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Fall follows Harmony's rise

Publication: The Times
Source: www.timeslive.co.za
Journalist: TJ Strydom

The gold mining company reported a sharp increase in profits on Friday for the quarter to September 30 - from R3.48-billion in the previous quarter to more than R4-billion.

Despite showing a 55% jump in operating profit on the previous quarter, Harmony shares fell by 1.76% to R33.50 on Friday.

The share price halved in the past year. Higher electricity prices and labour costs, and a lower gold price, have hurt most companies in the sector.

Harmony's cash operating costs in the quarter increased by R140-million compared with the previous quarter.

"This was mainly as a result of a R38-million increase in wages [due to the annual wage increase], as well as a R147-million increase in electricity costs [due to winter tariffs]," said CEO Graham Briggs in comments accompanying the financial statements.

Harmony mines 93% of its gold in South Africa.

The positive effect of the weaker rand, which would otherwise have raised the turnover of the company's marginal mines, was largely offset by the lower gold price.

Bullion is trading nearly 25% lower than at the start of the year.

Briggs said that the rand gold price has been static in the past two quarters and he expects this trend to continue in the short term.

"As gold prices have weakened, gold mines worldwide remain under pressure because of their rising costs.

"Our only means of remaining profitable is to reduce costs, improve our productivity and produce more gold," he said.

This quarter Harmony bumped up production by 12% to 9635kg.

"This was as a result of improved recovered grades at most of the underground operations, and of Kusasalethu building up to normal production after the temporary closure of the shaft earlier this year," said Briggs.

The Association of Mineworkers and Construction Union (Amcu) is dominant at the Kusasalethu mine.

Briggs announced its closure in January. It was reopened after negotiations with Amcu, the National Union of Mineworkers and other minority-representation unions.

Presentations

Annual report

Integrated annual report 2016
Integrated annual report 2016

(HTML & PDFs)

Investor brief

Harmony Investor brief, Sep 2017
September 2017 -
Harmony Investor brief

(PDF - 6.5MB)

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