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Harmony’s third-quarter profit soars 388%

Publication: BDlive
Source: www.bdlive.co.za
Journalist: Allan Seccombe

Harmony Gold is the first major gold group to report September quarter results. The miner reported a net profit for the three months to end-September rose 388% from the June quarter to R522m.

Output was at its highest in more than two years.

Apart from details about the 23-day strike last month, which will affect the December quarter results, it reported a strong performance, boosted by improved production and a higher rand gold price.

Harmony is verifying membership numbers that the Association of Mineworkers and Construction Union (Amcu) says it has at its Kusasalethu mine, where an illegal strike cost the company R325m and is likely to cause it to miss its full-year production target.

Company finance director Frank Abbott said the rand gold price increased 5% to R440,868/kg and output was 8% higher at 321,924oz in the quarter — the highest it had been in 10 quarters. Harmony expected to produce 1.3-million ounces of gold for the 2013 financial year to end-June next year.

But the Kusasalethu strike would bring the initially expected production that down by 25,000oz. This includes 21,000oz lost as a result of the strike and 4,000oz from the slow return to full production.

Harmony CEO Graham Briggs said the return to production at Kusasalethu, where more than 5,000 workers went back to their jobs on October 25 after downing tools 23 days earlier, had been slow The mine, which accounts for about 15% of the company’s gold output, would return to pre-strike production levels by the end of the week.

The strike ended after an agreement was reached with unions at the Chamber of Mines to raise wages of the lowest paid employees and operators of underground equipment. The deal will add R10m a month to Harmony’s wage bill.

The miner is verifying union membership at Kusasalethu where Amcu has gained “significant” numbers. Gold Fields, which also has mines around Carletonville, has also seen Amcu making gains at its operations.

Amcu’s emergence is a significant development because the gold sector has been for decades almost the sole preserve of the National Union of Mineworkers. “The recipe book we’ve been using in the last 25 years in the mining industry has been changed,” Mr Briggs said.

“Having another union in the boardroom is maybe not bad when you’re in discussions around issues that pertain to labour. It’s not necessarily negative, it’s just going to be different.”

Mr Briggs said Amcu’s presence had not been seen at Harmony’s Free State operations, which made up the bulk of its gold production. The company hoped to conclude the membership verification process in a few weeks.

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Investor brief

Harmony Investor brief, Sep 2017
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Harmony Investor brief

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