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Harmony’s first-quarter gold output up 6%

Journalist: Creamer Media Reporter

JOHANNESBURG ( – South African-based gold-miner Harmony Gold recorded a 6% quarter-on-quarter increase in production to 11 615 kg of gold during the quarter ended September 30, 2009, but CEO Graham Briggs warned on Friday that the company might have to restructure some of its lowest-grade, highest-cost operations as a result of the strengthening rand.

Both the underground and surface sources had increased output during the first quarter of the company’s 2010 financial year, with underground output up by 5% quarter-on-quarter to 10 724 kg.

The rand/dollar exchange rate had averaged R7,78 to the dollar throughout the quarter, compared with an average R8,42 to the dollar in the previous quarter, leading to a 3% decline in the average rand gold price to R239 438/kg.

“We will have to contend with the likelihood of continuing rand strength for now, and the negative consequences of this on rand gold receipts. Our weapon in managing the strong rand and rising costs, must be improved productivity ­ in short, we need to work harder and smarter. Our focus remains producing more profitable ounces,” Briggs said in a statement.

Nevertheless, the company stated that the higher gold production had helped to offset the impact of the drop in the rand gold price, boosting revenues by 3% to R2,7-billion.

Further, the gold-miner stated that a 7% increase in the dollar gold price to $996/oz, up from $935/oz in the June quarter, was encouraging and underpinned Harmony’s confidence in the precious metal, especially during difficult economic times.

Briggs, meanwhile, highlighted that good progress had been made at its South African growth projects, namely Phakisa, Doornkop, Elandsrand and the Tshepong decline, saying that the projects were “well on their way” to achieving their targets.

Further, the conveyor at the Hidden Valley mine, in Papua New Guinea, would be completed and commissioned by December, with production to ramp up to commercial levels during the December quarter.

Harmony posted a first quarter net loss of R29-million, compared with profit of R238-million the previous quarter.

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