Harmony Gold to acquire MAC Copper in $1B Australian expansion

Harmony Gold (JSE: HAR) (NYSE: HMY), South Africa’s top gold producer by volume, has agreed to acquire MAC Copper (ASX:MAC)(NYSE:MTAL) for $1.03 billion, accelerating its strategic shift into copper through a key Australian asset.

The all-cash deal would give Harmony full ownership of MAC’s only asset, the CSA copper mine in central western New South Wales. CSA is among Australia’s highest-grade and oldest operating copper mines, with a history stretching back nearly 150 years. At 1.9 km, it is also one of the country’s deepest underground operations.

Harmony is offering $12.25 per MAC Copper share, representing a 20.7% premium to the company’s last closing price in New York. MAC shares jumped 17% to $11.90 in premarket trading Tuesday after the company announced its board unanimously supports the offer. MAC’s current market capitalisation stands at approximately $847 million.

Harmony shares initially dropped as much as 7.5% in Johannesburg before recovering slightly. In premarket trading on the NYSE, the stock was down nearly 10.5% to $14.22.

Strategic shift

Harmony, like industry peers Newmont (NYSE: NEM) and Barrick Gold (TSX: ABX) (NYSE: B), is diversifying into copper – a metal critical to electric vehicles and power grid infrastructure. 

MAC’s acquisition is 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,” chief executive officer Beyers Nel said in the statement.

The deal expands Harmony’s copper footprint in Australia, where it entered in 2022 with the Eva copper project in Queensland. The Johannesburg-based miner expects to begin production at Eva by 2028. With CSA and Eva combined, Harmony aims to produce 100,000 tonnes of copper annually within five years. Last year, CSA alone produced about 41,000 tonnes.

Outside Australia, Harmony also owns the Hidden Valley gold mine and jointly holds the Wafi-Golpu copper-gold project with Newmont (NYSE: NEM)(TSX: NGT) in Papua New Guinea. The company is increasingly steering away from gold-only operations as mining the metal becomes more complex and costly in South Africa.