Harmony Gold's deep level Kusasalethu operation

JSE-listed gold miner Harmony Gold on Tuesday announced that gold production for its 2015 financial year has dropped by 8% to 1.08 Moz – resulting primarily from the closure of the unprofitable Target 3 mine and restructuring of Kusasalethu, Doornkop and Hidden Valley.

Production profit for FY15 decreased to R2.8 billion compared to R3.8 billion in FY14. This was mainly due to the 8% decrease in gold production, as well as a 6% increase in operating costs for FY15.

On a more positive note, gold production increased by 4% from the previous quarter and gold sold increased by 12%, also quarter-on-quarter. As a result, the previous quarter’s headline loss of R0.60/share was turned into a profit of R0.44/share (including year-end accounting adjustments).

“We have restructured each of our operations to ensure that our company is profitable even in a tough gold price environment. Harmony remains a relevant gold player, adding value through job creation, taxes and community upliftment in both South Africa and Papua New Guinea. Our focus is therefore on increasing our margins – not only through capital curtailment and cost reductions, but most importantly through increasing our production”, says Graham Briggs, Harmony CEO.

Following Harmony’s annual life-of-mine reassessment, a net loss of R4.5 billion (US$396 million) was recorded in FY15 due to a total impairment of R3.5 billion ($303 million).

The impairment of R3 471 million in the June 2015 quarter consists of an impairment of R2 114 million in respect of Hidden Valley, R1 036 million on Doornkop, R278 million on Phakisa and R43 million on Freddies 9. The impairments are due to the restructuring of operations for profitability and in response to low commodity prices and high operating costs, which resulted in a reduced life of mine.

The Kili Teke prospect in Papua New Guinea is a new exciting copper-gold discovery and drilling to convert the prospect into a new copper-gold resource continues. Kili Teke could well be another Golpu.

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