Wafi-Golpu a ‘game-changer’ for growing South Africa miner

Wafi-Golpu a ‘game-changer’ for growing South Africa miner

South Africa-based Harmony Gold Mining says Wafi-Golpu is a “potential game-changer” but stressed capital would only be spent once a special mining lease was granted for the US$2.8 billion project in Papua New Guinea.

Harmony recently said it was keen to restart negotiations for an SML with the PNG government, which had refused to renew Barrick Nuigini’s SML in April for the Porgera gold mine, Barrick’s joint venture operation with Zijin Mining, the Enga provincial government and landowners.

Harmony also has the Hidden Valley mine in PNG, where a proposed extension is part of the company’s growth plans.

In an investor presentation last week, Harmony reiterated the permitting process was underway for Wafi-Golpu, its 50:50 joint venture with ASX-listed Newcrest Mining.

The partners are waiting on a decision regarding the environmental impact assessment, submitted in 2018, which proposes deep sea tailings placement.

Harmony said the mine was expected to achieve steady state production of more than 1.4 million ounces gold-equivalent per year and generate $9 billion in free cashflow in the first 10 years after reaching commercial production, assuming a $1,200/oz gold price and $3/lb copper price.

Wafi-Golpu would be in the lowest decile cost quartile copper production, Harmony said, or negative all-in sustaining cost of $2,128/oz in gold production terms.

Harmony recently acquired AngloGold Ashanti’s assets in South Africa and said it expected to become a plus-1.6Moz producer in FY21.

The addition of AngloGold’s Mponeng, the world’s deepest gold mine, and Mine Waste Solutions was expected to add more than 350,000oz per year.

Harmony’s current FY21 guidance is for 1.26-1.3Moz at an AISC of R690,000-710,000/kg.

It plans to provide a further update in February.

Van Eck holdings

Separately, Harmony advised Van Eck Associate Corporation had acquired an interest in shares to take its stake to 10.02% of the company’s total issued shares.

Harmony shares (JSE: HAR) are about double a 52-week low but around half the R126.76 peak reached in August.

They closed up 0.045% on Friday to R66.21, to capitalise it at R39.98 billion (US$2.6 billion).

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