Harmony set to put cash from bonanza half year into projects

HARMONY Gold is to report half year share earnings more…

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HARMONY Gold is to report half year share earnings more than 100% higher for the 2023/24 financial year owing to an improvement in the rand gold price as well as higher grades at its underground mines which led to an increase in production.

Commenting in a trading statement today, earnings per share is expected to come in between 937 and 976 South African cents per share. This compares to 298 c/share for the half year to December 2022.

CEO Peter Steenkamp said the consequent strong cash generation would put the company in a prime position to replace ounces and grow production.

“We will continue using our wealth of experience and specialised skills to convert our significant mineral resources to mineral reserves as we create long-term value for all,” he said in the statement.

Shares in the company ended just over 3% higher in Johannesburg taking gains on a 52 week basis to 97%.

Steenkamp’s comments indicate Harmony is more likely to approve the deepening of Mponeng mine, west of Johannesburg, especially as the firm’s other main growth option in the short term, Eva Copper in Australia, is going to take longer to develop amid regulatory delays. Harmony said today it would incur additional expenditure costs as it updated Eva Copper’s feasibility study completed by the former owner.

Harmony resumed the dividend in August but developing Mponeng Deeps is a potentially multi billion rand project potentially scotching shareholder hopes for an outsize payout.

Headline share earnings will come in between 937 and 976 South African cents a share, about 100% higher year-on-year. Similar improvements will be registered in dollar terms: headline earnings will be between 50 and 52 US cents a share compared to 17 c/share in the 2022 financial year.

In January, Harmony maintained full year production guidance of between 1.38 to 1.48 million ounces for the period to end-June following a strong first half showing in which gold production would be in the range of 820,000 to 830,000 ounces.

Grades will come in at the upper end of 5,6 to 5.75 grams per ton (g/t). This grade guidance has been retained for the full year. Harmony also guided to an all-in sustaining cost of below R975,000/kg for the year.

In its trading statement on Thursday, Harmony said offsets to the strong operating performance were labour and electricity cost inflation and higher royalty taxes driven by an increase in revenue and profitability.

Amortisation and depreciation costs were also higher as a result of higher depreciation recognised for Hidden Valley’s stripping activities

There was also an increase in the current taxation due to higher taxable income resulting from favourable gold prices and an increase in gold sold, said Harmony.

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