Higher production boosts Harmony shares
HARMONY Gold firmed 4.26 percent in early trade yesterday after the company flagged that production from both its local operations would be 14 percent higher in the quarter ended September.
The stock eventually settled 0.69 percent up at R24.83. It said it expected gold production from its South African underground operations to rise between 12 percent to 14 percent quarter-on-quarter due to an increase in both volumes and recovered grade.
It said that it also planned to address production problems at is Papua New Guinea operation, Hidden Valley, adding that general gold production had increased 6 percent to 8 percent than the corresponding quarter in the previous financial year.
Harmony Gold chief executive Peter Steenkamp said the company remained focused on safety.
“Focus on safety, operational excellence at our South African operations and delivery at Hidden Valley in the second half of the 2018 financial year will ensure that we remain on track to meet our production guidance,” he said.
Harmony lost five employees at its Kusasalethu Mine outside Carletonville in August, following a fall of the ground incident.
Last month the company announced that the regional general manager of the Tshepong operation near Odendaalsrus in the Free State had been shot and killed on his way home.
The killing was rumoured to be linked to the rising number of illegal miners, known as zama-zamas.
Harmony which has a market capitalisation of R11.3 billion, said that the planned waste stripping of cutbacks 5 and 6 at Hidden Valley is ahead of schedule and will be completed towards the end of November. Despite the impact on Hidden Valley’s gold production, Harmony’s total gold production increased by 3 percent to 5 percent quarter-on-quarter and the corresponding quarter year-onyear.
Harmony Gold acquired 100 percent of the Hidden Valley mine in October last year. Previously, the company said it expected the mine to produce 180 000 ounces of gold and 3 million ounces of silver per annum by the 2019 financial year.
In the year to June 2017, Harmony said it had produced 1.09 million ounces of gold, exceeding production guidance of 1.05 million ounces and achieving an underground grade of 5.07grams a ton from 5.02 grams a ton in 2016.
It impaired R677 million at Kusasalethu, R786m at its Target mine and R255m at the Tshepong operations. It also said it had made an R91m provision for the potential contribution silicosis claim by former employees.
Harmony’s production results for the first quarter 2018 financial year ended September 30, 2017, is scheduled to be released on November 7, 2017.
Rene Hochreiter, a mining analyst at Noah Capital Markets said that the production update was positive.