Harmony Gold’s two recent transactions, which have loaded debt onto its balance sheet, promise to deliver a vastly different set of financial results when the two low-cost assets start contributing gold to the mining group.

In its interim results for the six months to end-December, Harmony’s financial results showed the effect of an impairment of its Unisel mine, which the miner is likely to close in two years instead of the expected four, and flat production, sales, revenue and operating profit.

Harmony reiterated it was on track for full-year production of 1.1-million ounces of gold for the year to end-June, the first step on its way to a target of 1.5-million ounces in a couple of years.

Harmony is bringing its Hidden Valley mine in Papua New Guinea into commercial production in the coming months and nearing the conclusion of a $300m cash deal with AngloGold Ashanti to buy its Moab Khotsong and mothballed Great Noligwa mines in SA.

Harmony said it had secured critically important consent from the Department of Mineral Resources to transfer the mining rights associated with Moab Khotsong and other assets in the deal from AngloGold to Harmony, clearing the way for the issuance of a directive from the Department of Water Affairs to continue pumping water from the mines.

Harmony CEO Peter Steenkamp said the final condition for the Moab Khotsong deal is awaiting approval from the Competition Tribunal, expected at the end of the week.

To give investors a sense of what the inclusion of Hidden Valley and Moab Khotsong would mean for Harmony, the company adjusted its interim results to reflect the impact.

Production would have been 23.4 tonnes of gold against 17.4 tonnes in the interim period, while the group’s all-in sustaining cost would have been R471,246/kg and not the R500,248/kg it reported. Free cash flow would have been R700m higher at R2.2bn.

Harmony said it is using equity, debt and cash in equal measures to pay AngloGold and it said its net debt to earnings before interest, tax, depreciation and amortisation ratio would rise to 0.9 times from 0.4 in the interim period.

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 period was 1% higher at 560,003oz compared to the same period a year ago, with SA’s contribution rising by 6% on the back of 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 to a profit of R1.17bn a year earlier.