Ingenuity and communication
THE annual Denver Gold Forum in Colorado claims to be the world’s most prestigious precious metal equities investment forum.
It probably is. It is certainly where the US’s gold bulls and investors interested in gold and platinum gather to glean whatever information they can — and tell executives what they think about their companies.
The last forum, held from September 22-25, was attended by 163 participating companies, the majority of which delivered brief presentations. I haven’t attended one of these but it must be quite a scrum. As you’d expect, SA was well represented by AngloGold Ashanti, DRD, Gold Fields and Harmony.
Leafing through those attending, it was impossible to avoid the notice- able absence of SA’s platinum producers. Given that they are still in the thick of their talks with the Association of Mineworkers and Construction Union about retrenchments and remuneration, that’s probably understandable.
It was during the forum that Harmony CE Graham Briggs was told the company’s mines were viewed as marginal; discussion about costs and cash preservation were inevitable. His response has been to tighten costs all round, a policy that coincides with Harmony’s latest production guidance, issued on Tuesday.
Harmony says it expects its overall production to be about 12% higher than in the June quarter. That means it should have produced about 9,600kg over the September quarter. Provided it is able to maintain this — a big ask — it should result in production for the current financial year of about 1.24-million ounces. That would compare with financial 2013’s 1.137-million ounces.
What is intriguing about Harmony’s performance in the September quarter is that the increase of around 15% at its South African mines was achieved in a period of labour disruptions. It coincided with a welcome fall in cash costs per kilogram of 6%-8%.
These numbers underline ingenuity and managerial competence married with good communications. The results for the quarter, due out on November 8, will reflect this in the very period when there were increases in labour costs arising from the wage negotiations, and electricity costs when the winter tariffs apply.