Harmony Gold’s share price shot up almost 10% after it reported that its interim profit to end-December would more than treble.
SA’s biggest gold producer by volume is in a sweet spot at present given the high gold price and weak rand. Its numbers will be further boosted by higher gold output.
The uncertain global environment has supported demand for gold, which is widely viewed as a safe-haven asset. Central banks have also been net purchasers of gold in recent months, keeping the spot price of the precious metal at about $2,000/oz.
With the bulk of its assets located in its home market, Harmony benefits more from the rand gold price relative to its bigger global peers.
In a trading update on Thursday, Harmony said its headline earnings per share (HEPS) are expected to come in at R9.37-R9.76 for the reporting period versus R2.93 a year earlier.
CEO Peter Steenkamp said in a statement that ongoing investment in “safety, higher-quality ounces and a stable and predictable cost structure” supported the results.
“This has placed us in a very good position to take advantage of the strong gold price and generate excellent operating free cash flows,” Steenkamp said.
An increase in the production of silver and uranium at the Hidden Valley and Moab Khotsong operations, respectively, also boosted the results.
Steenkamp, who has been in charge of the group since 2016, is overseeing a strategy that seeks to position Harmony Gold as not only a gold producer but also a copper producer, to create a new revenue stream but also limit the potential risks of being reliant in the main on a single commodity.
Copper assets are in demand as mining companies look to diversify their portfolios with so-called green metals that are needed for the global transition to clean energy. Copper is expected to run into a deficit in the next decade.
Harmony has plans to develop a joint-venture with Newcrest Mining on the Wafi-Golpu copper project in Papua New Guinea. It also has the Eva Copper project in Australia.
After initially gaining almost 10%, the company’s share price was up 4.68% to R111.54 by 3pm. It has surged 90% over the past year, making it one of the best performers on the JSE for the period.
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