Patrice Motsepe’s ARM hedges part of $1.1 billion Harmony Gold stake

Key Points

• African Rainbow Minerals hedged 18 million Harmony Gold shares to raise cash while maintaining exposure to future stock gains.
• The collar hedge locks in gains while preserving upside, allowing ARM to raise funds without selling shares in Harmony Gold.
• As platinum prices fall, ARM benefits from Harmony’s 66% stock rally, driven by gold’s rise and strong asset growth under new CEO Beyers Nel.

African Rainbow Minerals (ARM), the diversified mining company chaired by South African billionaire Patrice Motsepe, has hedged nearly a quarter of its $1.1 billion stake (approximately 24 percent) in Harmony Gold to free up cash and keep options open for possible acquisitions.

Although ARM remains a committed long-term investor in Harmony Gold, now under the leadership of new CEO Beyers Nel, the company has taken steps to improve liquidity. It has hedged 18 million Harmony shares, which account for 2.84 percent of the gold miner’s issued capital and about 24 percent of ARM’s total interest in the firm.

ARM hedges Harmony stake for liquidity

The hedge, structured as a collar, involves buying European put options with a strike price of R234.85 per share (valued at R4.2 billion or $235.2 million) and selling call options at R562.40 per share (worth R10 billion or $560 million). This strategy gives ARM access to funding while still benefiting from future gains in Harmony’s share price, up to the call option level.

ARM’s decision comes at a time when it’s facing growing pressure from lower platinum group metal (PGM) prices. Harmony Gold, the country’s largest gold producer, has seen its stock climb more than 66 percent since January, driven by a surge in gold prices. The World Bank expects gold to stay above $3,000 an ounce through at least 2026.

Harmony, which operates across South Africa, Papua New Guinea, and Australia, reported a 15.2 percent jump in total assets to R68.9 billion ($3.76 billion) at the end of 2024. Its market cap stands at R169.3 billion ($9.48 billion), with ARM’s stake now valued at nearly R20 billion ($1.12 billion).

Cash without compromise for ARM

South African billionaire, Patrice Motsepe, who played a central role in Harmony’s 2003 merger with Avmin, holds an indirect 11.8 percent stake in the company through ARM. His longstanding connection to the gold miner continues to shape ARM’s portfolio strategy.

Earlier this year, during ARM’s interim results in March, Motsepe said “all options are on the table” regarding the Harmony stake. While no shares are being sold yet, the hedge allows ARM to lock in gains and raise cash without giving up its position. With the stake representing close to half of ARM’s market capitalization, the move signals a deliberate effort to extract value and possibly prepare for new deals.