Harmony targets higher production


Harmony targets higher production

Published Date: 2020-09-16 | Source: Stephen Gunnion | Author: Stephen Gunnion

Harmony targets higher production

The gold miner says the acquisition of the Mponeng mine will help lift production in the year ahead.

Harmony Gold says it's well-positioned to benefit from continuing strength in the gold price. And the acquisition of AngloGold Ashanti's remaining SA gold assets will help it grow output as conditions improve.

The gold producer, which takes ownership of AngloGold's Mponeng mine next month, said an increase in operating cash flows and a capital raise in June to fund the deal had left it with a robust balance sheet. Still, it reported a loss for the year to end-June, albeit smaller, after recording a loss on a derivative instrument.

Gold production declined 15% to 1.2 million ounces, mainly due to the impact of the national lockdown. The average underground recovered grade was almost 3% lower at 5.45g/t, with the decrease attributed to the impact of remedial actions to address geological challenges and seismicity at its Kusasalethu mine.

Revenue increased by 9% to R29.2 billion, boosted by a 25% rise in the average rand gold price it received. Its loss per share shrank by two thirds to 164c while it recorded a 154c headline loss per share, down from earnings of 204c previously. Like last year, it hasn't declared a dividend.

Although it benefitted from a lower depreciation charge due to the impact of the national lockdown on production levels and hadn't recorded an impairment for the year following last year's R3.9 billion write-down, it recognised a currency translation loss of R919 million on US dollar denominated debt. The translation loss in the comparable period was R78 million. Also included in this year's numbers are derivative losses on its gold hedges of close to R1.7 billion compared to gains of R484 million last year. It said the losses were as a result of the weaker rand exchange rate and the strengthening of commodity prices, which negatively impacted derivative valuations.

The miner said it continued to enjoy favourable commodity and foreign exchange pricing on the unhedged portion of its exposure, whilst simultaneously locking-in the current higher prices as part of its hedging programme.

Harmony expects production of between 1.26-1.3 million ounces at an all-in sustaining cost of R690 000/kg to R710 000/kg for the year ahead. It said its guidance would be updated towards the end of the year to also reflect the inclusion of Mponeng and recycling operation Mine Waste Solutions, which is part of the AngloGold acquisition.

Its shares rose 3.7% to R106.86 yesterday.

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