Johannesburg - The best performer on the JSE since the beginning of the year, Harmony Gold’s shares yesterday leapt 9.49 percent to R36.12 as the gold producer posted a solid set of results.
“Harmony, with 94 percent of its operating revenue generated in South Africa, benefits from the weak rand, which more than offsets the impact of the low US dollar gold price,” chief executive Peter Steenkamp said yesterday.
The company is seeking to make acquisitions and repay debt after a plunge in the rand caused its profit margins to increase in the second quarter.
Preference
The company had a preference for operating mines and would look in its existing locations of sub-Saharan Africa and Papua New Guinea, finance director Frank Abbott said yesterday. It would likely repay debt by the end of the year, he said.
Gold priced in rand has climbed 19 percent higher since December 1 and traded at R18 268 an ounce at 8.34am in Johannesburg.
“This rand gold price, which is substantially better than even the previous quarter, does give us cash flow,” Abbott said. “We will certainly be looking for possible acquisitions.”
Headline earnings were R74 million in the three months to December, compared with a R523m loss in the previous quarter, the company said.
Harmony has seen its share price climbing to R35, up from R9.85 in December. All-in sustaining costs decreased by 7 percent to R434 834 a kilogram in the quarter. (In dollar terms, a 15 percent decrease to $950 an ounce).
Looking ahead in the next quarter, Steenkamp added: “Output will probably fall this quarter, due to the slow start-up after the December break, but the company’s 1.1 million-ounce forecast for the year remains unchanged.”
The developments have allowed Harmony to repay R1.1 billion of debt in the quarter, meaning its net debt is now R2.5bn.
Restructuring
Marian van der Walt, the Harmony executive of corporate and investor relations, said: “We have completed our restructuring and do not plan any downscaling. Our approach with restructuring efforts in the past was to focus on ensuring that job losses are limited with employees being transferred to our other operations.”
Van der Walt said the rise in commodity prices was putting Harmony on a good footing “to further benefit from the higher gold price through increased production, higher grades and re
ducing its costs.”
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