Harmony’s $1.6b bid for NSW copper mine

South African mining company Harmony Gold has entered a binding agreement to acquire MAC Copper (ASX: MAC) in hopes of adding the CSA copper mine to its portfolio.

MAC shareholders, under the terms of the scheme, will receive $19 (US$12.25) per MAC share.

MAC acquired the high-grade CSA site from Glencore in 2023 for $1.2b and 20.6% of ordinary shares in MAC, a deal with a value totalled at $1.7b.

“The acquisition of the CSA copper mine in Australia is significant as it introduces a high-quality, established underground producing copper asset to the Harmony portfolio,” says Harmony chief executive Beyers Nel.

“CSA is one of the highest-grade copper mines in Australia, producing 41kt of copper in CY24.”

MAC’s chief executive Mick McMullen says that the board has unanimously recommended shareholders vote in favour of the scheme, subject to the absence of a superior proposal, providing shareholders a high degree of transaction certainty.

“MAC has recently updated the market with several developments including our larger reserve life, production guidance, the new Merrin Mine development and the recent debt refinancing which we feel has enabled the market to remain fully informed,” he said.

“The board believes the transaction provides MAC shareholders with a compelling opportunity to de-risk their investment and realise an attractive cash value of US$12.25 [$19] per MAC share, which is also a premium to MAC’s recent historical trading levels.”

Harmony is a gold mining specialist with a growing international copper footprint and aims to de-risk itself through diversification by acquiring the premium, established copper asset in a tier 1 jurisdiction.

“The operation is a logical fit with the portfolio given it meets Harmony’s core investment criteria, including increasing free cash flow generation while improving margins at long-term expected commodity prices,” Mr McMullen said.

“We believe that Harmony is well positioned to leverage its expertise in underground mining to further enhance operations.

“Furthermore, the transaction represents a significant step forward in transforming Harmony into an increasingly de-risked, higher-quality, global gold and copper producer through disciplined and effective capital allocation.”

Harmony currently owns the Eva copper mine project in Queensland, acquired in 2022, and continues to expand its portfolio.