Harmony Gold lifted headline earnings per share by 132% cents in the year to June, driven by higher gold prices and elevated production boosted by higher grades and cost containment, with CEO, Peter Steenkamp saying there was strong support for bullion prices to remain elevated.
Harmony raised underground recovery rates by 6% 6.11 grams per ton. For the year to June, gold production rose from 1.4 million ounces to 1.5m ounces on the back of a 17% rise in output from Mponeng and a 34% and 17% rise in production at Mine Waste Solutions and Hidden Valley, respectively, due to improved recovered grades.
The company recorded a marginal 1% increase in all-in sustaining costs to $1 500 per ounce against the backdrop of a 16% rise in average gold prices received to $1 999 per ounce for the period under review compared to the year to June 2023. This subsequently drove up revenues in the company for the full year by 25% to $3.2 billion.
“Our gold volumes increased on the back of good grades on the back of mining areas that you know we always knew were going to be higher grade but we didn't expect it (grade) to be that high,” Steenkemp told Business Report in an interview yesterday.
“The higher gold price also had big impact on that and obviously we had a very good control on the costs.”
After headline earnings per share for the period rocketed by 132% to 1 852 (ZAR) cents, Harmony Gold has declared a final dividend declared of 94 ZAR cents compared to 75 cents a year earlier.
However, shares in Harmony Gold slumped by 8.60% in afternoon trade on the JSE yesterday to R151.69, extending the stock’s 10.99% weakness on the same bourse in the past seven days.
In the year under review, Harmony Gold drove up operating free cash flow by 111% to R12.7bn. It attributed this to higher recovered grades and a higher average gold price received for the period.
The company said it closed the period with a “strong, flexible balance sheet” that put it in a net cash position of R2.8bn and R12.6bn in liquidity made up of cash and undrawn facilities.
Gold prices that had benefited the company in the year to June were poised to remain elevated, said Steenkamp, on the back of strong central bank buying and ongoing de-dollarisation.
“We think the de-dollarisation that's happening at the moment in the world is still strong so the alternative to the dollar is obviously gold,” Steenkamp said.
“We believe there will be interest rate cut in the US, and that will be good for gold so we think for the foreseeable future gold prices will still be good and potentially can even go higher than it currently is.”
Steenkamp said the company was placing more emphasis on its exposure to copper which accounts for 21% of its total declared mineral resources of 136.5m ounces. For the period, the company’s declared mineral reserves rose by 2% to 40.3m ounces.
“Copper is great for us, first of all we have fantastic assets or projects as far as that’s concerned so we’re going to be part of copper going forward. Copper is the right commodity to be in so we are very happy to be part of the copper story going forward,” said Steenkamp.
BUSINESS REPORT