Harmony’s gold output up 29%
Harmony Gold says its output jumped nearly a third in the first nine months of its 2019 financial year as its new Hidden Valley and Moab Khotsong mines made their impact.
Harmony Gold showed a nearly one-third jump in gold output in the first nine months of its 2019 financial year as its new Hidden Valley and Moab Khotsong mines made their impact.
Harmony bought the Moab mine in Gauteng from AngloGold Ashanti for $300m in March 2018. The mine is now the single largest source of gold for Harmony, which has mines and projects in SA and Papua New Guinea.
Harmony’s gold output ballooned by 29% to 1.08-million ounces in the nine months to end-March as Moab contributed production for the full nine months. The Hidden Valley mine in Papua New Guinea also reached steady-state production from June 2018.
Moab contributed 6,156kg (197,920oz) in the nine months compared to 764kg (24,563oz) in the same period a year earlier. Hidden Valley shot up to 4,426kg (142,299oz) from 1,519kg (48,837oz).
All-in sustaining costs rose 5% to R543,432/kg against an average received gold price of R579,778/kg, which was slightly higher than the previous period.
Harmony kept its full-year production guidance of 1.45million ounces intact, but warned of an increase in its allin sustaining costs to a new level of R540,000/kg compared to the range of R520,000/kg to R530,000/kg it advised the market to expect earlier in its financial year.
The increase in costs was because of electricity price increases implemented by Eskom from the start of April.
Harmony has a gold hedge in place that raised the received gold price for its suite of assets, apart from Moab and the Phoenix tailings operation, where production was not covered by the forward gold sales agreements.
The difference was substantial.
Moab, which produced 197,920oz or 6,156kg of gold during the nine months, realised R565,171/kg compared to the more than R585,000 for the other underground mines.
This means Moab’s gold sales had realised R3.460bn in revenue compared to R3.462bn at Tshepong, which had gold output of 5,985kg but achieved R585,776/kg, including the hedged gold price.
Production profit from the underground SA mines fell to R3.05bn for the nine months compared to R3.08bn before. Production profit from the four surface operations fell to R319m from R367m.
The Hidden Valley mine reported production profit of R1.45bn, up from R23m, boosting the Harmony group’s production profit to R4.8bn from R3.5bn before.
Harmony has sold forward 584,000oz of gold up to the end of the third quarter of its 2021 financial year at an average price of R649,000/kg.
A portion of Hidden Valley’s gold and silver production is also locked up in hedged prices or forward sales, but the benefits of this move do not flow to the mine’s received gold price they rather are reflected as a gain on derivatives in the income statement.
Harmony noted production disruptions stemming from Eskom power cuts at its surface operations during the March quarter, but it did not quantify the effect on production.