AFRICAN Rainbow Minerals has hedged 24% of its stake in Harmony Gold to improve liquidity and position itself for potential acquisitions, according to BusinessLive.
The collar transaction covers 18m shares in Harmony, representing 2.84% of the gold miner’s issued capital. ARM owns about 12% of Harmony, which is worth R163bn on the JSE compared to ARM’s R38.5bn market capitalisation.
Both companies are chaired by Patrice Motsepe. The hedging arrangement includes purchasing European put options with a strike price of R234.85 per share, valued at R4.2bn, and selling call options at R562.40 per share worth R10bn.
“The collar provides ARM with access to funding for strategic objectives while allowing retention of upside exposure to Harmony’s share price up to the call option strike,” ARM said.
The move capitalises on record gold prices, with Harmony shares surging nearly 70% since January. The World Bank expects gold to remain above $3,000 well into 2026.
Robbie Proctor at Anchor Capital said ARM was leveraging record gold prices and its close ties to Harmony. “ARM’s stake in Harmony represents close to half their market cap. It’s opportunistic to lock in gains without selling shares while retaining upside. It does raise prospects of M&A,” he said.
The collar structure matures in June 2030. ARM mines iron ore, manganese, chrome, platinum group metals, nickel and coal, whilst gaining gold exposure through Harmony.
Harmony confirmed ARM remains committed as a strategic investor under new CEO Beyers Nel.
