Harmony Gold expands into copper with $230m project buy

The Eva copper project located in north-west Queensland, Australia. (Credit: Copper Mountain Mining.)

South African miner Harmony Gold (JSE: HAR) (NYSE: HMY) is expanding into the copper market with the acquisition of Copper Mountain Mining’s (ASX: C6C) (TSX: CMMC) Eva project in Australia, in a deal worth $230 million.

The company said the project, situated in Queensland, adds 1.72 billion pounds of copper, and 260,000 ounces of gold to its mineral reserves.

Until now, the company’s only exposure to copper, which is critical to the global energy transition, was through its stake in the Wafi-Golpu joint venture with Newcrest in Papua New Guinea, where the partners have been waiting for a special mining lease (SML) from the government for more than three years.

The acquisition also opens up a new revenue stream for Harmony as prices and demand for copper remain strong based on an expected supply deficit of the metal in the medium-to long-term.

The Eva open pit copper mine is expected to yield 100 million pounds of copper a year and 14,000 ounces of gold annually over an expected mine life of 15 years.

Getting the project off the ground, according to Copper Mountain, will require a $597 million investment, which Harmony plans to fund with existing cash and available debt facilities.

“Acquiring Eva Copper is strategically important to our growth journey. It opens a new copper/gold frontier for Harmony within a highly attractive Australian mining area,” Harmony CEO Peter Steenkamp in the statement. 

Harmony Gold became South Africa’s biggest gold producer last year after completing the acquisition of the remaining domestic assets of local rival AngloGold Ashanti (JSE: ANG) (ASX: AGG) (NYSE: AU).

The company expects to close the deal with Copper Mountain in the first quarter of 2023.

Copper Mountain’s flagship asset is the 75% owned Copper Mountain mine located in southern British Columbia, Canada, near the town of Princeton.

Analysts at Haywood were not too supportive of the deal, saying Mountain Copper was playing it safe, but losing upside.

“The sale of the Eva project strengthens the company’s balance sheet and reduces risk, which is understandable in this market environment,” Haywood said. “But CMMC remains a one-mine producer with more modest growth and foregoes attractive upside beyond the Copper Mountain mine.”