Harmony’s share price leaps after strong quarterly sales and production

Harmony Gold's Kusasalethu mine.

Harmony Gold's Kusasalethu mine.

Published Nov 14, 2023


Harmony Gold Mining Company surged 6.8%, to R90.20, after reporting a 17% increase in gold production, to 13 223kg in the three months to September 30, while operating cash flows were also much higher.

There was a 33% increase in gold revenue, to R14.78 billion. The average gold price received increased 18%, to R1 127 208/kg from R955 010/kg, the miner said an operational update yesterday.

Operating free cash flow increased 278%, to R3.24bn from R857 million, driven by higher recovered grades at Mponeng, Moab Khotsong and Hidden Valley.

“The first quarter saw a continuation of the strong operating performance across all our operations … this was mainly due to higher average recovered grades from our South African underground operations alongside a very strong quarter from the Hidden Valley mine in Papua New Guinea,” the group said.

Underground recovered grades improved to 6.29g/t from 5.35g/t. Recovered grades at Hidden Valley were up 74% year-on-year, to 1.76g/t from 1.01g/t in the first quarter.

“Recovered grades at the Hidden Valley mine have remained high since we intercepted the high-grade ‘Big Red’ part of the ore body in the fourth quarter of the previous financial year.”

There had also been a 7% improvement in group all-in sustaining costs, to R841 436/kg from R907 573/kg.

High-grade underground operations contributed 53% towards group operating free cash flow.

Hidden Valley mine contributed 22% towards group operating free cash flow.

Net debt to earnings before interest tax depreciation and amortisation (EBITDA) was at zero, from 0.2 times at the end of the previous financial year.

“We remain on track to meet our FY24 production, cost and grade guidance,” the group said in a statement.

“All operations delivered higher production year-on-year. We are confident this good momentum will continue on the back of improved flexibility,” it said.

Silver production from Hidden Valley increased 55%, to 30 914kg. The average silver price received also increased by 35%, to R14 157/kg. Silver revenue of R433m was received at Hidden Valley.

Uranium production, a by-product from the gold extraction process at Moab Khotsong, increased 50%, to 70 044kg. Uranium sold increased 116%, to 92 987kg. The average uranium price received was up 24%, to US$58.21/lb.

Uranium revenue came to R223m for the quarter.

The strong rand/kg gold price was providing Harmony with a significant tailwind.

“We continue to manage costs carefully and are pleased that all our cost metrics per unit are lower year-on-year – in both rand and US dollar terms – as a result of the higher recovered grades, low-cost surface retreatment production and higher by-product credits from silver and uranium,” the groups said.

An “extensive project pipeline” would help the group transform into a global gold-copper producer.

“We are on track with the key projects. These include the tailings storage facility expansion at Mine Waste Solutions and the Zaaiplaats project which is the life of mine extension at Moab Khotsong.”

Newmont Corporation joined Harmony as partner in the Wafi-GolpuJoint Venture effective November 7, 2023, following the conclusion of the Newcrest Mining acquisition.

Harmony’s safety performance continues to improve. The group LTIFR (lost time injury frequency rate) for the quarter improved to 4.84 from 5.68, the lowest in 10 years, the group said.