Harmony Gold’s investors, fresh from getting a record interim dividend, are set for more goods after the company reported a surge in revenue in the nine months ended March as the gold rally adds glitter to the group’s performance.
The company, SA’s largest gold producer by volume, said in a trading update on Monday that gold revenue increased in the period under review to R50.9bn, while its net cash position surged 49% to R10.8bn.
This is despite the group’s production being down by 6% in the period affected by severe rainfall across SA, with the decline in output offset by the record-breaking gold price as investors flee to safe havens amid the trade war and pronounced geopolitics.
New CEO Beyers Nel said the company remained on track to meet its full-year production, grade and cost guidance.
“The record gold prices have provided an excellent opportunity to replace maturing hedges with new ones as they expire, locking in excellent margins in line with our hedging policy. During the quarter, the gold hedge book was maintained at between 10% and 30% of production over a rolling 36-month period,” Nel said.
“The average floor and ceiling price on our gold zero-cost collar book of 346 000oz stood at R1,660,000/kg and R1,890,000/kg, respectively.”
The gold price windfall has also seen Harmony reinvest significantly back into the business, with total capital expenditure for the reporting period up 31% to R5.8bn. It said the increase in capital expenditure was mainly due to extension projects at Moab Khotsong and Mponeng mines.
Mponeng is regarded as the world’s deepest level shaft at 3,891m below datum and 2,062m below sea level. The mine, near Carletonville, began producing in 1986.
Moab Khotsong is a deep-level mine near Orkney and Klerksdorp. The mine, which began producing in 2003, was acquired from AngloGold Ashanti in March 2018.
In March Harmony declared a record interim dividend of 227c, 54% higher than the prior period, amid the gold price rally.
Nel said the company was executing on its blueprint to establish the group as an international gold and copper producer.
“The Eva Copper Project in Queensland, Australia, is progressing well with the feasibility study update nearing completion and preparatory works at the project site under way. Most of the technical work has been completed,” he said.
“We are a company fortified by sound fundamentals, an exceptional team, and a focused execution of our promises. Supported by a robust gold price and a strong balance sheet, we are strategically positioned to advance our ambition of becoming a global gold and copper producer.”
Nel took over the reins at Harmony in January after the retirement of CEO Peter Steenkamp, who retired at end-December after nearly a decade in the role.
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