Elandsrand – one of
Harmony’s South
African gold mines
 
Johannesburg, South Africa — MININGREVIEW.COM — 11 May 2009 – Harmony Gold Mining Company – Africa’s third-largest producer of the metal – says its profits for the first quarter of 2009 (the third quarter of the company’s fiscal year) fell 26%, after the previous quarter’s gain on the sale of its Cooke assets in South Africa was not repeated.

The company revealed in a stock exchange statement that net income had declined to US$116 (R972 million), or R2.30 a share, in the three months to March, from US$157 million (R1.32 billion rand), or R3.23 rand a share, in the prior quarter.

Bloomberg News reports that CEO Graham Briggs has been selling less profitable assets, reducing debt and preserving cash to prepare Harmony for expansion. He plans to increase gold output to take advantage of growing demand for the metal, which has doubled in price during the past four years

“Harmony has strengthened its balance sheet through disposals, which is hardly a sustainable business model,” Nedcor Securities analyst Christian Siebert, told Bloomberg News by phone from Johannesburg. “While management is implementing appropriate changes, we have yet to see sustainable and material improvements.”

Higher gold prices mitigated the effect of a 3.4% decline in production to 349 801 ounces, and a 1.8% increase in costs, to R171 361/kg during the third quarter, compared to the previous three months, Harmony said.

“While Harmony is in a good position in terms of cash and its cash flow, we still haven’t arrived in terms of operational performance,” Briggs told investors on a conference call. “Fourth-quarter production will be better,” he added.