Harmony Gold to beat revised guidance after stellar year

HARMONY Gold said today it expected to exceed 1.55 million ounces in gold output for the 12 months ended June 30, beating guidance it previously revised upwards.

In March the South African gold miner targeted 1.38 to 1.48 million oz in gold production for the 2024 financial year at an all-in sustaining cost (AISC) of R920,000/kg. AISC would be “comfortably below” the revised number, it said today.

The better-than-expected operational numbers were owing to improved grades – which would be above six grams per ton (previously guided to 5.6 to 5.75g/t) – as a result of a high grade block at the firm’s Mponeng mine, as well as improvements elsewhere in the portfolio.

The increase in the rand gold price – more than 17% higher in the last 12 months – also made a major contribution to Harmony in the current financial year.

Commenting in a year-end update, Peter Steenkamp, who retires as CEO of Harmony in December, said the performance was the result of his strategy since 2016 “… positioning us as champions of gold mining in South Africa”.

He told Miningmx in May that the market was beginning to be realise that “we can produce 1.5 million oz up to 2038”.

Shares in the company have doubled in the last 12 months. The once under pressure gold counter is currently capitalised at R103bn.

“We have a nice pipeline ahead of us,” he said referring to the extension of Mponeng as well as the development of Eva, a copper/gold project in Australia, and the long-term potential in Wafi-Golpu, a project in Papua New Guinea Harmony shares with Newmont.

There have been questions in the past as to whether Harmony has the balance sheet to develop its international portfolio. Said Steenkamp: “We have built a solid balance sheet, which remains in a net cash position.” The company generated R1.4bn in free cash in the third quarter.

“Although Harmony has entered a cycle of higher capital expenditures, this is necessary to ensure we continue replacing our mineral reserves while improving the quality of our portfolio”. Harmony said it would meet capital expenditure of R8.6bn for the 2024 financial year.

Wafi Golpu was last estimated to cost $5.83bn to build. Since the feasibility was completed in 2018, a new study is clearly needed, but Steenkamp said in May that – for perhaps the first time – there was a clear pathway for Harmony financing it.

“When the big spending comes it will be from Mponeng’s extension, MWS (Mine Waste Solutions, a surface retreatment operation) going at full steam, and the Eva project complete,” said Steenkamp.

“Provided the current margins prevail, we will be in a very good spot,” he said. Harmony is due to publish updated plans for its 2025 financial year at its year-end results scheduled for August 28.