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Cape Town – Harmony Gold [JSE:HAR] announced an interim dividend of 50c and posted strong headline earnings (Heps) amid a speed-up in production as it pays off debt.
Harmony said its Heps was R1.50 in the six months ended 31 December 2016, compared to R3.24 for previous six months. It said in a statement on Thursday that this “is more than a 100% higher than the headline loss of R1.03 reported in the previous comparable period in 2015”. Its year-end Heps on 30 June was R2.21, when it also paid a 50c dividend.
Six-month gold production increased by 8% to 17 227kg (553 862 oz), compared to 15 974kg (513 576oz) for the six months ended June 2016.
“Our operations … are maintaining their momentum and we believe that our annual guidance of approximately 1 050 000oz of gold at a cash cost of about $1 100/oz (R495 000/kg at an exchange rate of R14.00) is achievable," said Harmony CEO Peter Steenkamp.
"We will continue our strong operational performance and create further value uplift.”
Gold production also increased by 16% at its Kusasalethu mine, where miners launched an illegal sit-in for 48 hours 2km in January. Harmony wants to shut down the mine in five years’ time, reducing its lifespan by 19 years.
Revenue, including the gold hedge, increased by 3% to R9.868bn and total production profit decreased to R2.474bn from R3.092bn in the previous six months after accounting for an increase in cash operating costs.
“Positive cash flow generation from our operations in the past 12 months enabled the company to pay a final dividend of R218m in September 2016 … and reduce net debt from R1.1bn at the end of 30 June 2016 to R289m at the end of 31 December 2016,” it said.
“We achieved all we set out to in the six months from 1 July 2016 to 31 December 2016,” said Steenkamp.
“We delivered on our strategy to mine safe, profitable ounces and increase our margins,” he said. “Our cash flow continues to be strong, which allowed us to declare an interim dividend – the second dividend in 12 months.
“Harmony has a sustainable investment case based on prudent financial planning and on capital allocation that is aimed at enhancing the value of our portfolio.
