GOLD SHARES Led by the dollar gold price

Harmony Gold Mining’s decision to scale back, though not abandon, its Golpu project in Papua New Guinea is typical of the capital expenditure cuts being forced upon the gold industry by a period of prolonged low prices.

Harmony and its partner in Golpu, Newcrest Mining, are looking beyond current gold prices, and investors have responded positively. Since midDecember gold has dipped and recovered again and is back to the level of US$1 225/oz just before the release of the revised Golpu feasibility study. In the same period, Newcrest’s shares in Australia have gained 15% to A$12,48 and Harmony has added 58% to R31,41 a share on the JSE.

But measured against other gold companies, it is clear there is more to these share price moves. In the past month AngloGold Ashanti has added 35% to R124 and Gold Fields 39% to R68. Big global miners are mixed, with Newmont’s shares on the NYSE Euronext up 11% to $21,19 but Barrick Gold 1% off at $11,33.

Golpu is a 50/50 joint venture between Harmony and Newcrest on a property north of the Hidden Valley gold mine which was developed by the same partners. The property consists of two sections, Wafi and Golpu, containing a vast resource of about 28,5m oz of gold and 9,5 Mt of copper. Golpu is the bigger section, containing about 20,2m oz of gold and 9,4 Mt of copper.

The original feasibility study showed it would cost about $9bn to build a large mine. That was considered too ambitious and difficult to finance in the current low gold price environment so the partners updated the study to provide a modular,