SA’s largest gold miner, Harmony Gold, saw a drop in gold production at the start of its 2023 financial year because of the closure of its Bambanani mine and load-shedding.
Total production was down 4.1% quarter on quarter to 11,396kg (366,390oz), the gold miner said on Thursday in its update about the three months to end-September. Group all-in sustaining costs (AISC), a measure of operating efficiency, went up 4.9% to R907,864/kg ($1,657oz).
The mine, near Welkom in the Free State, delivered 317kg (10,192oz) in gold — about 2.7% of total production — in the previous quarter as Eskom’s power cuts continued.
“The ongoing energy crisis in SA had a negative impact on group production, with approximately 100kg (3,215oz) in production lost as a result of load curtailment this quarter,” the gold miner, valued at R36.26bn on the JSE, said.
However, Harmony Gold’s production guidance remains unchanged at 1.4Moz-1.5Moz for its 2023 year with group all-in sustaining costs of under R900,000/kg because of the better performance in SA and the favourable dollar/rand exchange rate.
Most of Harmony’s operations are in SA, along with two in Papua New Guinea and one mine in Australia, but it is now looking to diversify into commodities such as copper as the local gold industry matures.
As part of the switch, Harmony announced in October that it agreed to buy the Eva Copper project in Australia and its exploration land package from Copper Mountain for R4.1bn.
Copper is one of the commodities expected to benefit from the green transition. Harmony’s purchase of Eva may prove to be a sensible investment as the group seeks sustainable growth and begins to play a role in the global transition to a low-carbon economy.
Copper is key for the green transition, being most suitable for electrical conductivity, with applications in electricity generation, transmission and end-use.
“We have begun a detailed review of the existing project feasibility study prepared by Copper Mountain. We expect to conclude the transaction in early 2023, subject to conditions precedent being fulfilled,” Harmony said.
With an estimated cost of $600m to develop the project that will only begin in 2025 and take two to three years, this will put pressure on Harmony in terms of increasing its capital expenditure requirements over the next few years.
The Eva open-pit copper mine is expected to yield 100-million pounds of copper a year and 14,000oz of gold annually over an expected mine life of 15 years, according to Mining.com.
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