Harmony beats consensus on higher gold

Johannesburg - Harmony Gold Mining Company [JSE:HAR], South Africa's third-largest bullion producer, more than doubled its quarterly earnings on Monday, blowing past market expectations as it reaped the benefits of a weak rand and a sky-high gold price.

The group's headline earnings for share, totalled 242 cents in the October-December quarter, from 95 cents in preceding quarter.

The results far outstripped the average estimate of 159 cents in a Reuters poll of 5 analysts.

Production for the quarter was 344 592 ounces, up 5% quarter on quarter.

The average gold price during the quarter in rand terms scaled 12% to a record, helped by a weaker local currency, with the cash flowing directly to Harmony’s bottom line.

While South African miners sell gold for dollars, the bulk of Harmony’s costs are in rand, so a weaker local currency fattens its margins.

The average dollar gold price in the October-December quarter was down one percent at $1 684 per ounce but that marginal decline was off historic highs.

Harmony said it expects even higher gold prices in the coming year.

Operating costs were reduced by 6% to R249 356 per kilogram.

The company declared an interim dividend of 40 cents a share.

Harmony has cut its full-year production target by 13% due to safety stoppages, chief executive Graham Briggs said.

Harmony now expects to produce 1.35 million ounces, down from its previous target of 1.55 million ounces, Briggs told Reuters in a telephone interview.

The company produced 1.3 million ounces in 2011.

Harmony shares surged more than 4% on Monday morning after the gold miner blew past market expectations with its second-quarter results.

Shares of Harmony were up 3.8% at R96.61 at 07:11 GMT after earlier rising more than 4%.