[miningmx.com] – HARMONY Gold said it would be unable to recover
70,000 ounces in lost gold production suffered in the third quarter which would mean
full year production for its fiscal year would be no more than about 955,000 oz.
However, the lower gold production – as a result of several unrelated grade problems
which CEO Graham Briggs said had given management a “wake up call” – was no
more than a hiccup in a stellar year so far in which Harmony has booked impressive
post-capex profits.
Net profit for the nine months of the 20111/12 financial year stood at R2.5bn largely
owing to the gold price received which, in rand per kilogram terms, is just over
R100,000 more than at the same time last year.
The outcome is that Harmony has been able to use cash to pay R2.2bn ($292m) for
drilling at its company-changing Wafi-Golpu deposit in Papua New Guinea (PNG), a
deposit it shares with partner Newcrest, and reduce debt. Net debt was R60m lower in
the quarter, said Frank Abbott, Harmony Gold’s CFO.
Third quarter gross profit was R502m ($66m) owing to an 18% decline in gold
production, predominantly related to a series of grade problems, some caused by
work stoppages. Elsewhere, as at Hidden Valley in PNG, rains led to a slippage in the
higher grade portion of the pit, said Briggs. Overall producrtion was also affected by a
decision to upgrade infrastructure at Doornkop which led to 44% lower gold
production at that mine in the quarter.
But net profit was higher at R1bn ($132m) owing to a R652m ($84m) deferred tax
credit which stems from a change in the mining tax formula, itself a function of the
introduction of a tax on dividends.
Briggs said he was disappointed by the lower grades at some mines but he said he
was satisfied with Harmony’s strategic progress. “Generally this has been good
progress strategically.
Commenting on Wafi-Golpu, where ongoing drilling continues to confirm initial
estimates of 16 million ounces of gold and some 4.8 million tonnes of copper, Briggs
said findings of a pre-feasibility study were due in the September quarter. “It remains
a great deposit; one of the world’s best,” he said.
