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Harmony to brief on troubled mine

Jan 07 2013 09:48 Reuters


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Johannesburg - Harmony Gold Mining Company [JSE:HAR] will hold a briefing at 08:00 GMT on Monday on the outcome of a review of its troubled Kusasalethu mine, the scene of violent protests and an illegal strike last month. 

Harmony, SA's third largest gold producer, said last week it would delay the post-holiday restart of the mine as it was undertaking a review of its financial and operational status. 

The company could take a number of options including placing the mine under "care and maintenance", which would mean closing it for an indefinite time 

Such a move would hit Harmony's bottom line hard at a time when it needs cash to fund its huge Wafi-Golpu project in Papua New Guinea, analysts say. 

"This would be a blow to Harmony: Kusasalethu produced around 18% of Harmony's production profit in the September quarter. If they do put it on care and maintenance it will certainly disrupt their cash flow regarding Wafi-Golpu," said David Davis, mining investment analyst at SBG Securities. 

A brief underground sit-in was staged at Kusasalethu just before Christmas when 1 700 workers refused to surface to protest the suspension of colleagues who had taken part in an illegal strike. 

The suspensions also sparked violence on December 20 when several miners were injured by police firing rubber bullets to disperse a demonstration. In November, two miners were killed in clashes between rival unions. 

The unrest at Kusasalethu was the latest labour flare-up in South Africa's mining sector, which was battered last year by a wave of violent wildcat strikes that claimed around 50 lives. 

Harmony shares were flat at R71.50 in early trade.



 

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