HARMONY Gold forecast gold production of no more than 700kg (24,700 ounces) during the period of the 21-day lockdown ordered by South African president Cyril Ramaphosa as the country attempts to control the spread of COVID-19.
Commenting in an update today, the company also said it had suspended all exploration and capital projects in an effort to conserve cash.
Responding to questions via e-mail, Harmony spokeswoman, Marian van der Walt, said the production estimate equated to about 18% to 20% of average South African production for the month.
Capital projects affected by the shutdown were drilling and optimisation of Target North, as well as exploration at Kalgold. “Remember that work at Golpu has been reduced significantly until such time as the special mining lease has been secured,” Van der Walt said in respect of the Papua New Guinea (PNG) project which it shares with Australia’s Newcrest Mining.
Asked if there were any vulnerable shafts that Harmony may decide not to reopen when the lockdown is over, Van der Walt replied: “We are running some cash flow models to ensure that we make responsible decisions”.
The company confirmed today that all nine of its underground mines had stopped operation in terms of the lockdown order. Production would come from surface treatment plants which are processing pre-existing surface reef and waste. Surface retreatment operations also continue to treat surface tailings, it said.
In addition, Kalgold, the company’s open pit mining operation situated in South Africa’s North West province, continued to mine and treat ore albeit at a reduced rate.
Hidden Valley, situated in PNG, also continues to mine in line with its plan subject to any directives that may be issued by the government.
“The health and safety of all of our employees – and in particular those who continue to work on the care and maintenance of our mines, as well as at Hidden Valley – remain our highest priorities,” said Peter Steenkamp, CEO of Harmony Gold.
“We continue to ensure compliance with all prescribed and recommended preventive measures – in both South African and Papua New Guinea,” he said.
The onset of COVID-19 comes at a delicate time for Harmony Gold which announced in February that it would buy Mponeng and Mine Waste Solutions from AngloGold Ashanti for $300m in cash.
The transaction consists of $200m on deal closure – expected in June – with the balance payable by means of a royalty of $260 per ounce on underground gold mined in excess of 250,000 ounces a year for six years starting January 1, 2021.
Van der Walt said the company was continuing to assess ways to limit its expenses. “If required, we may use some of our debt facilities,” she said.
Harmony was also “… running various scenarios to establish what is possible” in terms of paying wages to employees in the event the lockdown is extended. Impala Platinum said in an update on March 30 that it warned unions indefinite payment of wages in a lockdown scenario was not possible.
