Harmony Gold shines on worldwide gold price rally
JOHANNESBURG - HARMONY Gold Mining Company, which is chaired by mining mogul Patrice Motsepe, expects to post a 339 percent surge in profits during the six months to the end of December as the strong bullion price rally and the bargain acquisition of AngloGold Ashanti’s remaining South African assets pay off.
Harmony said on Friday that its net profit would climb between R5.7 billion and R5.9bn – up between 325 and 339 percent from a year earlier, also buoyed by higher production and foreign exchange translation gains.
The group said net profit for the interim was estimated to be between 283 and 297 percent higher at between $349 million (R5.12bn) and $361m, compared with a year earlier.
Harmony bought AngloGold Ashanti’s Mponeng mine, Mine Waste Solutions and the West Rand Mine for $300m in 2019.
The group said the assets contributed R3bn in revenue and R2bn in production costs, and a gain on bargain purchase of between R1bn and R1.2bn would be recognised on the acquisition.
Revenue from the existing operations increased by R3.1bn, primarily due to an 8 percent increase in gold production and the increase in the gold price.
“The average gold price increased by 31 percent to R896 587 a kilogram in the first half of 2021 from R683 158 a kilogram in the first half of 2020,” said Harmony.
Harmony’s gains on derivatives recorded a net gain of R902m for the period, compared to a net gain of R157m a year earlier.
“The increased gains are primarily as a result of a weaker rand/dollar exchange rate that resulted in a large gain on the unrealised foreign exchange derivatives,” said Harmony.
Harmony was also boosted by a foreign exchange translation gain of R652m compared with R36m a year earlier, primarily due to the impact of the stronger rand on US dollar-denominated loans during the period.
The taxation expense increased from R157m last year to R772m on the higher foreign exchange gains on the US dollar loans.
The group said headline earnings per share were now expected to be between 761 and 795 cents, or between 205 and 219 percent higher, than the 249c recorded in the previous comparable period.
In US dollar terms, headline earnings a share were projected to be between 47 and 49 US cents per share, or 175 and 189 percent higher, than the 17 US cents a share in the previous comparable period.
Harmony shares rose 1.76 percent on the JSE on Friday to close at R56.