Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: Alex who wrote (71379)	6/9/2001 12:15:39 PM
From: long-gone	Read Replies (1) \| Respond to of 116768

<<R800 million, as well as the possible sale of its Kalgold platinum prospect. The financial restructuring is aimed at enabling Harmony to fund transactions without resorting to hedging. So Cool!

To: Alex who wrote (71379)	6/9/2001 2:39:15 PM
From: baystock	Read Replies (1) \| Respond to of 116768

m1.mny.co.za JP Morgan was the banker that administered Harmony's $150 million (R1.2 billion) five-year, unsecured corporate bond announced yesterday (6 June). The bond, which was 1.2 times oversubscribed, requires the company to issue twice-yearly interest payments of 6.5 per cent per coupon to holders. The cost to the company is estimated at about 13.4 per cent. The major benefit of the mechanism is that the revenue insurance of hedging is not required and Harmony is less exposed to the fluctuations in the dollar-rand exchange rate. But the major risk is that the corporate bond could look expensive in a couple of years' time if government's inflation targets are realised and the interest rate for commercial debt ticks down. At present, the bond looks like an innovative and sexy solution to the problematic issue of funding capital in the depressed gold market. In fact, analysts say commercial debt would cost more than 13 per cent for a company with Harmony's risk profile. "Harmony has raised the awareness of corporate bonds and it's possible you'll get other producers looking at this, particularly smaller companies with less access to commercial debt facilities," a South African gold analyst says. In the meantime, Harmony is in pre-marketing mode ahead of a book-building exercise aimed at raising about $100 million. Commercial director Ferdi Dippenaar says the schedule is busy and comes amid high volatility in the share price – a factor he says is favourable. "The latest gold spike (in which Harmony's share price tested new all-time highs) has shown that there was a huge shortage of Harmony shares (in a gold price run)," says Dippenaar. About 13 million Harmony Gold ADRS [NASDAQ:HGMCY] traded in May, compared with a monthly average of 5.5 million shares in preceding months. "We believe a bit of a bond exposure and some shares offer the best of both worlds to shareholders," says Dippenaar. But, at the end of the day, it's what Harmony does with its stronger balance sheet that matters - in other words, how much it pays for the AngloGold mines (which we believe is end-game in the fund-raising of the past two months), whether Harmony can economically combine the new production and their existing production, and how the group retires existing unprofitable ounces.