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Harmony Gold reports 44% increase in cash operating profit


Source: www.mineweb.co.za

"Turnaround at Harmony continues": CEO

Harmony Gold Mining Company Limited ("Harmony") has reported a 44% increase in cash operating profit to R800 million for the quarter ended 31 December 2009, reflecting a 10.6% increase in the Rand gold price received to R264 774/kg and a drop in cash operating costs.

Commenting on the quarter's results, Harmony CEO Graham Briggs said the turnaround at Harmony continues, with an increase in profitability on the back of favourable market conditions and restructuring for more quality ounces.

He warned that there could be "more pain before gain" on the production front as Harmony continues to assess those of its South African operations with depleted ore bodies in the company's pursuit of 2.2 million profitable ounces by 2012.

Harmony closed the Evander 7 shaft in South Africa's Mpumalanga province and Brand 3 Shaft in the Free State during the December 2009 quarter and the Evander 2 and 5 shafts last month, redeploying most of the affected employees to its new growth projects.

Briggs says that, while the Merriespruit shafts in the Free State appear to have remaining potential, provided they meet their production targets, the Harmony 2 Shaft, also in the Free State, would continue to be closely monitored.

Commissioning of Harmony's four South African ‘growth' projects continued and production planning at the recently acquired Pamodzi Gold Free State assets was completed. On the international front, Hidden Valley in Papua New Guinea (PNG) yielded 43 028oz of gold and 53 081oz of silver, of which 50% is attributable to Harmony.

Briggs says exploration results in PNG were 'exciting'. Drilling at the Morobe Mining Joint Venture's Golpu West prospect had achieved several highly significant intercepts of porphyry copper gold mineralisation, while a new zone of epithermal gold mineralisation was outlined in initial drilling at the Wafi prospect, suggesting potential for a significant gold deposit.

Looking ahead, Briggs said that - notwithstanding the welcome improvement in the Rand gold price during the December 2009 quarter - Harmony believed that the R/kg gold price would most likely remain flat for the next 12 months.

On macro industry issues, Briggs commented: "We are not blind to ‘rumbles' out of South Africa that threatens us attaining our objectives - particularly the outrageous power price increases and that old chestnut, nationalisation of the mines."

"Nor are we complacent. We will continue to engage in robust, constructive debate on these and other issues concerning ourselves and our industry, with a view to securing the best possible outcomes for all our stakeholders."

Briggs added that he remains confident that "Harmony will continue to deliver on its productions plans and produce quality ounces through disciplined mining, grade focus and an increase in development meters.

He concluded: "Restructuring will continue. We will push ahead with the commissioning of our growth projects in order to bring to account their quality ounces and we will continue to pursue profitable growth opportunities - organically through acquisitions and forging strategic partnerships, both locally and internationally."

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