0% Harmony hurt by strong rand
Brendan Ryan | Fri, 30 Oct 2009 08:36[miningmx.com] -- HARMONY may have to restructure some of its lowest-grade and highest cost operations because of falling revenues due to the strength of the rand against the dollar. CEO Graham Briggs commented in Harmony’s September quarterly results statement released on Friday that, “we will have to contend with the likelihood of continuing rand strength for now and the negative consequences of this on rand gold receipts.” Briggs also highlighted the rising cost pressures on the group. He said, “the spectre of further extraordinary price hikes from power utility Eskom to fund its growth imperative looms large. In addition, our wage bill will reflect the impact of the recently agreed wage settlement. “Our weapon in managing the strong rand and rising costs must be improved productivity - in short we need to work harder and smarter. Our focus remains on producing more profitable ounces.” The impact of the strong rand reduced the average gold price received by Harmony for the September quarter to R239,438/kg (June quarter – R245,953/kg) despite the improvement in the dollar gold price over this period. That removed the benefit of a better-than-predicted operational performance through which Harmony increased gold production by nearly 6% to 11,615kg (11,003kg) which was ahead of the company’s forecasts. Cash operating profit fell 25.7% to R552m (R743m). Briggs noted that all the agreements relating to Harmony’s acquisition of the Free States assets from Pamodzi Gold had now been signed. So far Harmony had paid R20m to Pamodzi in terms of the waste rock dump agreement which became unconditional on September 16. The balance of R380m on the purchase price would be paid towards the end of November when the remaining agreements became unconditional. Briggs said the Pamodzi assets would be “an excellent fit with our existing Free State assets” and would be known as the President Steyn shafts.
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