Harmony’s shares soar as trifecta of good conditions help profit treble
• Miner’s increased output capitalises on the high gold price and weak rand
Harmony Gold’s share price shot up almost 10% on Thursday after it reported that its interim profit to end-December would more than treble.
SA’s biggest gold producer by volume is in a sweet spot at present given the high gold price and weak rand. Its numbers will be further boosted by higher gold output.
The uncertain global environment has supported demand for gold, which is widely viewed as a safe haven asset. Central banks have also been net purchasers of gold in recent months, keeping the spot price of the precious metal at about $2,000/oz.
With the bulk of its assets located in its home market, Harmony benefits more from the rand gold price than its bigger global peers.
In a trading update on Thursday, Harmony said its headline earnings per share were expected to come in at between R9.37 and R9.76 for the reporting period versus R2.93 a year earlier.
CEO Peter Steenkamp said in a statement that ongoing investment in “safety, higherquality ounces and a stable and predictable cost structure” supported the results.
“This has placed us in a very good position to take advantage of the strong gold price and generate excellent operating free cash flows,” Steenkamp said.
An increase in the production of silver and uranium at the Hidden Valley and Moab Khotsong operations, respectively, also boosted the results.
Steenkamp, who has been in charge of the group since 2016, is overseeing a strategy that seeks to position Harmony as not only a gold producer but also a copper producer, to create a new revenue stream but also limit the potential risks of relying on a single commodity.
Copper assets are in demand as mining companies look to diversify their portfolios with socalled green metals, which are needed for the global transition to clean energy. Copper is expected to run into a deficit in the next decade.
Harmony has plans to develop a joint venture with Newcrest Mining on the WafiGolpu copper project in Papua New Guinea. It also has the Eva Copper project in Australia.
After initially gaining almost 10%, its shares ended 3.32% higher at R110.09. They have surged 90% over the past year, making it one of the best performers on the JSE in that time.