Harmony’s guidance for the quarter and year ended June 2013
- Published on 19 July 2013
- June quarter production up and unit costs down
- Year on year production marginally down, underground grade up
- Write down of portion of carrying value of Hidden Valley as previously announced
Harmony Gold Mining Company Limited (Harmony) advises that gold production for the June 2013 quarter is likely to be 10% to 12% higher than the previous quarter, driven by higher tonnages and higher grades. Largely as a result of this rise in gold production, cash operating costs (R/kg) were 3% to 5% lower quarter on quarter.
Gold production for the 2013 financial year is expected to be 2% to 4% lower than the previous financial year, mainly as a result of labour disruptions at Kusasalethu during the December 2012, March 2013 and June 2013 quarters. Harmony estimates that the labour disruptions at Kusasalethu cost Harmony approximately R1.2 billion. During the June 2013 quarter, all employees at Kusasalethu returned to work safely and production build-up commenced in line with the start-up production plan. That the decrease in annual gold production was limited to this extent is a credit to Harmony’s management and employees. Pleasingly, in line with Harmony’s strategic initiative to improve the quality of ounces mined, year on year underground grade increased by 5% to 7%.
On 18 June 2013 Harmony announced that it anticipated the possible write-down of the carrying value of its 50% holding in Hidden Valley to the net realisable value. The reason for the impairment is the reduction in the US dollar gold and silver prices and Hidden Valley’s poor production performance. The impairment testing process has been concluded, pending completion of the year-end audit procedures. It is expected that an amount of between US$260 million and US$280million (approximately R2.6 billion to R2.8 billion) will be written down - the amount includes an impairment of between R50 million to R80 million of Harmony’s South African assets. The impairments will reduce the reported net profit, but will not have an impact on reported cash balances and free cash flow.
“We continue to manage that which is in our control – production and costs. Quarter on quarter production has increased and we are making good progress with our cost cutting project, Project 400. We have reduced our capital expenditure, as well as our services, exploration, procurement and corporate costs and have approved our operational plans based on a gold price of R400 000/kg,” Graham Briggs, chief executive officer said.
Harmony’s results for the quarter and year ended 30 June 2013 as well as the FY14 Business Plans will be released on Wednesday, 14 August 2013. Please refer to the dial-in and webcast information.
Harmony was incorporated 62 years ago and is one of the largest gold mining companies in the world and the third largest gold producer in South Africa with a reported production of 1.17* million ounces of gold for the financial year 2012 and Mineral Reserves of 52.9 million ounces. Harmony is a multi-listed company and its primary listing is on the JSE Limited (ticker: HAR). The company’s shares are also quoted in the form of American Depositary Receipts (ADRs) on the New York Stock Exchange (ticker: HMY) and as International Depositary Receipts (IDRs) on the Berlin (ticker: HAM1) and Brussels exchanges (HMY).
Harmony operates mines in South African and Papua New Guinea. In South Africa, the company has ten underground mines and one open-pit mine and several surface operations in South Africa. In PNG, Harmony has a 50% interest in the Morobe Mining Joint Ventures, which includes Hidden Valley, an open-pit gold and silver mine, the exciting Wafi -Golpu project, and extensive exploration tenements. Outside the joint venture, Harmony’s own exploration portfolio focuses principally on highly prospective areas in PNG. The Company’s head office is situated in Randfontein, South Africa.
For more details contact:
Investor Relations Manager
+27 (0) 82 759 1775 (mobile)
Marian van der Walt
Executive Corporate and Investor Relations
+27 (0) 82 888 1242 (mobile)