Mines profitable at current price – Harmony

Published Feb 5, 2014

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Johannesburg - Harmony Gold Mining would swing back to profit in the next six months if the gold price stayed at current levels, chief executive Graham Briggs has predicted.

South Africa’s third-largest producer of the metal was aiming for all its mines to produce gold at less than R400 000 a kilogram and to bring the average cost across its operations to about R390 000 a kilogram,

Briggs said on Monday. A kilogram of gold was worth R447 376 at the London fix of $1 250.25 an ounce yesterday afternoon at an exchange rate of R11.13 to the dollar. “We are planning for a more conservative gold price at R400 000 a kilogram and below,” he said. “Therefore the next six months at these gold prices should be quite profitable.”

On Monday Harmony posted its second loss in three quarters after output and bullion prices declined. The company did not pay a final dividend last year and wrote down the value of its 50 percent stake in the Hidden Valley venture with Newcrest Mining in Papua New Guinea by $268 million (R3 billion).

The higher gold price might allow the board to pay a dividend in the next six months, Briggs said. At the current gold price “you can see the sort of margin that we have”, he said. “That would be a good intent to pay some dividends during this next half year, but we don’t know what the gold price is going to do.”

The price of gold in rand has risen 12 percent this year, partly due to the rand’s 6.5 percent drop against the dollar. Harmony shares closed 3.67 percent lower at R30.21 yesterday. – Bloomberg

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