Graham Briggs, CEO, Harmony Gold
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Harmony aims for 2.4 million oz gold output
David McKay and Allan Seccombe
Posted: Wed, 31 Oct 2007

[miningmx.com] -- HARMONY Gold was seeking to produce 2.4 million oz/year of gold production excluding its discontinued operations Orkney and Australian operations it has recently sold.

"That's our target. I'm sure it will come to haunt me," said acting CEO Graham Briggs.

Briggs said the company was aiming at 18 tonnes of gold per quarter.
sure it will come to haunt me
Harmony chairman Patrice Motsepe said in the company’s 2007 annual report gold output for 2008 would be less than the 2.334 million oz in financial 2007.

Briggs insisted the company's shafts had to be profitable after capital expenditure.

According to Steve Shepherd, an analyst for JP Morgan, about 28 tonnes of gold, or 16% of production would not make the cut. These were Harmony 2 shaft, and Merriespruit shafts 1 and 2, Saaiplaas 3 shafts, Joel and St. Helena.

Harmony is talking to the unions about the closure of St Helena and has already shifted workers to the nearby Phakisa project, Briggs said.

Harmony has undertaken a review of its assets and will in the December quarter take decisions on how to structure the company’s portfolio, he said.

Motsepe is pushing for a permanent CEO appointment in early December to give shareholders peace of mind, Briggs said, adding he has asked for the job.

Harmony is reviewing its much vaunted continuous operations (Conops), a system whereby mines work around the clock, seven days per week.

"We're trying to fix up Conops before pulling the plug," Briggs said of whether every mine currently using the system would retain it. "It won't be a knee-jerk decision but if we don't see an improvement in the short term we'll return to normal operations." Conops was only applied in about half of Harmony's mines, he said.

Deciding on scrapping Conops at some operations will be difficult to make because it would entail laying off hundreds of people hired to keep the mines in continuous production. For example, if Conops was halted at Masimong, 700 workers would be laid off, he said.

“While that’s not a shareholder consideration, it’s certainly a consideration in our discussions with the unions and taking the situation forward,” he added.

Commenting on an insurance claim at Elandsrand, where a pipe broke resulting in stranding more than 3,000 workers and resulting in the mine being closed for about 48 days, with the loss of a tonne of gold, Frank Abbott, Harmony's acting financial director, said a claim was likely to be paid for both loss of profit and the cost of replacement of equipment. "We're working with the assessor at the moment," Abbott said.

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The cost of repairing Elandsrand is R20m on top of lost revenue of some $25m.

“In the coming quarter (December) we’ll see a reduction in costs, but we will be hit hard by production we’ll not see from Elandsrand,” said financial director Frank Abbott.

Briggs said the issue of safety had been overplayed by the media. "The media said the minister stopped the shaft (Elandsrand) but we stopped the mine," he said. The growing consciousness over mine safety was resulting in Government shutting the entire mine whereas the company traditionally only closed part of the mine.

Speaking last week at a charity function, Harmony Gold's former CEO, Bernard Swanepoel, commented that South Africa's gold mines had never been safer in more than 100 years of operations. However, there was more attention on them than ever before, he said - a development he said was due to overweening media attention.

That's not quite true because the Chamber of Mines, of which Swanepoel was a representative, instituted its own goal of reducing mine accidents by 20% every year for five years. It had failed by its own self-imposed measure.

Briggs said closing down an entire shaft for a period of time would have a retrograde effect of making it even more safe and more difficult to re-enter once investigations into accidents had been completed. "If you close a mine for a week, it takes another week to restart," he said. "There's a lot of cooling that needs to be restarted. It can become even more unsafe."