South Africa’s Harmony Gold has struck a US$1.03 billion deal to acquire MAC Copper (ASX: MAC) and its sole strategic asset: the CSA copper mine in New South Wales.
The CSA mine is one of Australia’s oldest and highest-grade copper operations, with a 150-year history and tunnels plunging nearly 2km beneath the surface, making it among the deepest underground mines in the country.
Harmony’s bet is that history still has legs - and a high-margin future - even though it was passed up by Glencore and has had little extra development under MAC's stewardship.
The all-cash deal at $12.25 per share represents a 20.7% premium to MAC’s last close on the NYSE, sending MAC shares surging 17% to $11.90 in pre-market trading after its board gave the deal the go ahead.
For Harmony, the transaction is more than a mine buy. It’s a repositioning, and the move adds to its 2022 entry into Australia when it bought the Eva copper project in Queensland.
The Johannesburg-based miner - long synonymous with gold production and still South Africa's top producer by volume - is accelerating its diversification into copper just as the red metal comes into vogue for the global electrification push.
Cobar refresh
With the five existing mills still running below capacity Cobar is ripe for investment in new resources.
The latent capacity at the CSA mine puts a premium on any discoveries made by nearby explorers.
Global mining major and previous owner Glencore had deemed it not an accretive value as it had eyes elsewhere, thus was unmotivated to expand in Cobar to keep the mill full - eventually selling it off to MAC Copper (Metals Acquisition at the time) for US$1.1 billion in 2023.
But MAC had stalled at undertaking any M&A in the region to fill the mills. Perhaps Harmony sees near-term value in expanding CSA.
Harmony aims to churn out 100,000t of copper concentrate per annum from CSA and Eva together within the next five years.
Explorers in the area that could benefit include Peel Mining’s (ASX:PEX) Wagga Tank and Mallee Bull polymetallic deposits and Australian Gold and Copper’s (ASX:AGC) with its Achilles discovery.
