Weak rand, firm gold price boost Harmony profits

Cape Town - Harmony Gold [JSE:HAR] on Thursday posted an 84% increase in production profit to R1.29bn (68% to US$91m) quarter on quarter, mainly due to a 7% increase in the gold price received and supported by a 2% increase in gold production.

Better production results resulted in Harmony recording headline earnings of R74m.

The company said in a statement higher production means that Harmony’s cash flow is strengthened, its margins are growing, it is able to repay its debt and to fund Golpu.

The higher R/kg gold price is simply an added bonus, said CEO Peter Steenkamp.

Combined with a 7% increase in the average R/kg gold price received of R507 490/kg, revenue increased by 10% to R4.57bn (to $321m) during the quarter.

The company said underground grade was 7% higher, with the majority of Harmony’s operations producing higher kilograms and generating net free operational cash flow.

All-in sustaining costs for all operations decreased by 7% to R434 834/kg in the December 2015 quarter, compared to R466 061/kg in the September 2015 quarter (15% decrease to $950/oz).