Unisel impairment casts slight shadow over Harmony’s interims
An impairment of the Unisel mine contributed to the slight shadowing of a sound interim operational performance at Harmony Gold, which reiterated it was on track for full-year production of 1.1-million ounces of gold.
Harmony, which has the bulk of its mines in SA and is ramping up its wholly owned Hidden Valley gold and silver mine in Papua New Guinea, noted gold output for the six months to end-December was 1% higher at 560,003oz compared with the same period a year ago, with SA’s contribution rising by 6% due to improved grades and an increase in milled tonnes across most mines.
Eight people were killed at Harmony’s mines during the period.
On flat revenue of R9.8bn, Harmony recorded operating profit of R1.2bn compared with profit of R1.17bn a year earlier, with the latest interims weighed by a R116m impairment against the underperforming Unisel operation.
Net profit was R897m against R1.54bn a year earlier, which included a R848m benefit from a bargain purchase.
Excluding one-off items, headline earnings were R990m compared with R657m the year before.
Harmony has invested $180m in Hidden Valley after buying its Australian partner, Newcrest Mining, out of the equally held joint venture. The mine is forecast to reach commercial production in the June quarter, adding 180,000oz of gold to Harmony a year and contributing towards the company’s output target of 1.5-million ounces in a couple of years.
All-in sustaining costs across the group fell by 2% to R500,248/kg, while the average received gold price was flat at R580 672/kg. Gold sales were up by 2%.
Helping Harmony’s revenue was a R503m boost from forward gold sales of 108,000oz at an average price of R692,836/kg.
Harmony has a gold and currency hedge book and overall these forward contracts realised R771m in gains for the six months. The gold contracts run for another two years and cover 19% of Harmony’s gold production.
"Management continues to top up these programmes when the market presents attractive opportunities to do so," Harmony said.