Harmony Gold, the third largest producer of South African gold, generated headline earnings per share (HEPS) for the quarter to end December of 44 cents compared to 66 cents in the June quarter as costs increased and less gold was produced.
The company milled 3,56% more tonnes than the previous quarter although grades per tonne decreased by 7%.
Total cash costs increased by 6,8% quarter-on-quarter to R104,132/kg compared to R97,538/kg.
“The group’s higher unit costs this quarter are a result of lower yields on most of our quality mines and are frustrating at a time when we are harnessing all efforts to reduce costs,” said chief executive Bernard Swanepoel in a statement.
He added that over the next half year, the company would continue its higher development rate, which would access more gold and therefore increase grades by 10 to 15%.
It “will also put us in a position where we will have more consistent production results,” said Swanepoel, “This should enable us to have reduced unit costs and improved performance.”
Development metres on the company’s South African mines were up 11,6% quarter-on-quarter.
Leon Esterhuizen, analyst at Investec in Johannesburg, described the results as disappointing.
He also referred to Swanepoel’s forecast for the coming six months as: “A new quarter, a new promise,” alluding to Harmony’s recent underperformance.
Harmony’s operations generated R487-million in cash during the quarter, and the company spent R512-million on investing activities.
The company generated a net R36-million in the quarter, leaving a cash balance of R904-million by the end of December.
In South Africa, the company’s underground grades decreased by 4,4% to 4,78g/t from 5g/t previously. – I-Net Bridge