/ 15 February 2008

Power cuts hamper Harmony’s production

The world’s fifth largest gold miner, Harmony Gold, said on Friday that its production for the March 2008 quarter would decrease.

”In the light of Eskom’s electricity-supply disruptions and with mines operating only at 90% of Harmony’s previous power supply, the company’s production for the March 2008 quarter will decrease,” it said in a statement.

However, CEO Graham Briggs said that the company ”is devising new strategies on optimising operations to produce at 90% of electricity supply to ensure that we deliver returns on our shareholders’ investments”.

On January 25, South African mines received a communiqué from parastatal electric utility Eskom that electric power could not be guaranteed. Most South Africa mines were closed for five days amid rolling electricity cuts.

The mines then resumed operations but are presently operating with only 90% of their usual power supply.

Earlier this week, Bloomberg quoted Eskom as saying it would not be able to supply mines with more than 90% power until 2012.

Harmony on Friday released its financial review for the second quarter ended December 31 2007.

The gold miner saw a headline loss per share of 43 cents for the second quarter to end-December against 30 cents in the previous quarter — as result of a decrease in output.

Harmony’s total production for its underground continuing operations decreased by 1,3% to 4 445 000 tonnes resulting in an 8,3% decrease in kilograms produced to 12 403kg and a 3,9% drop in grade to 4,87g/t.

Cash operating costs remained almost unchanged at R133 234/kg. Gold price received at R169 502/kg was 8,5% higher than the September quarter. However, the Rand/United States dollar exchange rate was 4,7% stronger at 677 cents.

Harmony’s operating profit from continuing operations improved 43% to R449,8-million. Capital expenditure increased during the quarter under review to R808-million. This was mainly as a result of the ramp up in expenditure at Harmony’s Hidden Valley mine in Papua New Guinea. — Sapa