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Harmony Gold Posts Profit, Drop In Full Year Output

Publication: Dow Jones
Journalist: Devon Maylie

JOHANNESBURG -(Dow Jones)- Harmony Gold Mining Co. (HAR.JO) Monday posted a decline in gold output for the full year, but reported a rise in net profit due to a higher gold price and said it expects the precious metal price to remain strong.

Finance director Hannes Meyer said Harmony will increase production "going forward" from a number of its operations and that the miner will continue to seek expansion in southeast Asia, while maintaining output from South Africa.

Gold output at the group’s operations fell 9% on the year to 1.393 million troy ounces from 1.429 million ounces the year before due to safety-related work stoppages and some shaft problems, the miner said. Meanwhile cash costs rose to $1,009/oz compared to $801/oz in 2010.

During the final quarter of Harmony’s financial year, three employees died at its mines in South Africa. Increased mine deaths across commodities in South Africa forced many miners to halt work this year, cutting into production targets.

The Johannesburg-based company said net profit rose to 617 million rand ($87 million) for the full year compared to a loss of ZAR192 million ($24 million) in 2010.

Harmony started production at its Papua New Guinea gold and copper mine in September 2010 and said it increased the resource base at that operation to 9 million metric tons of copper and 26.6 million ounces of gold.

Meyer said that by 2014 capital expenditure at its Wafi gold project in Papua New Guinea will account for the biggest portion of spending. The spend at Wafi will be in the area of $100 million over the next three years, he said.

"We will continue to look at additional projects in southeast Asia," Meyer told Dow Jones Newswires. "But it does take time...We’ve got other projects in Papua New Guinea, which we own 100% of, that we will continue to spend money on."

Meyer said Harmony is aiming to shift its current breakdown of its resource base to 70% in South Africa and 30% outside, from the 79% now based in South Africa.

It concluded a new two-year wage agreement with unions in the country following a nearly two-week long strike that halted mining activities. Gold miners agreed to a between 7.5% and 10% pay hike. Harmony estimates it lost 500 kilograms of gold output on account of the strike.

The miner said the increased wages will add an additional ZAR31 million in costs a month. The miner will give more details on its outlook for 2012 during an investor day next week, it said.

Copyright © 2011 Dow Jones Newswires

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