HARMONY pushed its net cash position up 285% to R11.1bn in the year to end-June giving it a total available liquidity of nearly R21bn which positions the group well for the pending acquisition of MAC Copper in Australia for $1.08b (R19bn) in cash.
That’s according to CEO Beyers Nel who commented in the group’s results statement that Harmony does not “anticipate the need for equity funding for our near-term growth projects.
“Instead, we are pursuing a balanced mix of debt or debt-like instruments to maintain an optimal capital structure and further lower our cost of capital,” he said.
Asked to clarify precisely what “near term” meant in terms of Harmony’s ambitious expansion plans Nel said this referred only to the MAC Copper acquisition.
Assuming that goes ahead as planned then next up on Harmony’s slate is the development of the Eva Copper project – also situated in Australia – which has to be developed from scratch.
Harmony’s results include an update on the drilling programme carried out since the Eva project was acquired in 2022. The results show a 31% increase in estimated contained copper to 1.9mt and a 12% rise in estimated contained gold to 492,000oz compared with the initial 2024 declaration of resources.
A final investment decision on Eva has still to be made by the Harmony board but first production from the mine is forecast for 2028.
Nel commented, “Eva is a bit further out so it will come with its own funding solution and there will be more colour on that with the final investment decision which is potentially later this year.”
The “biggie” lurking in Harmony’s future is the Wafi-Golpu copper gold project about which the group says very little in these latest results as it continues to negotiate with the Papua New Guinea government over the required special mining lease (SML)
Asked about this Nel commented, “I can’t go into all the issues that are still outstanding but we feel steady progress is being made. There is still no definitive answer yet as to when we expect the SML to be finalised.”
Analysts have always queried Harmony’s ability to fund its share of the huge capital cost of Wafi-Golpu which is a joint venture with US gold major Newmont.
Earlier this year Nel played these concerns down telling Miningmx that, “Harmony has never been in a better position to finance and build Wafi-Golpu.”
If there was a worry in these overall good results from Harmony, it concerned rising costs with a reported jump of 17% in AISC (all-in sustaining costs).
Nel broke that number down saying that mining cost inflation accounted for about 9% while the balance came from the impact of lower gold production on unit costs and greater sustaining capital requirements both of which had been guided in advance to shareholders.
He commented, “Harmony’s story has always been one of cost discipline and cost management and we believe we can keep our costs under control going forward.”
Harmony’s gold revenues rose 20% to R73.9bn but could have been higher because the total increase was offset by a realised loss of R4.6bn on the group’s gold hedge book.
Nel said Harmony continued to hedge up to 30% of its gold production over a rolling 36-month period to “lock-on margins” and added, “this prudent strategy provides financial stability and flexibility during a phase of elevated capital investment.”
