Shaft headgear at
Doornkop “’ one of
Harmony’s South
African mines that
are responsible for 90%
of its production
 
Johannesburg, South Africa — 08 November 2012 – Harmony Gold Mining Company “’ Africa’s third-largest producer of the precious metal “’ has revealed that the first quarter profits to 30 September 2012 rocketed to an almost fivefold increase, while output climbed to the highest level in 10 quarters.

Bloomberg News reports that, revealing this in a statement issued here, the company said net income had risen to US$61 million from US$12.5 million in the prior three months.

Along with AngloGold Ashanti Limited and Gold Fields Limited, Harmony is trying to boost output to mitigate labour-cost and electricity-price increases, and to benefit from increasing gold prices. CEO Graham Briggs plans to raise production to 1.7Moz in fiscal 2016 from an estimated 1.3Moz this fiscal year.

Harmony increased 6%, the most since May 24, to R72.31 by the close in Johannesburg, making it the best performer on the city’s stock exchange after Grand Parade Investments Limited.

Production grew 8% to 321,924oz in the quarter from three months earlier. That’s the highest in ten quarters, finance director Frank Abbott told reporters on a call..

Gold gained 2.5% to an average US$1,653/oz during the quarter from US$1,612.73 in the prior quarter. It wouldn’t be surprising if gold rose to US$1,800 by the end of this year, Briggs told reporters on the call. The metal traded at US$1,714.03/oz as of 5:17 p.m. yesterday in London.

Second-quarter production will probably be similar to the first, excluding an estimated 25,000oz loss from a strike at Kusasalethu, which will affect this year’s target, Briggs said. The cost of the strike that lasted from October 2 to 25 is estimated at about R325 million, Harmony said.

Wage increases are costing the company about R10 million a month more than before, Briggs said on the call. Harmony mines about 90% of its metal in South Africa, and is investing in existing and new projects in Papua New Guinea. Labour represents about half of Harmony’s costs while electricity accounts for an average 16%, Briggs said.

Source: Bloomberg News. For more information, click here.