HomeGoldHarmony triples profit

Harmony triples profit

A night shot of
Tshepong – one of
Harmony’s South African
Johannesburg, South Africa — MININGREVIEW.COM — 9 February 2009 – Harmony Gold Mining Company – Africa’s third-largest gold producer – says its fiscal second-quarter profit tripled after the company sold a stake in its uranium assets, and the rand price of gold increased.

Releasing its latest results here, the company revealed that net income had risen to US$ 134 million (R1.32 billion), or R3.23 a share, in the three months ended 31 December 2008, compared with R402 million, or 99 cents a share, in the previous quarter. However, production had declined 8% to 362 242 ounces.

The results statement added that during the quarter Harmony had concluded the Rand Uranium transaction, forming a uranium venture with Pamodzi Resources Limited by selling that company a stake in its assets. Harmony had received R901 million after tax from the sale, it said.

“It’s nice that they are making money, finally,” said Wayne McCurrie, a fund manager with RMB Asset Management, in an interview in Johannesburg today. “They have a weak rand and a fairly high gold price, so they should be making money.”

Bloomberg data shows that Harmony posted a loss before one-time items in 12 of the preceding 17 quarters.

Harmony’s average received gold price was 17% higher than the previous quarter at R253 441 per kilogram. A weaker rand-dollar exchange rate benefits Harmony as it pays costs in rand and earns revenue in dollars. For the quarter, the rand traded at an average of R9.93 to the U.S. dollar.

The company said it would not cut any more jobs and was unlikely to make any acquisitions before June, when it expected to be debt free. Harmony currently has debt of R1.2 billion, and would consider paying a dividend once this burden had been paid off. “We will consider that issue after the June quarter,” said CEO Graham Briggs.

The company aims to produce 2.2 million ounces of gold annually by 2012, he pointed out.
Harmony’s capital expenditure programme will fall to R1.8 billion in two years, from R2.8 billion this year, finance director Frank Abbott said in an interview with Bloomberg News.