has targeted expenditure on capital projects of R28bn of which about half is on its Australian copper portfolio: the brownfields CSA mine ramp-up, and Eva – a greenfields copper project in Queensland. This compares to group capex of R17.1bn in the 2026 financial year ended June.
The bond, which falls due in 2031, was priced at a 1.5% interest rate. “It enhances funding efficiency, diversifies our capital sources and optimises our funding profile,” said Beyers Nel, CEO of Harmony, in a statement.
In the event the bond is converted, it would result in the issue of about 19.4 million new shares, equal to 3% of total shares in issue. However, conversion only becomes attractive above R418.60/share or a 40% premium. Harmony can use cash settlement to further reduce dilution, it said.
“While convertibles can be complex, the five-year term gives Harmony sufficient time to generate cash to settle the bonds, while potential dilution is limited,” said Arnold van Graan, an analyst for Nedbank Securities. “We see the proactive balance sheet management as positive,” he said.
As at end-June, Harmony had liquidity of R17.1bn, or about $1bn. Net debt totalled R852m at the close of the year. It generated a 54% increase in adjusted free cash flow generation to a record R17bn.
Harmony is set to become a 100,000-tonne-a-year copper producer in the next three to five years thanks to Eva and CSA, but it comes at a hefty upfront cost. The CSA recap will cost R3.2bn over two years following its $1.04bn acquisition in 2025.
But it’s Eva where major capital falls due in Harmony’s international portfolio. Between $650m and $680m has been planned in capex this year out of a total outlay of $1.55bn to $1.75bn to first copper production at the end of the 2028 calendar year.
There is a risk of Eva’s capital cost increasing owing to a stoppage on part of the project after Harmony detected an endangered species of skink on the site, although Nel said at the firm’s 2026 results presentation that guidance was being maintained at present. “Where we sit today, we’ve got no reason to believe that we cannot attain our capital guidance that we originally guided,” he said.
“We’re not at a stage where we’re thinking of delays that would impact costs and schedule. We’re fairly comfortable,” he added.
Harmony is also spending big on its South African assets. Over their life of mine, the group’s Mponeng, Moab Khotsong, Tshepong North and Doornkop mines will absorb a total of R19.5bn in capex.
