Harmony Gold has commissioned the first phase of its renewable energy programme, a 30MW solar plant that will generate about 6% of the gold miner’s total energy consumption at its SA operations.
The second round of the four-phase project, which is expected to be completed within the next two years, will increase Harmony’s energy generation from renewables to about 170MW, or 20% of its power requirement.
Subsequent phases will see the company reduce its reliance on Eskom using other sources of alternative energy such as wind and storage that can supply its operations with power around the clock, said CEO Peter Steenkamp.
In its financial results for the year to end-June released on Wednesday, SA’s largest gold mining company by volume said revenue increased 14% from a year earlier thanks to higher grades at its underground operations and the average gold price received. The average recovered grade increased 8% to 5.78g a tonne, while the price received for its gold rose 15%.
That saw Harmony’s operating free cash flow more than double to about R6bn. Headline earnings per share (HEPS) were up 60% to R8.
Inflation pressure resulted in all-in sustaining costs increasing 6% to R889,766/kg, but this was still below the guided R900,000/kg.
After failing to declare an interim dividend, Harmony Gold will reward shareholders with a final divided of 75c a share — up from 22c a year earlier — and also above last year’s total payout of 62c.
Mponeng and Moab Khotsong, Harmony’s high-grade mines in SA, recorded a strong performance, driven by a 12% improvement in grades production.
The Hidden Valley gold and silver mine in Papua New Guinea reported an 18% and 41% increase in gold and silver output, respectively, though last year’s production was hampered by the failure of an overland conveyor belt in January 2022.
Steenkamp said production guidance for the year ahead is between 1.38-million ounces and 1.48-million ounces at an all-in sustaining cost of less than R975,000/kg. Underground recovered grade for the next year is seen at 5.60g-5.75g/tonne.
Capital expenditure is expected to increase to R9.5bn “mainly as a result of our investment in our major projects, necessary fleet replacement at Hidden Valley due to the life of mine extension project, and an increase in ongoing development capital” he added.
“We are currently updating the Eva Copper feasibility study. Upon completion, we will provide an updated guidance on the project development costs and funding structure.”
Harmony’s Eva Copper project in Australia and plans to develop the joint-venture Wafi Golpu copper project in Papua New Guinea with Newcrest Mining are part of the group’s plans to diversify and transform “into a global gold-copper producer”, Steenkamp said.
Copper assets are in demand as mining companies look to diversify their portfolios with so-called green metals that are needed for the transition to clean energy.
Copper, which is used in various technologies critical to the energy transition, is expected to run into a deficit in the next decade.
A recent report by S&P Global, “The Future of Copper”, says that even under a best-case scenario the market will endure persistent shortages through most of the 2030s, including a deficit of nearly 1.6-million tonnes in 2035.
The shortage could see copper prices, now trading at about $8,500/tonne, rise to record levels early in the “supply tightening cycle” of $11,000/tonne and as high as $13,000/tonne “by the end of the decade”, the report adds.
Steenkamp said the group’s copper mining will be “very profitable” even at current prices, which was why it wanted to get these mines into production as soon as possible.
Updated: August 30 2023
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