HARMONY Gold said it would produce less gold than forecast for the 2022 financial year following damage this month to six kilometres of a conveyor at Hidden Valley, the firm’s Papua New Guinea (PNG) mine.
The conveyor had been repaired during last calendar year in which Harmony installed preventative measures to alert management to future faults, said Jared Coetzer, head of investor relations for Harmony.
“The conveyor tripped as designed because one the splices broke. It was checked and then restarted so this was more human error,” he said. “We will take the opportunity to conduct annual maintenance at Hidden Valley whilst the conveyor is being repaired.”
Hidden Valley also reported “geotechnical issues” which hindered effective mining of stage 6 of its open pit. Harmony therefore processed lower grade stockpiles. Combined with the impact of Covid-19 restrictions on the workforce, Hidden Valley’s production for the first half of the group’s financial year was 26% lower at some 60,153 ounces.
As a result, gold production for the 2022 financial year ended June 30 from Hidden Valley would fall to between 115,000 and 117,000 oz compared to guidance of 153,000 to 161,000 oz.
The outcome for Harmony as a group was a downwards adjustment to its overall full year production which would come in at between 1.48 million to 1.56 million oz from a previous forecast of 1.54 million to 1.63 million oz – a 4% decline.
As less gold would be mined, there would be an impact on all-in sustaining costs (AISC) which would rise to between R805,000 per kilogram and R835,000/kg from R765,000/kg to R800,000/kg. The AISC guidance for the South African mines which was put at R765,000/kg to R800,000/kg was unchanged, the company said.
That was owing to stable production at the South African mines in the first half which came in at 718,726 oz compared to 708,310 oz in the previous six month period.
Harmony said it measured first half production performance against the previous six months instead of the comparative period in the previous financial year. This was in order to fairly account for full production from Mponeng which the company bought from AngloGold Ashanti in September last year.