Harmony Gold has beefed up its broad-based BEE credentials by allocating preference shares to a community trust that will oversee the empowerment of host communities at its Mponeng mine.
Its eligible employees will also benefit from the separate implementation of an employee share ownership scheme.
“Our employees and host communities are the cornerstone of our success,” CEO Peter Steenkamp said in a statement on Monday. “We believe in shared value and partnership in order to grow our business and develop thriving communities where we operate.”
Harmony Gold acquired Mponeng, which is near the town of Carletonville, and related assets from AngloGold Ashanti in 2020 for $300m. Mponeng began producing in 1986 and the production guidance for the 2023 financial year is 198,300oz-215,500oz.
SA’s biggest gold producer by volume, Mponeng will issue 2.47-million preference shares to a community trust, equating to 0.4% of its ordinary shares, in a deal that will allow host communities to share in its success.
The miner will also issue 12.7-million ordinary shares to the employee share ownership trust, equivalent to about 2% of its issued shares.
The two proposals are subject to shareholder approval.
Harmony Gold is among the best-performing stocks on the JSE, with its shares having nearly doubled year to date, thanks to a predominantly higher rand gold price. Unlike its big peers listed on the JSE, the vast proportion (90%) of Harmony Gold’s output is based in SA.
In its most recent quarter ended September, its financial metrics have also pointed in the right direction.
Its total gold output rose 17% to 425,130oz in the three months to end-September year on year, boosted by higher average underground recovered grades in SA and a strong showing from its Hidden Valley mine in Papua New Guinea.
The rand gold price rose 18% to more than R1m/kg, from R955,000/kg a year earlier as geopolitics and strong buying momentum from central banks boosted the appeal of the metal.
Gold revenue surged 33% to R14.78bn from the matching period a year ago. All-in sustaining costs, an industry metric measuring total production costs, fell 7% to R841,436/kg.
Its operating free cash flow surged 278% to R3.23bn, while operating free cash flow margins more than doubled, to 22% from 8%. Net debt was reduced to just R117m from R2.7bn a year earlier.
Its share price ended 2.5% higher on Monday at R115.35, giving it a market valuation of R71.5bn.
AngloGold Ashanti has moved its primary listing to the US in the hope that it will close the market valuation gap between itself and larger rivals in Northern America such as Newmont Corporation and Barrick Gold.
The relocation of its primary listing to New York from the JSE confirmed the long-held market speculation after AngloGold sold Mponeng, ending an era with SA that dates back more than a century when it was part of the Anglo-American stable.
AngloGold also move its headquarters to the UK as part of the transition championed by CEO Alberto Calderon.
About a year ago, AngloGold embarked on a painstaking exercise to review and optimise its portfolio through various channels that included improving productivity and reducing production costs as one way of catching up with its global peers.
Harmony said earlier in 2023 that the Mponeng and Moab Khotsong mines were bearing fruit as the group strove to become a higher-margin and low-cost producer. Moab Khotsong is a deep-level mine near the towns of Orkney and Klerksdorp.
The mine, which began producing in 2003, was acquired from AngloGold Ashanti in March 2018. Production guidance for the 2023 financial year is 204,000oz-215,000oz.
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