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Despite a 12% slump in production, Harmony reports a profit

by , 06 May 2014

Earlier today, Harmony Gold released a trading statement covering the three months to the end of March. This is the gold producer's third quarter. Offsetting a fall in production was a better gold price. Let's take a closer look at Harmony revealed in its update…

A higher gold price helped Harmony

Harmony says it has turned things around and posted “a quarterly profit despite a fall in production,” reports Fin24. Helping the gold producer climb out of loss territory was “a smaller foreign-exchange loss on a US denominated loan”.

Also helping Harmony out was a “higher gold price,” says BDLive. Over the three months to the end of March, production fell 6% to 269,035 ounces.

Headline earnings per share came in at 12c for the quarter, adds BDLive. That’s up from a 21c loss posted for the three months to the end of December.

That equates to a net profit of R31 million, notes Mining Weekly. That’s compared with a “net loss of R91 million in the December quarter”.

Harmony is putting a priority on safety

Following the deaths of nine miners in February at Harmony’s Doornkop mine, CEO Graham Briggs says it’s “taking ‘fairly drastic measures’ on safety,” reports Fin24. Mr Briggs says they “have independent outsiders doing a completely safety review of all our operations”.

The better gold price Harmony received saw get $1,294 an ounce, reports Bloomberg. And the quality of the gold mined also improved by 5%.

Over the quarter, Harmony wrote down R29 million for “the early closure of its Steyn 2 shaft… prompting the company to close the mine six months earlier than planned,” notes BDLive. And the gold producer “spent R90 million on retrenchment and restructuring”.

At time of writing, shares of Harmony were trading 3.15% higher at R36.72.

So despite a fall in production, Harmony benefitted from the rand dollar exchange rate pushing the company into profits.

Despite a 12% slump in production, Harmony reports a profit
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