JOHANNESBURG (miningweekly.com) – Diversified mining company African Rainbow Minerals Limited (ARM), an associate of Dr Patrice Motsepe, has entered into a hedging collar transaction over 18-million ordinary shares of ARM's equity in Harmony Gold Mining Company, representing 24% of its equity in Harmony.

It was announced by ARM on the Stock Exchange News Services (SENS) of the Johannesburg Stock Exchange on June 11 that this hedging collar transaction and related arrangements provide ARM with access to funding in the future on efficient terms, if and when required, for its own strategic objectives.

Simultaneously, ARM, which is chaired by Motsepe, is allowed to retain further upside exposure to the Harmony share price, up to the call option strike price. 

ARM retains full exposure to the residual Harmony shares held by it that are not subject to the hedging collar.

The key terms of transaction one were the purchase of European put options with a strike price of R234.85 a share, at a notional value of R4 227 291 000.

The second transaction involved the sale of European call option with a strike price of R562.40 a share, at a notional value of R10 123 200 000.

The terms and conditions of the collar were described in the SENS announcement as being “customary for a transaction of this nature”.

ARM, which mines and beneficiates iron-ore, manganese ore, chrome ore, platinum group metals, nickel and coal, has a strategic investment in gold through Harmony, which Motsepe also chairs.

The announcement stated that ARM remained fully committed to Harmony as a strategic investment and remained confident in Harmony and its management’s ability to drive growth and value for its shareholders.