Share

Harmony seeks acquisitions, debt repayments as profits surge

Johannesburg - Harmony Gold Mining [JSE:HAR], the best performer on the Johannesburg stock exchange this year, is seeking to make acquisitions and repay debt after a plunge in the South African rand caused its profit margins to increase in the second quarter.

The company has a preference for operating mines and will look in its existing locations of sub-Saharan Africa and Papua New Guinea, Finance Director Frank Abbott said on a call with reporters Thursday. It will likely repay debt by the end of the year, he said.

Harmony’s stock has more than doubled this year as the plunging rand - down 9.7% against the dollar since December 1 - combined with a rising gold price and caused its profit margins to surge.

The company, which gets almost all its bullion from South Africa, gets its revenue in dollars while its costs are in the local currency.

Gold priced in rand has climbed 19% since December 1 and traded at R18 268 ($1 143) an ounce at 8:34 a.m. in Johannesburg.

“This rand gold price, which is substantially better than even the previous quarter, does give us cash flow," Abbott said. “We will certainly be looking for possible acquisitions.”

Headline earnings were R74m in the three months ended December 31, compared with a R523m loss in the previous quarter, the Randfontein, South Africa based company said in a statement on Thursday. All-in sustaining costs were R434 834 a kilogram, a 7% improvement. In dollar terms, they declined 15% to $950 an ounce.

“The fall in the rand has assisted a lot in term of profits but I think fundamentally we need to focus on the stuff that we can control which is the safety, the production the grade is and the cost,” chief executive officer Peter Steenkamp said on the call.

The company produced 287 074 ounces of gold in the quarter, 2% higher than the previous three months, it said. Output will probably fall this quarter due to the slow start up after the December break, but the company’s 1.1 million-ounce forecast for the year remains unchanged, Steenkamp said.

Harmony repaid R1.1bn of debt in the quarter, meaning its net debt is now R2.5bn.

The higher margins means Harmony is able to fund the development of a mine at Golpu, a deposit in Papua New Guinean that it jointly owns with Melbourne-based Newcrest Mining.

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
19.00
-0.3%
Rand - Pound
24.14
-0.1%
Rand - Euro
20.64
-0.2%
Rand - Aus dollar
12.38
+0.3%
Rand - Yen
0.13
+0.5%
Platinum
910.20
-1.4%
Palladium
1,008.00
-5.4%
Gold
2,157.44
-0.1%
Silver
24.95
-0.4%
Brent Crude
86.89
+1.8%
Top 40
66,252
0.0%
All Share
72,431
0.0%
Resource 10
53,317
0.0%
Industrial 25
100,473
0.0%
Financial 15
16,622
0.0%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders