[miningmx.com] – IN A throwback to the Nineties when ‘synergies’ between neighbouring gold mines started to gain popularity, Sibanye Gold and Harmony Gold have agreed to swap and sell each other mineral rights in the Free State province.
In a transaction announced today, Sibanye Gold said it would swap two mining right portions at Beatrix which had not been included in the mine’s resource plan for two mining right portions at Harmony’s Joel shaft. Sibanye Gold said it could access Joel’s gold resources from the north and south sides of Beatrix.
Additionally, there’s an agreement in which Sibanye Gold will sell two mining right portions at Beatrix to Harmony for a 3% royalty net of revenue derived from underground mining from these portions.
Said Sibanye Gold CEO, Neal Froneman: “Much has been said in the past about the
potential to unlock value in the South African gold industry by breaking down the farm fences and I believe that there remains significant potential to create meaningful value”.
Harmony Gold CEO, Graham Briggs, said the swap of these minerals had been under discussion “over the last couple of years”. He added that the areas that Joel would relinquish were difficult to access and were uneconomical, while the portions that Joel would acquire were accessible and would increase the current life of mine.
The only condition left to fulfil before the swap became final is approval from the Department of Mineral Resources. “These approvals are expected to be obtained before the end of June 2014,” he said.
He declined to ascribe hard numbers to the value of the swap saying: “The areas in deal still need to be developed before we get an understanding of how much gold is in there and what it might mean to the companies”.
“The ounces balance each other, they are one for one. They weren’t mined in the history of Joel so there is not a good determination of value,” he said. “Those areas are in the inferred resource category.”
Breaking down farm boundaries gained currency in the late Nineties when it became apparent that the South African gold industry would have to work harder to win its margins, even if it were through cooperation with rivals.
Some of that cooperation appears to have returned to the sector, once again in the teeth of difficult economic conditions that have seen gold mining firms slash costs and capital expenditure, slim down corporate overheads and even sacrifice executive remuneration and emoluments.
“There is greater cooperation among the gold producers,” said James Wellsted, head of corporate affairs for Sibanye Gold when asked on the prospect of his company involving itself in more cross-boundary deals.
“We saw the cooperation in dealing with the wage negotiations and strikes recently and this is another example. There is much more dialogue than in the past,” he said.
