DARREN SCHUETTLER, Johannesburg | Tuesday
HARMONY Gold, South Africa’s third biggest gold producer, is considering closing a money-losing shaft after reporting weaker results for the quarter to September.
Harmony kicked off South Africa’s gold reporting season with a 30% drop in net earnings, prompting investors to lop nearly nine percent off the company’s share price.
The gold miner reported net earnings after tax of R80m in the September quarter, down from R111m in the three months to June 30. Earnings per share dropped to 81 cents from 115 cents.
The dividend for the September quarter was nil versus 70 cents in the previous June period.
Gold output slipped 312 kg to 16 639 kg (534 956 oz) in the September period. But the company said it remained on track to produce 2.2 million ounces this year.
Chief Executive Bernard Swanepoel said the weaker quarter was due mainly to lower mining grades at the Free State operations, but he expected a better December quarter.
Harmony would also decide by December whether to close its troubled number four shaft at Randfontein, which posted a R17.5m loss in the quarter. It employs 2500 miners.
”This is a quarter of missed opportunities, not a quarter of disasters,” Swanepoel told analysts during a results briefing.
”We expect to report an overall improvement in grade and tonnage during the next quarter and the company should in future produce at an average grade of five grams per tonne,” he said.
Overall, cash costs jumped to R54,872 per kg from R51,740 per kg in the June quarter. But Swanepoel expected working costs to return to around R50 per kg by year-end.
The September quarter included an annual 8.5% wage hike which Harmony expected to offset through productivity and efficiency gains.
Analysts said the quarterly results were below expectations and shareholders drove Harmony’s stock down 325 cents, or 8.8%, to R33.50 on the Johannesburg bourse. – Reuters