SOMETIMES you just get lucky. Peter Steenkamp took over Harmony Gold in January last year in time for a boom in the rand gold price followed by a boom in the dollar gold price, both of which combined to send the Harmony share soaring six-fold. While this has bought him welcome breathing space in terms of extra revenue generation, he still has to deal with major fundamental issues that will make or break the company. His three main decisions last year were all controversial. The first was to chop the life-of-mine at Kusasalethu from 24 years to five years through a decision to “high grade” the operation. The second was to buy out partner Newcrest Mining’s stake in the loss-making Hidden Valley mine in Papua New Guinea for $1, plus all associated liabilities, and then announce Harmony would pump another $180m into Hidden Valley to double its size. Effectively, the extra cash generated from the high-grade mining of Kusasalethu is going to be ploughed into Hidden Valley which is an operation some analysts feel is not worth it. Steenkamp’s third decision was to look for acquisitions to expand group production by 50% to 1.5 million ounces annually. It is risky and, while everything looks rosy now - with Harmony resuming dividend payments and cutting debt - conditions in the gold business can change swiftly, and dramatically.
LIFE OF PETER
He holds a degree in mining engineering from Pretoria University and has some 30 years of experience in gold mining. He diversified into coal and platinum with ARMCoal and ARMPlatinum from 2009 to 2013 after which he joined Sasol Mining. Arguably his worst career decision was to become CEO of ill-fated Pamodzi Gold – an experience Steenkamp no doubt would like to forget.
“Acquiring 100% of the Hidden Valley meets our acquisition criteria.”
- Web Address: www.harmony.co.za