HARMONY Gold reported a steep decline in third quarter production, but said its revised production target of 1.48 to 1.56 million ounces was intact.
Production fell 11% to 325,219 oz for the period which took total gold output for the year to date to 1.1 million oz. All in sustaining costs (AISC), which accounts for expansion capital, was 15% higher and 20% higher in dollars for the nine months on a year-on-year basis (R825,925/kg; $1,703/oz).
Peter Steenkamp, CEO of Harmony, said in an update today that cost inflation was starting to bite across the sector. However, inflation and increased geopolitical uncertainty would also act as supports to the dollar gold price.
“Gold production during quarter three of financial year 2022 has been particularly challenging with electricity and water supply constraints persisting at our South African operations,” Steenkamp said.
A particular pressure in the quarter was that the company delayed access to certain “higher grade areas” at Moab Khotsong in order to make sure the areas were “structurally well-supported” before mining activities continued. It also stopped mining in areas affected by seismicity at Mponeng and Bambanani.
Harmony announced earlier this week that four miners had been killed at its Kusasalethu mine west of Johannesburg in a single incident related to “an infrastructure” accident. It didn’t add much detail today saying only it was during “routine engineering infrastructure-related work”.
Kusasalethu is one of three mines earmarked for early closure as they were ageging operations and unlikely to sustain economic mining for much longer.
In the case of the Free State mine Bambanani, which is due to close in July some 18 months earlier than planned, Harmony Gold said earlier this year it could no longer guarantee it could operate the mine in terms of its safety protocols.
Masimong, another of the ageing mines, is set for closure in 2023 while Kusasalethu is to be closed in 2024 in terms of the group’s long-term planning.
In its summary of the South African mining industry in 2021 published on May 9, the Minerals Council South Africa said had been “a disappointing regression” in fatality rates on the country’s mines with 74 deaths compared to 60 in 2020 – a 23% year-on-year increase.
Said Harmony today: “We are still in the process of investigating the multiple loss of life which occurred during routine engineering infrastructure-related work at our Kusasalethu mine, near Carletonville, which we announced on 9 May 2022”.
“While the timing of the incident happened outside of this reporting period, we pay our respect to those who lost their lives,” the company said.