JOHANNESBURG, May 27 (Reuters) - Harmony Gold,

South Africa's top gold producer by volume, has agreed to buy

Australian miner Mac Copper Ltd ( MTAL ) in a deal worth $1.03

billion as it steps up a diversification into copper.

Johannesburg-based Harmony said it is offering $12.25 per

Mac Copper ( MTAL ) share in the cash deal, a 20.7% premium to the

stock's closing price in New York on Friday. Mac Copper ( MTAL ) said in

a statement that its board unanimously backs the offer.

The Australian company's CSA Copper mine, situated in New

South Wales, produced 41,000 metric tons of the metal last year

and Harmony said that buying a producing mine brings immediate

cash returns.

The acquisition will be financed with internal cash reserves

and a $1.25 billion loan facility, Harmony said.

Harmony's shares fell 6.3% in early morning trade in

Johannesburg.

It is Harmony's second acquisition of copper assets in

Australia after it bought the Eva Copper project in Queensland,

in 2022, a mine that could produce 55,000-60,000 metric tons of

metal a year from 2029.

Harmony has also explored over the years options to develop

Wafi-Golpu, a gold-copper project in Papua New Guinea it jointly

owns with Newmont Corp.

South African mining companies including Gold Fields are

increasingly looking elsewhere for assets as domestic operations

become more costly due to the geological challenges presented by

some of the world's deepest gold mines.

Harmony said it will build on its experience in underground

mining in South Africa to boost Mac Copper's ( MTAL ) CSA mine.

The deal is a significant step toward Harmony growing into a

global gold and copper producer, CEO Beyers Nel said.