HomeGoldHarmony foresees gold price staying above US$1 000/ounce

Harmony foresees gold price staying above US$1 000/ounce

Graham Briggs,
CEO, Harmony
Johannesburg, South Africa — MININGREVIEW.COM — 07 October 2009 – The CEO of Harmony Gold Mining Company says the dollar price of gold could stay above US$1 000 this year after hitting a new record, but added that a stronger rand was eroding gains for South African producers.

“Certainly it will go higher. It wouldn’t surprise me if it stayed above US$1 000 an ounce,” Harmony CEO Graham Briggs told Reuters.

“My preference is that it should not rocket fast, but that it should creep up steadily. It’s a little bitter-sweet for us South African gold producers, because what affects us most is the rand gold price. This is what would make a big difference.”

Harmony is the fifth-biggest gold producer in the world and Africa’s number three, with most of its mines in South Africa.

“I guess the expectation has been that the gold price was likely to go up. The fundamentals have supported that view with lack of new supply, rising production costs and the fact that successful explorations have been few and far between,” Briggs said.

He added that the strong rand had "chipped away" at some of Harmony’s plans, but no drastic changes had been effected yet. “But if the rand continues to be strong, one will have to look at things; one cannot live in hope,” he said.

Asked how Harmony’s strategy to grow through acquisitions was progressing, Briggs said it was slower than expected. Apart from assets from the liquidated Pamodzi Gold, Harmony had not found bigger projects to buy, he explained.

“It’s not going very well, there’s not much to be bought out there. It’s probably an indication that there are not many successful explorations,” Briggs continued. “We are relatively fussy, and we want to add quality.”

Briggs went on to say that his company had done due diligence on projects in Indonesia, the Philippines, the United States and Africa, scouring for projects of up to US$350 million (R2-8 billion) to produce 150 000 ounces a year.

He forecast the company’s production would rise to 1.7 million ounces in FY 2010, with additional output coming from its new joint venture operation in Papua New Guinea and from revitalised mines in South Africa. Harmony produced 1.5 million ounces in FY 2009.

Briggs said the group had maintained its target of producing 2.2 million ounces a year by 2012, which would be met through various mine improvements, expansions and acquisitions.