Harmony Gold announced on Monday that it has met its annual production guidance of approximately 1.1 Moz.
Year on year Harmony Gold continued to differentiate itself through quality grade management, increasing underground grade by 6% to 5.02 g/t it said in a statement – making it the fourth consecutive year of increased recovered underground grades.
To create further cash certainty, Harmony Gold has entered into short term gold forward sale contracts for a total of 432 000 oz over a period of 24 months, representing approximately 20% of the company’s total production.
Peter Steenkamp, CEO of Harmony Gold said: “The gold hedge was a necessary short term step to secure our margins at some of our higher cost operations and creates certainty on a portion of our future cash flows. It enables us to further reduce our debt and strengthen our balance sheet’’.
The sharp increase in and the volatility of the R/kg gold price provided Harmony with an opportunity to lock in 20% of its gold sales at a “very attractive” average rate of approximately R682 000/kg.
The limited size and duration of the hedge means shareholders retain full upside exposure on 80% of Harmony Gold’s future gold production for the next two years, after which shareholders will have 100% exposure to the gold price.
“Our hard work has paid off and I am extremely pleased with Harmony’s performance. Harmony is well positioned to benefit from a strong R/kg gold price. We remain positive on the strength of the gold price, with cash certainty being key in times of extreme gold price volatility,” said Steenkamp.
Harmony will announce its operating and financial results for the six months and year ended 30 June 2016 on Wednesday 17 August 2016.