Harmony Gold Mining has vowed to return its deep level Kusasalethu mine to profitability following a negative free cash flow of R119 million over the three months from June to October 2014. This followed a loss over the financial year ending June 2014 of R392 million.
These poor results were posted in spite of huge investment and ongoing improvement initiatives and continued investment in the mine (some R3.9 billion in capital since 2001) to improve the mine’s performance. The mine is situated on the Gauteng and North West Province borders. In 2013 it produce 2740 kg of gold at a grade of 3.85 g/t.
“Kusasalethu has not returned to profitability after various setbacks. We need to be both decisive and mindful in our actions so that we preserve the viability of this mine for several decades to come. Without these actions, this mine will not survive and that would indeed be a tragedy for our company, our employees, our communities and our country,” says Graham Briggs, Harmony CEO.
Reasons for poor performance
Engineering infrastructure and water reticulation failures in the past year exacerbated the underperformance at the mine further, as have excessive stoppages for various reasons, including illegal mining activities.
The current situation is clearly unsustainable. Harmony’s intention is to restore the mine to profitability in the fourth quarter of the current financial year and – in so doing – preserve as many jobs as possible. The new plan will entail mining lower volumes at higher grades at a reduced cost.
Harmony employs over 6000 personnel but has had to commence a section 189 of the Labour Relations Act. The consultation period will be over the next 60 days and it is hoped that voluntary separation or relocation into other parts of the business will prevail.