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Harmony officially signs deal with Pamodzi Gold

Harmony Gold Mining Company Limited (Harmony) announces that it has officially signed formal agreements with Pamodzi Gold Limited (Pamodzi Gold) for the sale to all rights, title and interest of Orkney shafts located near Orkney in the North West province.

Pamodzi Gold has engaged Harmony in order to take management control of the Orkney operations under a contracting agreement by the 1 October prior to the all conditions precedent being met. Harmony has agreed in principle to this arrangement and both parties envisage signing a formal agreement within the next three weeks.

The initial purchase consideration payable to Harmony by Pamodzi Gold for the Orkney shafts is equal to R550 million, and a secondary consideration is calculated as follows: –

  • 3% of the net smelter revenues in respect of the first one million ounces of gold produced by Orkney after the effective date of the transaction; and
  • 1.75% of the net smelter revenue in respect of all gold produced by the Orkney thereafter subject to an maximum aggregate amount of R450 million.

The initial Orkney purchase consideration will be settled by Pamodzi Gold through:

  • the payment of a cash amount of R350 million; and
  • the issue of 9,272,903 ordinary consideration shares to Harmony.

The number of Pamodzi Gold ordinary shares to be issued to Harmony has been calculated based on the 30 day VWAP of the Pamodzi Gold ordinary share price on the JSE up to the business day immediately preceding the date upon which the detailed cautionary was announced, being 24 April 2007, which VWAP is equal to R21.57.

The transaction is subject to, amongst others, the following conditions precedent:

  • the shareholders of Pamodzi Gold passing all resolutions necessary in order to approve and implement the Orkney transaction;
  • Harmony converting its Old Order Mining Right to a New Order Mining Right in terms of Item 7 of Schedule 2 of the MPDRA;
  • the Minister of Minerals and Energy consenting to the transfer of the New Order Mining Right to Pamodzi Gold in terms of section 11 of the MPRDA; and
  • Pamodzi Gold obtaining funding for payment of the initial Orkney purchase consideration.

Graham Briggs, acting Chief Executive says, “The official signing of the agreement highlights the willingness of both parties to meet the conditions precedent in order to successfully conclude the transaction by October 2007.”

Graham Briggs
Acting Chief Executive
+27(0)83 265 0274

Amelia Soares
General Manager, Investor Relations
Tel. + 27 11 684 0146
+27(0)82 654 9241

Lizelle du Toit
Investor Relations Officer
+27(0)82 465 1244

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