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Johannesburg - Harmony Gold Mining Company [JSE:HAR], the world's fifth largest gold producer, reported a 67% drop in quarterly profits that fell short of market expectations as power rates and the costs of a troubled asset it recently bought took a bite from its earnings.
The group's total production for the 2011 financial year came in at around 1.3 million ounces after output in the March to June quarter rose 3% as expected, but Harmony did not give a target for next year.
Its headline earnings per share, the main profit gauge in South Africa, fell sharply to 30c in the three months to end-June from 91c in the previous quarter. That was just below the average estimate of 33.5c in a Reuters poll of seven analysts.
A fall in profits was expected as the company had flagged to the market that its cash costs were expected to rise on higher power tariffs and stores-related expenses and the inclusion of costs related to Target 3, a shaft it bought from troubled miner Pamodzi Gold.
"Quarter on quarter, cash operating costs in rand kilo terms were 12 percent higher, mainly due to higher electricity and stores costs, as well as the inclusion of Target 3 in our operating results," the group said.
"Higher stores costs are due to additional maintenance performed during public holidays," it added.
The average gold price was up about 9% to $1 509 an ounce during the quarter from the previous one and its bigger domestic rivals AngloGold Ashanti [JSE:ANG] and Gold Fields [JSE:GFI] both reported sharply higher earnings for the period.
Analysts remain bullish about its Papua New Guinea project Wafi-Golpu and its Hidden Valley mine in the country and the company said it stuck to its view that it was a "game-changing region for Harmony".
Its prospects there and gold's surge have helped push its share price 20% higher since the start of the year compared to a 7% decline in the blue chip top 40 index .
The group's total production for the 2011 financial year came in at around 1.3 million ounces after output in the March to June quarter rose 3% as expected, but Harmony did not give a target for next year.
Its headline earnings per share, the main profit gauge in South Africa, fell sharply to 30c in the three months to end-June from 91c in the previous quarter. That was just below the average estimate of 33.5c in a Reuters poll of seven analysts.
A fall in profits was expected as the company had flagged to the market that its cash costs were expected to rise on higher power tariffs and stores-related expenses and the inclusion of costs related to Target 3, a shaft it bought from troubled miner Pamodzi Gold.
"Quarter on quarter, cash operating costs in rand kilo terms were 12 percent higher, mainly due to higher electricity and stores costs, as well as the inclusion of Target 3 in our operating results," the group said.
"Higher stores costs are due to additional maintenance performed during public holidays," it added.
The average gold price was up about 9% to $1 509 an ounce during the quarter from the previous one and its bigger domestic rivals AngloGold Ashanti [JSE:ANG] and Gold Fields [JSE:GFI] both reported sharply higher earnings for the period.
Analysts remain bullish about its Papua New Guinea project Wafi-Golpu and its Hidden Valley mine in the country and the company said it stuck to its view that it was a "game-changing region for Harmony".
Its prospects there and gold's surge have helped push its share price 20% higher since the start of the year compared to a 7% decline in the blue chip top 40 index .
