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Cape Town - Harmony Gold's share price climbed as much as 5.8% to R10.80 in early trade on Thursday as investors cheered an increase in quarterly revenue and output in its local operations by 13% and 17% respectively.
In a statement on Thursday Harmony [JSE:HAR] announced a 7% overall revenue rise, with revenue from its South African operations increasing by 13% in the first quarter to end-September 2015 of its 2016 financial year.
South African underground gold production lifted by 17%, while underground recovered grade showed an 8% quarter-on-quarter rise.
The company said higher production was supported by a 2% increase in the rand gold price, which lifted from R463 910 per kilogram in the June 2015 quarter to R473 567/kg because of an 8% weakening of the rand against the dollar.
During the September 2015 quarter the US dollar gold price received decreased by 5% to $1 133 per ounce (Jun 15: $1 195/oz).
Production profit is 12% higher at R701m, with a 7% revenue increase at R4.1bn. The company generated free cash flow of R122m during the quarter.
The loss per share of 120 SA cents for the September 2015 quarter reduced from the loss per share of 725 SA cents for the June 2015 quarter. Cash balances increased by R420m to R1.5bn. During the September 2015 quarter, positive cash was generated by operating activities net of investing activities of R122m.
Harmony said restructuring is yielding results and its South African operations are profitable.
Harmony CEO Graham Briggs said with this set of results the gold miner "is proving all of its critics wrong".
"We continue to improve our grade performance, our underground operations are generating free cash flow, our costs are well managed and we are on track to achieve our annual production guidance.
"Combined with a much higher than expected R/kg gold price, our margins are dramatically improved, enabling Harmony to repay its debt and finance the development of Golpu (copper project in Papua New Guinea),” he said.
Golpu is a "world-class gold-copper project" and the feasibility study is set to be completed by December 2015, Harmony said.
Meanwhile, Harmony said it has reached a three-year wage agreement with the National Union of Mineworkers, United Association of South Africa and Solidarity, effective from July 1 2015. This brings the average wage increase on the total South African wage bill for the 2016 financial year to about 6.5%.
By 10:19 Harmony shares were trading 3.33% higher at R10.54, a far cry from the 52-week high of R38.50 reached on January 21 this year.
