Harmony off to slow start

[miningmx.com] — HARMONY Gold’s ambition of mining 1.7 million oz in its new financial year has hit an early setback as the group reported production figures of 336,650 oz for its first quarter to end-September on Monday.

The figure is 2.9% lower than the 346,714 oz production achieved during the June quarter.

However, basic earnings per share rose to 24c (7c in the previous quarter).

Cash operating profit for the quarter declined to R652m from R942m. The rand per kilogram gold price received decreased by 2.8% to an average of R287,401/kg in the September 2010 quarter, from R295,580/kg in the previous quarter. However, gold sold increased by 130kg, which resulted in a R38m increase in revenue.

Cash operating costs for the quarter increased by 11.2% to R238m due to increased electricity costs and price increases as well as higher labour costs.

“Production from our growth projects during the quarter was pleasing, reinforcing our pursuit of lower-cost, better quality assets, and taking us a step closer to achieving our production target of two million ounces by 2013.”

He added the ramp up of Hidden Valley in Papua New Guinea (PNG) continued and exploration drilling at Wafi/Golpu showed tremendously positive results.

Harmony’s growth in the short to medium term will come from four projects, three in South Africa – Doornkop, Kusasalethu and Phakisa – and an open pit mine in PNG, being Hidden Valley. Most of the capital on these projects has been spent and production benefits have already started to be seen, driving the company down the cost curve.

These four growth projects were responsible for a 193kg rise in gold production quarter-on-quarter, which largely offset the closure of some of our older shafts, a lower grade at Bambanani and continued work on Joel’s shaft bottom.

Among the highlights for the quarter were a 113kg rise in gold production at Kusasalethu; an 86kg growth in production at Hidden Valley, a 33kg increase production increase at Doornkop as well as the South African surface operations, which saw gold production rise by 52kg.

A concept study at Harmony’s Wafi/Golpu project was finalised in September, indicating that a copper and gold mine is technically and financially viable, and that a number of development options could be considered in a pre-feasibility study.

Production could potentially be between 400,000oz and 700,000oz of gold and 100,000t to 200,000t of copper per year. This could be sustainable over a 20-year mine life.

“This could conceivably be the gold find of the century,” said Briggs.