HARMONY Gold says its hedging strategy continues to make sense after analysts questioned the approach following a nearly R10bn realised loss on its gold hedge book.
The issue was raised during an analyst call on Thursday, against the backdrop of higher gold prices and the significant difference between spot prices and some of the prices at which Harmony previously hedged production.
Harmony reported a realised gold hedge loss of R9.65bn ($571m) in FY26, which partially offset the increase in gold revenue and lowered the average gold price received.
The company has said it continues to hedge to lock in margins and protect itself against adverse gold-price movements as it undertakes its capital projects.
Financial director Boipelo Lekubo said the company had applied its hedging programme consistently and that it was not designed to speculate on the direction of the gold price.
Although she acknowledged the realised loss of “almost R10bn”, she pointed to the sharp reduction in the group’s net derivative liability.
The value of Harmony’s outstanding hedge liabilities fell sharply to R2.14bn at year-end from R12.24bn at the half year.
Lekubo also indicated that the impact from the hedge book should moderate as older hedges expire.
“We’ve locked in good hedges – as and when those mature, you’ll start to see realised loss coming down.”
Harmony’s latest hedge book suggests it has no intention of abandoning the strategy. Instead, it has continued to lock in protection at higher gold prices as existing positions mature.
Harmony says hedging provides greater certainty over cash flow and protects margins, giving it more financial flexibility as it funds its growth projects.
Eva Copper stays on 2028 timetable
Meanwhile, Harmony said its Eva Copper project in north-west Queensland remains on track for first production in the second half of 2028, despite the discovery of a protected species that has complicated environmental approvals.
Harmony’s published results identify the species as the Northern Blue-tongued Skink. Work is continuing in approved areas while the company seeks environmental approval for the affected parts of the project.
CEO Beyers Nel said Harmony was working with regulators and other stakeholders to keep the project moving while protecting the environment.
“Our strategy balances environmental stewardship, the regulatory compliance and value preservation while maintaining our planned path to first copper in 2028.”
Harmony is pursuing the regulatory process in two stages. According to Nel, the first is intended to preserve the timetable for first copper in 2028, while the second relates to ensuring replacement ore sources come into the mine plan when required.
For now, Harmony has not changed either its timetable or its capital guidance.
“We maintain our guidance at this stage where we are – both in terms of first copper as well as capex and as scheduled.”
Nel said Harmony did not see it as a choice between protecting the species and developing the mine.
“It doesn’t feel like it’s going to be either the endangered species or the mine. We feel it is going to be building the mine with taking care of the environment and the planet.”
Construction is continuing in approved areas, including the copper concentrator, which was cleared before the species was discovered and remains on schedule.
