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South Africa's Harmony Gold announces safety drive

Publication: Reuters Africa
Source: www.reuters.com

JOHANNESBURG (Reuters) - South African bullion producer Harmony Gold said on Tuesday it had swung back to a quarterly profit despite a fall in production as it benefited from a smaller foreign-exchange loss on a U.S. denominated loan.

The company said it had begun a safety improvement drive to avoid a repeat of a February accident at its Doornkop mine when a fire and rock fall killed nine miners.

Chief Executive Graham Briggs said the company was taking "fairly drastic measures" on safety.

“We have independent outsiders doing a complete safety review on all our operations... We have to have a safe mine environment," he said on a conference call. The review's outcome would be known in around two months.

South Africa's gold mines are the deepest and among the most dangerous in the world but the industry has made strides to improve safety in recent years.

Because of the Doornkop incident and other operational problems, the company's gold production fell 12 percent in the quarter to 269,000 ounces.

But Harmony cashed in on a higher rand/gold price which, increased 8 percent to 451,000 rand/kg because of a weakening of the domestic currency. This benefits metals producers in South Africa because most of their costs are in rand.

The company said its headline earnings per share for the quarter to the end of March were 12 cents after a loss of 21 cents in the previous three months. Headline earnings are the main profit measure in South Africa, stripping out various one-off items.

The grade of the ore that Harmony is mining improved by 5 percent to 5.1 grammes per tonne, the third consecutive quarter of improvement, a trend which will also flow to its bottom line.

The company said it continued to evaluate scenarios for its Wafi-Golpu project in Papua New Guinea, including the prospect of "a substantially lower capital expenditure development option."

($1 = 10.5157 South African Rand)

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