Johannesburg, South Africa — MININGREVIEW.COM — 15 February, 2008 – South Africa’s Harmony Gold Mining Company Limited (Harmony) – fifth largest gold producer in the world – has made a dramatic turnaround from a R566 million loss (which included a R459 million loss on the sale of Gold Fields shares) in the September quarter of 2007 to a R46 million profit in the December quarter.
Announcing its December quarter results here today, the company pointed out that cash operating profit rose 43% from R314.6 million in the September quarter to R449.8 million in the December quarter.
The benefits of a 16 percent gain in the average price of bullion to $789.31/oz in the quarter was partly offset by higher costs for labour, steel and fuel. Cash operating costs were down by 8.1%.
Output fell 8.3 percent from 434 773 oz to 398 764 oz after the company suffered a substantial loss at its Elandsrand mine last October, when about 3 200 miners were trapped underground for more than 24 hours after a pipe broke, prompting a 44-day stoppage to make repairs and assess safety.
Surface tonnes milled dropped from 2.14 million to2.04 million quarter-on-quarter, while underground tonnes milled fell from 2.46 million to 2.3 million. This meant an overall decrease of almost 6% in tonnes milled from 4.6 million to 4.34 million
Capital expenditure in the December quarter amounted to R460 million – almost 30% above expenditure in the September quarter. Overall expenditure to date is R3.6 billion.
Under the title “Gold – an exciting place”, the Harmony statement emphasises that while the cash cost for the past six months, and for the next six months, is R133 000/kg, the gold price – which averaged R163 000/kg in the past six months – is forecast at R223 000/kg for the next six months. This means a margin of R90 000/kg in the next half-year – three times the R30 000/kg achieved in the previous six months.
Looking ahead, the five key factors the report named in terms of future strategy are: operations to improve safety performance; focus on long-life (more than 10 yrs) operations and profitability; methods of re-capitalising short-life operations; focus on core mining projects and expand the pipeline; and partnering to enhance growth of international projects.
Caption, Pic 1: One of Harmony’s main operations – the R934 million Phakisa project.