HARMONY Gold on Monday reiterated its stance that it does not intend to separate its mining assets in South Africa from Wafi-Golpu, its greenfields gold mining project in Papua New Guinea.
Harmony’s share price jumped as much as 9.65% yesterday to an intraday high of R62.94 after it released its interim results for the six months ended December, surprising analysts by increasing its interim dividend to 50c from 40c the previous year.
South Africa accounts for about 95% of Harmony’s annual production.
"Harmony will continue to look at ways to add value to stakeholders, but we are not planning to split the company at this stage," CEO Graham Briggs said.
This comes after concerns that challenges facing South Africa’s mining sector — the result of rising electricity costs and a restive labour force — might diminish Harmony’s ability to continue to capitalise exploration work for the project. Mr Briggs said he was optimistic that Harmony was one step closer to signing an agreement with labour representatives, and for production at Kusasalethu to resume in a few weeks.
South Africa’s third-largest gold producer suspended operations at Kusasalethu mine in December after a series of illegal underground sit-ins prior to the festive season break. Bilateral talks with unions, alongside a section 189 notice — which gives mineworkers 60 days in which to enter into an agreement — were progressing well, Mr Briggs said. Harmony was scheduled to meet with unions later this week. "We are very positive that an agreement will be signed, this will be a benchmark on how to engage with labour," Mr Briggs said.
Headline earnings rose 28% to R1.58 a share, while operating profits went up by 16% to R1.6bn for the quarter as a result of reduced cash operating costs and a higher gold price during the quarter. A dividend of 50c was declared as a result.
Mr Briggs said gold recovery head grades at the mine also improved during the quarter, and Harmony was aiming to surpass its targets. The miner was also in the process of finalising the R1.6bn sale of the Evander gold mine to Pan African Resources, which was subject to final authorisation by the Department of Mineral Resources.
Kusasalethu has contributed about 14% of Harmony’s annual output of about 1.3-million ounces. Monday’s production report showed Harmony’s output fell 9% to 291,731oz from the September quarter, due to the fall in output from Kusasalethu being offset by improved production at other underground surface mining operations.
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