Picture: Phill Magakoe.

Johannesburg - Harmony Gold Mining, South Africa’s third-largest producer of the precious metal, decided against expanding its Phakisa mine and will write down the value of the asset by about 1.4 billion rand.

A feasibility study “showed that a large amount of capital was required to develop the decline project,” Randfontein-based Harmony said in a statement today, referring to a new area from which to extract ore.

Harmony will instead access a portion of the targeted area from a mine adjacent to Phakisa, it said.

Harmony is attempting to cut costs and boost cash flow after gold tumbled 28 percent in 2013, the biggest annual decline since 1981.

The company decided to write down its 50 percent stake in a venture in Papua New Guinea by $268 million (R2.9 billion) in July last year.

Phakisa, in Free State province, accounts for about 8 percent of Harmony’s production.

“We will re-consider the Phakisa decline in future, as the project as a whole is worth investing in,” chief executive Graham Briggs said in the statement. - Bloomberg News