Bernard Swanepoel
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» Swanepoel's last interview at Harmony
» Swanepoel "fell on sword", says shareholder
» Bernard Swanepoel resigns from Harmony

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Swanepoel makes way for new blood
Allan Seccombe
Posted: Mon, 06 Aug 2007

[miningmx.com] -- BERNARD Swanepoel is making way for someone with fresh passion to take over Harmony Gold and he will spend the next couple of months deciding his future as he hands over the reins of the company synonymous with his name.

Swanepoel, who served for 12 years at the helm of Harmony, building it up from virtually a single asset to the world’s fifth largest gold producer, said his decision to resign was not related to the poor June quarter results.

“There is no doubt that in the next three or four years the Harmony we’ve been building will be visible to everyone, but three years is a long time,” Swanepoel told Miningmx in an interview.

The board had enough reasons to fire me long before this
“It needs someone with passion and energy. I’ve been with Harmony for 12 years and wasn’t sure I wanted to be there for another three or four more,” he said.

“It’s time to let someone else come in and impose their own style,” he added. “After 12 years with me in charge that might be a good thing for Harmony.”

The market did not think his departure was such a good idea, judging from its immediate reaction to his resignation and Harmony’s forecast of a very poor June quarter, the final in the company’s financial year. An hour after the double whammy of information was in the market R9bn had been erased from Harmony’s market capitalisation on the JSE.

“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.

Harmony will post a June quarter headline loss per share between R1.30 and R1.60 a share on 13 August against the March quarter’s profit of RR0.58/share. The company went two years without posting a profit.

Gold output fell by 8% to 12% during the June quarter and costs shot up.

“It’s most unfortunate that after such a long time with the company that my resignation coincides with results like that,” Swanepoel said.

The discussion about his departure from the company had been going on “a long time”, he said, but the time was now right for him to go.

“I definitely resigned. No doubt. The board had enough reasons to fire me long before this,” he said.

Swanepoel will spend the next few months of his notice period as he hands over to plot his future. “With a lower level of activity I can decide what I want to do, but I don’t know yet what that will be.”

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“I’d like the next phase of my life to be spent on a portfolio of activities and not just one big job. I’ve done that for 12 years.”

Swanepoel’s name has been linked to the top job at Anglo Platinum, whose CEO Ralph Havenstein unexpectedly resigned on 30 July, but Swanepoel ruled that out. “That’s just people desperate for a rumour,” he said.

Swanepoel was well known for his self deprecating humour during quarterly results presentations and his laid back but impeccable dress sense. If he generated an air of an Afrikaans-speaking country bumpkin who battled with big English words, it was something those dealing with him found to their cost to be an illusion.

An aggressive and astute businessman, he’ll probably be best remembered for an audacious bid for Gold Fields that turned very bitter and cost both companies millions in legal and consultant fees.

June had been earmarked for his resignation, Swanepoel said, because that was when Harmony should have completed raising $350m through a bond issue, but the market had become far more difficult and expensive because of the sub prime mortgage issue that had its genesis in the United States and spread around the world.

Harmony postponed the bond exercise and will use its billion rand in cash and money generated from its operations to invest in its growth projects.

Harmony needs capital for its Papua New Guinea projects as well as the Phakisa shaft, Doornkop South Reef, the Tshepong North decline in South Africa. About R2.1bn has been spent on these projects to date, and another R413m was planned for the June quarter alone.

The projects will add a net 500,000 oz by 2010/2011 as one million ounces of new production come on line. Marginal assets producing between 300,000 and 600,000 oz will be sold off.

The projects will continue apace under acting CEO Graham Briggs, the managing director of Harmony Australasia, who said it was critical to grow the group’s gold output and lower costs.

“There are good projects in Harmony in South Africa and Papua New Guinea. We need to generate cash within the company from the present production units to support that capital expenditure,” Briggs told Miningmx.

“What we have to see at Harmony is more gold. We have to get that,” he said. “We’ve got a trend that needs changing and to do that we have to focus on the core business of mining and focus on the basics.”

“There’ve been a lot of things going on in Harmony’s life and some of these operations need to be focussed on in great detail. We need to support the management and operational management to get them producing.”

Briggs has been with Harmony since 1995, serving in various operational roles. He will present the June quarter and year-end results on Monday.

Asked about the exodus of a number of board and top level managers over recent years, he said: “The operations seem to be okay as far as management skills and capacity goes. There has been an exodus of several of the executive. I think we’ll need some boosting on those skills and some leadership issues in some areas.”

Briggs said he would like to offer his services as permanent CEO but the board would spend the next few months looking for candidates. “My hat will be in the ring.”