Harmony is 'financially healthy'
May 8, 2009
Johannesburg - Harmony Gold Mining, South Africa's third largest gold producer, on Friday reported a 1.7 percent increase in headline earnings for the quarter to end March with HEPS recorded at 123 cents compared to 121 cents for the previous quarter.
The improvement was more notable on a year-on-year basis with HEPS climbing 95.2 percent from the 63 cents reported for the March quarter last year.
Production for the quarter at 349 801 ounces was 3.4 percent lower than the December quarter's 362 242 ounces.
This was after most of the shafts experienced a slow start-up after the Christmas break.
While underground volumes decreased, grade remained static, resulting in a marginal decrease in gold production.
Lower production pushed the cash costs up by 1.9 percent to $537 per ounce or R171 361 a kilogram and also resulted in a 4.5 percent decline in revenue to R3 billion.
Net profit fell 26 percent to R972 million from R1.3 billion in the December quarter and basic earnings per share dropped 28.7 percent to 231 cents from 324 cents.
But after the sale of assets and the completion of capital raising Harmony is now net debt free.
The company is using the proceeds from the capital raising and the Rand Uranium transaction, totalling R2.7 billion, to repay its convertible bond due in May 2009 and its short-term debt, which leaves it with a positive cash balance of about R1.6 billion.
"Harmony is financially healthy. We have delivered on our promise to reduce our debt, preserve cash and position the company to become net debt-free," said Harmony chief executive officer Graham Briggs, who said this reflected the benefits of the various remedial measures taken in the past 18 months.
The company is targeting production of 2.2 million ounces in 2012.
By then Phakisa, Doornkop and Elandsrand will be in full production and higher grades from the Tshepong Decline, the Bambanani shaft pillar and the Evander 8 Decline are expected.
Construction of the Hidden Valley gold mine in Papua New Guinea has also progressed and the mine will be commissioned mid-2009 while the Evander South project and the St Helena tailings project in the Free State provide the company with organic growth opportunities beyond 2012.
"We have positioned the company in such a way that we are able to deliver on our promise of paying a dividend in future," said Briggs.
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