Harmony Gold in R2.8bn write down

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GRAHAM_BRIGGS INDEPENDENT MEDIA Chief executive of Harmony Gold Graham Briggs.

Johannesburg - Harmony Gold on Friday became the second South African gold producer to announce an asset write-down as a sharp drop in bullion prices forces mining companies to re-assess the profitability of even their most productive mines.

South Africa's third-largest gold producer said it was writing down up to $280 million, mostly on the carrying value of its 50 percent holding in its Hidden Valley mine in Papua New Guinea mine.

The amount includes an impairment of up to 80 million rand ($8 million) on its South African assets.

“We continue to manage that which is in our control - production and costs,” chief executive Graham Briggs said.

AngloGold Ashanti, Africa's biggest producer of the yellow metal, on Monday said it planned to impair up to $2.6 billion in assets.

Gold has fallen from almost $1,700 per troy ounce to below $1,300 within the past six months.

Valuations and reserves have also dropped significantly.

“Non-cash writedowns can be expected from every gold company,” said David Davis, an analyst at SBG Securities in Johannesburg. He said Gold Fields, another major South African producer, would be next.

The writedowns help support gold producers in their argument that they cannot afford the massive wage increases demanded by unions in industry-wide salary negotiations already under way.

Harmony also said labour unrest at its Kusasalethu operation during the December 2012, March 2013 and June 2013 quarters cost it 1.2 billion rand. - Reuters

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