AngloGold Ashanti (AU, Financial) informed shareholders of the sale of two of its South African assets – the Moab Khotsong mine and the Kopanang mine – through two news releases published on its website Oct. 19.
With the divestiture of these two producing assets in South Africa, AngloGold will raise about $307 million.
In South Africa, AngloGold will still operate the Mponeng and TauTona mines, the so-called “West Wits operations,” and extract gold through some surface mining techniques in the area of the Vaal River and in the southwest area of Johannesburg.
Concerning the Moab Khotsong producing asset, AngloGold has agreed on the basis of a sale and purchase agreement to sell its newest gold mine in South Africa, which is located in the Vaal River region of the South African province of Free State, to Harmony Gold Mining Co. (HMY, Financial). The transaction has been valued at $300 million, to be paid by Harmony Gold Mining in cash.
Srinivasan Venkatakrishnan, AngloGold’s CEO, commented on this transaction: “This transaction is in line with our capital allocation strategy and our aim to effect the improvement of our global portfolio, through projects that extend mine lives, enhance margins and provide quicker cash turns on investment.”
Via the company’s website, Peter Steenkamp, Harmony Gold Mining’s CEO, also commented on this transaction: "Buying Moab Khotsong means we boost our cash flows by more than 60%, increase our average overall underground recovered grade by 12% and grow our South African underground resource base by 38%.”
With the addition of Moab Khotsong to its assets base, Harmony Gold Mining expects to increase its level of annual production of gold to 250,000 ounces. At Moab Khotsong, Harmony Gold Mining says that it expects to produce gold at an all-in sustaining cost (AISC) “below Harmony's target of $950 per ounce.”
Some figures on Moab Khotsong mine
At Moab Khotsong operations started in 2006, and the precious metal is produced through underground mining techniques. In aggregate with the other underground mine, Great Noligwa, which was incorporated into Moab Khotsong in 2015, the combined South African asset produced a total volume of 280,000 ounces of gold in full fiscal 2016. At Moab Khotsong mine the production of gold cost the operator about $884 in AISC per ounce of yellow metal sold in 2016.
The Moab Khotsong-Great Noligwa combined asset holds about 1.7 million of ounces in gold reserves as of Dec. 31, 2016, grading 8.8 grams of gold on average per ton of ore, while resources of gold amount to 17.5 million ounces grading 15.7 grams on average per ton of mineral.
Concerning the Kopanang mine, which is also located in the South African region of the Vaal River, AngloGold has agreed with Heaven”Sent SA Sunshine Investment Co. Ltd. that it will sell the gold and uranium oxide (byproduct) producing asset plus the West Gold Plant and related infrastructures to the Chinese capital management company. The transaction has been valued 100 million rand ($7.38 million) to be paid in cash by Heaven”Sent SA Sunshine Investment Co.
AngloGold is trading at $9.47 per share on the New York Stock Exchange. Shares of the South African mining company closed up 19 cents Thursday or plus 2.05% from the previous trading day with a volume of 3,373,113 shares traded on the U.S. stock market versus an average volume of 2.34 million shares traded over the last 10 trading days and versus an average volume of 3.37 million shares traded over the last three trading months.
AngloGold has a market capitalization of $3.98 billion, a price-book (P/B) ratio of 1.56, a price-sales (P/S) ratio of 0.94 and an EV-EBITDA ratio of 6.09.
The forward price-earnings (P/E) ratio is 24.88.
The gold stock distributes a dividend of 10 cents for a dividend yield of 1.05%.
Harmony Gold is trading at $1.69 per share on the New York Stock Exchange. Shares of its stock closed 7 cents down or minus 3.98% from the previous trading day with a volume of 3,132,836 shares traded on the American stock exchange. The average volume of Harmony Gold’s shares traded over the last 10 trading days was 3.25 million while the average volume of shares traded over the last three months was 3.13 million.
Harmony has a market capitalization of $739.89 million and a P/B ratio of 0.34.
The South African gold mining company distributes a dividend of 7 cents for a dividend yield of 3.71%.
Disclosure: I have no position in any stock mentioned in this article.
