Johannesburg - Harmony Gold Mining, the best performer on the Johannesburg stock exchange this year, swung to a second-quarter profit after the weak South African currency boosted its revenue.
Headline earnings were R74 million ($4.6 million) in the three months ended December 31, compared with a R523 million loss in the previous quarter, the Randfontein, South Africa based company said in a statement Thursday.
All-in sustaining costs were R434 834 a kilogram, a 7 percent improvement. In dollar terms, they declined 15 percent to $950 an ounce.
Harmony’s stock has more than doubled this year as the plunging rand - down 9.5 percent against the dollar since December 1 - combined with a rising gold price and caused its profit margins to surge. The company, which gets almost all its bullion from South Africa, gets its revenue in dollars while its costs are in the local currency.
Also read: Weak rand lifts gold firms’ profits
“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,” CEO Peter Steenkamp said in the statement.
The company produced 287 074 ounces of gold in the quarter, 2 percent higher than the previous three months, it said.
Output will probably fall this quarter due to the slow startup after the December break, but the company’s 1.1 million-ounce forecast for the year remains unchanged, Steenkamp said.
Harmony repaid R1.1 billion of debt in the quarter, meaning its net debt is now R2.5 billion.
Also read: Exodus of mining bosses a sign of the times
The higher margins means Harmony is able to fund the development of a mine at Golpu, a deposit in Papua New Guinea that it jointly owns with Melbourne-based Newcrest Mining.
BLOOMBERG
For more on this story, grab a copy of Business Report tomorrow morning.