Bernard Swanepoel, To The Point
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Bernard Swanepoel resigns from Harmony
Allan Seccombe and David McKay
Posted: Mon, 06 Aug 2007

[miningmx.com] -- BERNARD Swanepoel, chief executive of Harmony Gold, has resigned after 12 years in the post as the company gears up to post a dismal set of quarterly results, erasing billions of rands off its market capitalisation.

He is to be replaced by Graham Briggs, Managing Director of Harmony Australasia, as acting Chief Executive with immediate effect, the company said in a statement.

“I am confident that Harmony will continue to grow under new leadership and benefit from the strategy that we have developed over the past few years,” Swanepoel said in a statement.
synonymous with Harmony
The news of Swanepoel's departure and Harmony's warning of poor quarterly results slashed R9bn off Harmony's market capitalisation on the JSE in an hour of trading as the shares fell 19.5% to R77.11 each.

My hair is blown back," said an analyst who could not be quoted. "Bernard was the glue of that company, and now the glue has gone."

He raised the prospect that Swanepoel had been headhunted by Anglo Platinum following the recent loss of its CEO, Ralph Havenstein, in similarly sudden circumstances.

However, Steve Shepherd, an analyst for JP Morgan, said this looked like a firing: "With immediate effect is a firing. The upcoming results will be disgusting. One can only imagine this has come from Patrice Motsepe (Harmony chairman)," he said.

Swanepoel is the third CEO of a major South African mining company to quit his post in less than two weeks. Last week AngloGold Ashanti's Bobby Godsell announced his retirement in a well-planned exit, with a successor lined up. He was preceded by Anglo Platinum's CEO Ralph Havenstein, who is thought to have been asked to leave by 75% shareholder Anglo American because of the company's shocking safety performance this year.

"Swanepoel was synonymous with Harmony. He built it up from nothing over all these years. People are upset about the manner in which he left, and to have left so suddenly, it makes you wonder if there is something even worse than the trading update," said Andrew Joannou at Renaissance Asset Management in Cape Town.

No reason was given for Swanepoel's departure in the Harmony statement, but the answer might be found in a second trading statement released shortly afterwards. Harmony will report a dismal June quarter and the reason for Swanepoel's exit might be found there.

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"Everyone in this office is very surprised at the resignation, but then you look at what they're expecting with their results and it becomes less surprising," said a London-based analyst.

The poor quarter comes as Harmony started showing a glimmer of light after failing to turn a quarterly profit for two years.

Harmony expects to post a June quarter headline loss per share of between R1.30 and R1.60 per share compared with the March 2007 quarter headline profit of R0.58 per share.

"This is a worrying trading statement because you can't really understand why these results have come about. We had expected production to come down this quarter, but this is a lot worse than we were expecting," Joannou said.

Gold output fell by between 8% and 12% in June from the previous quarter, mainly due to, and as previously disclosed, production incidents at Bambanani and Joel, lower grades mined at Tshepong as well as the underperformance at Mt Magnet’s underground operations in Australia.

The combination of lower production and higher cost will result in the June 2007 quarter’s cash cost per kilogram being up by between 35% and 45%, Harmony said.

“Harmony’s management remains committed to creating shareholder value by addressing the company’s cost issues, through disciplined mining and a back to basics approach.” Harmony's acting CEO Briggs said in the statement.

Headline profit of between R0.20 and R0.30/share will be reported for the 2007 financial year compared with a headline loss of R2.69 cents per share for the 2006 financial year.