Harmony shares rise 4% after 17% surge in gold production
The stock closed 2.37 percent higher at R35.38 on the JSE after the group said that precious metal production had increased to 1.44 million ounces in line with its financial year 2019 guidance.
Harmony, whose portfolio gold projects spread across South Africa and Papua New Guinea, previously announced a target of producing 1.45 million ounces in 2019.
Chief executive Peter Steenkamp said yesterday that Hidden Valley's return to full production and the inclusion of Moab Khotsong had boosted production.
“Harmony’s 2019 financial year operating performance was boosted by the inclusion of a full financial year of production from both Moab Khotsong and Hidden Valley. We are committed to increase margins, which is achieved by mining safely and delivering increased profitable production,” Steenkamp said.
Harmony has previously said the Hidden Valley project, a joint venture with Newcrest, a major Australian miner, was poised for growth, while Moab Khotsong, which it acquired from AngloGold Ashanti, would be part of its investment strategy.
The miner said its underground grade recovery rate improved by 2percent at 5.59 grams a ton in 2019 from 5.48 grams a ton in 2018, the seventh consecutive year of achieving an increase in underground recovered grade. However, high cost structure has been a concern for investors and the company yesterday said it expected them to remain inflated.
Steenkamp flagged that the All-In Sustaining unit Cost (AISC) would be 8 percent higher than the guided R540 000 a kilogram due to issues at its Tshepong mine near Welkom.
“The increase in AISC is mainly due to inflationary increases and lower production at the Tshepong Operations,” it said.
Tshepong, Joel and Masimong suffered grade and volume issues in the six months to December.
In terms of recent developments in its global footprint, Steenkamp said that the recent developments in Papua New Guinea including the election of a new prime minister had resulted in a delay in permits for the Wafi-Golpu Project, which is believed to be a game-changer for the company.