Harmony investors’ R1bn reward
Harmony Gold, SA’s biggest gold producer by volume, will pay a record interim dividend after benefiting from a stronger gold price and a rise in output.
Posting results for the six months to end-December on Wednesday, the miner reported a 14% rise in total gold production, mainly as a result of higher recovered grades at its SA mining operations, Mponeng and Moab Khotsong; at Hidden Valley in Papua New Guinea; and at its Mine Waste Solutions tailings treatment facility near Klerksdorp in the North West.
The average gold price it received rose 18% year on year to R1.14m/kg, while operating costs per unit decreased about 3%. That contributed to group earnings per share rising 221% and headline earnings per share 226%. Revenue was up 35%.
It also benefited from increases in output and prices earned for silver and uranium.
“We have built a solid foundation that will enable Harmony to continue on this upward trajectory. While strong commodity prices have provided Harmony with good tailwinds, improved safety, good mining discipline and operational flexibility with a stable and a predictable cost structure remain fundamental to creating the long-term value expected by our stakeholders,” CEO Peter Steenkamp said.
After failing to pay an interim dividend in 2022, Harmony declared a record interim dividend of R1.47 a share, amounting to more than R1bn for shareholders. It paid a final dividend of 75c per share last year.
Steenkamp said the board decided to extend the life of the Mponeng mine near Carletonville in Gauteng at a cost of about R7.9bn. The project would add about 3-million ounces of mineral reserves and increase Mponeng’s life from seven to 20 years, until 2044.
Most of Harmony’s exploration spending will be on developing new copper mining assets as the company transitions to being a gold and copper producer. Its Eva Copper project in Australia and plans to develop the joint venture Wafi-Golpu copper project in Papua New Guinea are part of its plans to diversify its minerals mix.
Copper assets are in demand as mining companies look to diversify their portfolios with the green metals needed for the transition to clean energy.
Copper, critical to the energy transition, is expected to run into a deficit in the next decade.
The group said on Wednesday that negotiations continued between Harmony, joint venture partner Newmont and the Papua New Guinea government on the terms of the mining development contract for the WafiGolpu projects. The feasibility study update for the Eva Copper project continued as planned.
Harmony’s mineral reserves of 39.3-million ounces consist of about 68% gold and 32% copper, but this does not include the 3-million ounces from the Mponeng extension or Eva Copper project copper reserves.
SA accounted for a little more than 50% of total mineral reserves, but Harmony financial director Boipelo Lekubo said that as new mining projects in Australia and Papua New Guinea entered production in coming years the share of reserves attributable to its SA operations would begin to shrink.
Lekubo told Business Day that while the group was “always looking for value acquisitive opportunities” it was satisfied with the growth projects it had and would focus on these for now.
Harmony’s share price slipped 0.22% to R108.48 by the close.
The stock has gained about 94% in the past 12 months, making it one of the best performers on the JSE.