Skip to content skip to secondary navigation Top of the page

News
and events

Media coverage

Disclaimer:
Please note that the articles contained in this section of the website have been selected from articles published by the media. The facts and opinions expressed therein are those reported by the journalist and publication and therefore may not necessarily reflect those reported by the Company.

Harmony output to increase marginally


Publication: BusinessDay
Journalist: Bheki Mpofu

HARMONY Gold, SA’s third- largest gold producer, yesterday reported 4% growth in total gold output in the first quarter to September compared with the previous quarter, and said it expected marginal growth and lower costs in the next quarter.

The uptick in production was helped by the roll-out of developments at some of Harmony’s mines, including Tshepong, Phakisa, Doornkop and Elandsrand.

CEO Graham Biggs said to analysts that although capital expenditure dropped about 12% compared with the previous quarter, cash costs had increased 9%- 12%. The increase in costs was largely due to higher wages and electricity tariffs. Wages for artisans and miners had gone up 9,2%, while tariff increases had resulted in the company spending R240m on electricity during the quarter.

Analysts have said local gold production, which has been on a downward trend, is not expected to show significant growth as miners were still reeling from the damage caused by last year’s devastating electricity crisis. SA’s gold output in the second quarter was down 9,3% from a year earlier when the industry was grappling with power shortages.

SA’s overall gold output last year fell to its lowest level in 86 years as a power shortage and dwindling grades pushed it from the top spot to number three producer behind China and the US.

Briggs said he was concerned about the strong rand, but the company had remained profitable at the rand gold price of R240000/kg in the past five months. Harmony had planned its operations conservatively at the price of R225000/kg. “We remain bullish on the fundamentals in the medium and longer term,” he said.

Should the rand gold price per kilogramme continue at lower levels, the company will consider “incremental cutbacks from marginal mining operations”.

Analysts have raised concerns that the continued strength of the rand was hurting local mining companies, which could see them miss out on the surge in prices and demand. The rand’s strength was negating the rise in commodity prices for local firms, they have argued, saying the market was unlikely to see significant increases in cash flows and margins in the current circumstances.

Briggs said the company aimed to remain unhedged to maintain a positive cash flow and a healthy balance sheet during the period of the low rand gold price.

He said the recent acquisition of President Steyn gold mine from the liquidators of Pamodzi Gold had been finalised, with a mining plan prepared and conversion documents in support of mining licenses submitted. Harmony bought the Free State mine for R405m after Pamodzi failed to raise R11m needed to recapitalise the mine. The four shafts that Harmony will be operating in Free State are expected to bring in an additional 150000/oz.

Harmony has set a target to increase output from 1,55-million ounces per year to 2,2-million ounces by 2012.

The increase is expected as some of its mines are likely to start ramping up production towards 2012.

Annual report

Integrated annual report 2016
Integrated annual report 2017

(HTML & PDFs)

Investor brief

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

(PDF - 6.5MB)

Register for alerts