Harmony Gold shares up by 7%

HARMONY Gold yesterday rose nearly 7 percent on the JSE after the miner said its headline earnings shot up 49 percent to 224 cents for the six months to December, compared to 150c during the corresponding period last year.

The country’s third-largest gold producer said it also recorded a 6 percent rise in production from its South African operations, which includes double-digit increases at the Doornkop, Masimong and Target 1 mines. The company also kept costs in check.

SA Institute of Race Relations chief economist Ian Cruickshanks said Harmony’s 49 percent growth in headline earnings was testament to management’s efficiencies.

“It’s all about efficiencies. Gold production was up 6 percent and costs were down by 2 percent, which means they are working on efficiencies,” Cruickshanks added.

The improved production gave Harmony confidence about meeting its target.

The company said it was on track to achieve the group production guidance of 1.1 million ounces, after producing 560 000 ounces in the six months ended December 31, 2017.

“The increase in production expected at Hidden Valley will further boost our annual production,” the company said.

Chief executive Peter Steenkamp told journalists that the improved production came from management ‘s effort to reduce the number of safetyrelated stoppages. Steenkamp said the company had also improved its infrastructure.

Fatalities

However, the significant gains were overshadowed by the death of eight employees in four separate incidents during the period.

Steenkamp said the major contributor to the fatalities was the seismic event at the Kusasalethu mine in Carletonville in August, in which five employees died.

“We believe that the systems we have in place are sound. In this incident, there were failures in our systems that we are not proud of. There is an inquiry into that incident.

“We have been able to put in the right checks and balances to ensure that it does not happen again,” Steenkamp added.

The fatalities come amid mounting pressure for industry bosses to improve health and safety, following the rescue of 955 Sibanye-Stillwater employees who were trapped at the Beatrix mine earlier this month, and the death of two others at the Kloof mine.

Sibanye-Stillwater said yesterday that one of its employees died on Monday night at the Driefontein mine, while clearing a blocked ore pass.

Mineral Resources Minister Mosebenzi Zwane told the Investing in Mining Indaba last week that the ministry would not compromise on the safety of employees.

Harmony, which unveiled plans to acquire AngloGold Ashanti’s Moab Khotsong mine in North West for $300 million (R3.58 billion), said yesterday the Department of Mineral Resources had consented in terms of the Mineral and Petroleum Resources Development Act to cede the Moab Khotsong mining rights.

Steenkamp said this fulfilled one of the most important conditions precedent towards the completion of the Moab Khotsong transaction.

Harmony shares closed 3.73 percent higher at R21.12 on the JSE yesterday.