Close

Harmony Gold‘s results for its fourth quarter  show an increase in gold production, in line with the company’s strategy to optimise operational delivery.

Commenting on the results Graham Briggs, chief executive officer stated: “Our safety and health initiatives, improved productivity, the correct allocation of capital, a quality reserve base, improved grade, reduced costs, experienced teams and proper business planning will secure a sustainable business.

“Harmony’s strategy has been consistent in that we seek to optimise operational delivery, grow our cash flow and share our profits with all our stakeholders. We will continue to do what is right for our shareholders and stakeholders to sustain the future of the company.”

In line with this Briggs said the company was making good progress in cutting all costs. “Corporate and services costs for FY14 have been reduced by R450m and total capital guidance for the coming year has been reduced to R2.1bn – a R650m reduction in year-on-year capital expenditure. The saving in capital expenditure is largely due to less capital being spent in Papua New Guinea.”

Quarter-on-quarter gold production increased by 12% to 8 588kg (276 109oz), while cash operating costs decreased by three per cent to R351109/kg (US$1 156/oz). Total recovered grade increased by two per cent quarter on quarter. The company recorded a headline loss per share for the June 2013 quarter of 186 SA cents (US$20 cents) – lower than the previous quarter mainly due to the reversal of the Hidden Valley deferred tax asset of R547 million (US$55 million)(2) and retrenchment costs.

Year on year, Harmony’s underground grade increased by seven per cent, while gold production decreased by two per cent to 35 374kg (1 137 297oz). This was due to a 51% decrease in production at Kusasalethu while the remainder of the operations had a net increase in production of 7% year on year.

The company recorded a headline profit per share* of 47 SA cents (5 US cents) for the year ended 30 June 2013, in comparison to a headline profit per share of 565 SA cents (74 US cents) in the previous year. The decrease is due to the reversal of the Hidden Valley deferred tax asset of R547 million (US$55 million)(2), losses related to the temporary closure at Kusasalethu and retrenchment costs.

Regardless of the quality of the ore body, developing Golpu in line with the 2012 pre-feasibility study in the current gold and copper price climate does not deliver an adequate return on investment and therefore requires to be repositioned. A low risk, modular, expandable development approach that is different to what was proposed in the 2012 pre-feasibility study is expected to result in an improved project value.

Safety improved year on year, with the best annual Lost Time Injury Frequency Rate recorded in the history of the company. Said Briggs: “Although we have achieved significant improvements in safety, a lot more needs to be done to eliminate fatalities.”

Highlights:

–   Best annual lost time injury frequency rate ever

–   7 % year-on-year increase in underground grade

–   Major reductions in costs and capital

–   Headline profit per share* of 47 SA cents (5 US cents) for

financial year 2013

– reversal of the Hidden Valley deferred tax asset of R547 m (US$55 m)(2)

– losses related to temporary closure at Kusasalethu

– retrenchment costs

–   Quarter on quarter gold production increased by 12% to 8 588kg (276 109oz)

– increase in tonnes milled of 9%

– increase in total recovered grade of 2%

–   Cash operating costs decreased by 3% to R351 109/kg (US$1 156/oz) quarter on quarter

–   Operating profit1 of R639 million (US$68 million) for the June 2013 quarter

 

* Includes discontinued operation

1. Operating profit is comparable to the term production profit in the segment report in the financial statements and not to the

operating profit line in the income statement

2. Translated at a spot rate of US$/R9.98 at 30 June 2013

 

 

Additional Reading?

Request Free Copy