Harmony warns over output drop

[miningmx.com] — HARMONY GOLD MINING COMPANY LIMITED announced on Thursday that its production and costs for the quarter to end-September are largely in line with the guidance provided to the market in August 2010, at the time of the release of its fourth quarter results.

But the group advised that gold production for the September 2010 quarter is likely to be in the order of 3% lower than the June 2010 quarter.

It said this was a result of the planned closure of Harmony 2 shaft, the planned closure of Merriespruit 3 shaft, the temporary cessation of operations at Joel North shaft to allow for the completion of shaft bottom spillage infrastructure which resulted in 43 production days lost, as well as an accident at Phakisa at the end of June 2010, which resulted in the closure of that shaft for 13 days.

“As advised in the previous quarter, electricity costs were around R140m more quarter-on-quarter and labour increased by approximately R50m.

“Costs at Hidden Valley have been incurred for a full quarter as opposed to two months in the previous quarter.

“Retrenchment costs of around R60m have been incurred during the quarter,” the group stated.

CEO Graham Briggs commented that “our aim at Harmony is to focus on safe, profitable ounces. To do this we have taken bold decisions in shutting unprofitable operations, and focusing our attention on our longer-life, lower-cost operations that will be profitable and sustainable for many years to come. We remain focused on increasing production to 2 million ounces of gold by the 2013 financial yeaar, with costs per ton milled in the lowest quartile amongst South African producers.”

Harmony’s results for the period will be released on November 1 2010.