Golden year for Harmony as CEO basks in profit surge

Harmony Gold’s shareholders are set for a cash windfall after the company said its profit for the year ended June was expected to surge by more than 100%, with the Patrice Motsepe-chaired group taking full advantage of record gold prices.

The mining house, SA’s largest gold producer by volume, on Monday said its headline earnings per share (HEPS), a key profit metric in SA, would increase by more than 100% in the year. 

“Harmony delivered an exceptional combined performance across all our operations in FY24. This achievement was a result of clear strategic intent and successful execution, enabling us to deliver ahead of plan and capitalise on higher gold prices. Our aim is to be consistent and excel at what we do, and I believe we achieved this goal,” CEO Peter Steenkamp said in a statement.

HEPS are projected to reach a minimum of 1,852 SA cents per share, an increase of over 100% from the 800c reported in the previous comparable period. In US dollar terms, HEPS are expected to be at least 98c per share, which represents a more than 100% rise from the 45c per share reported in the same period last year. 

The bullish results by Harmony are in stark contrast to those of peers, Gold Fields, which last week reported a 30% plunge in profit in the six months ended June, and slashed full-year production guidance — missing out on the gold price boom.

This is as Gold Fields’ prized asset South Deep underperforms. 

Harmony, worth nearly R120bn on the JSE, is expected to release its results on September 5.

“We continued to allocate most of our project capital to our higher-grade, higher-quality and lower-risk assets. This aligns with our strategy of producing safe, profitable ounces and improving margins through operational excellence and value-accretive acquisitions,” Steenkamp said.

“By growing our higher-grade gold mines, expanding our surface retreatment business, and our international gold and copper assets, we will continue to transform and de-risk Harmony as we go from strength to strength.”

Group production for the reporting period rose by 6% to 48,578kg (1,561,815 oz), up from 45,651kg (1,467,715 oz) in the previous. This increase was primarily driven by improved recovered grades at Mponeng, Hidden Valley and Mine Waste Solutions.

Mponeng is regarded as the world’s deepest-level shaft, with a depth of 3,891m below datum and 2,062m below sea level.

Mponeng, which is near the town of Carletonville, began producing in 1986.

Moab Khotsong is a deep-level mine near the towns of Orkney and Klerksdorp. The mine, which began producing in 2003, was acquired from AngloGold Ashanti Ltd in March 2018. 

Despite the good performance and increased earnings, Harmony's profitability was offset by a R2.7bn impairment of the Target North asset.

“Post year-end, management received preliminary mineral resource estimates relating to the recent exploration drilling programme conducted at Target North. The new geological model is more robust and differs from previous interpretations as a result of the new information obtained from the drilling,” Harmony said. 

Harmony acquired Avgold in 2004, which encompassed the Target 1 mine in the Free State. This acquisition included a comprehensive exploration programme in the Target North area. At the time, it was estimated that Target North held a resource base of 67-million ounces, including the Oribi exploration zone. The property was categorised as undeveloped in property, plant and equipment and was valued at R5.1bn.

majavun@businesslive.co.za