Moab Khotsong mine in SA lifts Harmony’s production
The company has reported higher gold output than a year ago, with two new mines adding gold, although its Joel mine remains problematic
Harmony Gold’s September quarter production increased year-on-year because of production from the new South African Moab Khotsong mine it bought for $300m from AngloGold Ashanti earlier this year.
Harmony reported a sharp increase in costs because of winter power tariffs and higher labour costs.
For the first quarter of its 2019 financial year, Harmony reported production profit of R1.68bn for the three months to end-September compared with R1.4bn in the same period a year earlier, and R1.88bn from the June quarter.
The year-on-year change was driven mainly by the inclusion of the Moab Khotsong mine and the restarted Hidden Valley gold and silver mine in Papua New Guinea reaching commercial production levels in June.
Moab Khotsong, near Orkney in the Free State, is the largest single source of gold for Harmony, generating 74,911 ounces of gold in the September quarter and coming in with the second-lowest costs in the group at R413,411/kg.
In a production update, which did not include full financial data, Harmony noted that its all-in sustaining costs had risen to R526,747/kg from R488,176/kg a year ago and a similar level in the June quarter.
“Operating costs during the September 2018 quarter increased due to the seasonal higher winter electricity tariffs [in July and August] and higher labour costs, including once-off leave liability adjustments following the settlement of the wage agreement on October 3 2018,” Harmony said.
Production for the quarter of 378,510 ounces was 30% higher than a year ago but 2% lower than in the June quarter.
“We are confident that we will achieve our annual production and cost guidance as we continue to focus on safety, production and cost management,” said Harmony CEO Peter Steenkamp.
The most problematic mine in Harmony remains Joel, which reported all-in sustaining costs of R745,913/kg against a received gold price of R583,000. The Kusasalethu mine had costs of R640,421/kg.
The South African gold mines notched up a 19% year-on-year increase in gold production to 333,981 ounces because of the inclusion of Moab Khotsong, which Harmony took over in March.
Harmony said on Monday that a miner hurt in a tramming incident at Moab Khotsong in late October had died of his injuries.
Harmony flagged the exploration success at its opencast Kalgold mine in the North West province. The mine now has a total resource of 2.3-million ounces, with half of that in the indicated resource category.
“Mining studies have commenced to test a range of concepts to achieve a step change in the production profile of the operation through higher mining and throughput rates,” Harmony said.
Kalgold produced 10,256 ounces of gold in the September quarter at an all-in sustaining cost of R579,483/kg, marking it as one of the most expensive mines in the Harmony stable.