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Harmony Gold posts 65% drop in half-year profit

Due to a one-off gain recorded a year earlier and higher production costs.
Image: Naashon Zalk/Bloomberg News

Harmony Gold reported a 65% decline in half-year profit, due to a one-off gain recorded a year earlier and higher production costs.

Headline earnings per share (HEPS) – the main measure of corporate profit in South Africa – was R2.48 ($0.1616) for the six months to December 31, compared with R7.13 a year ago. The company announced a dividend of 40 cents for the half year.

Gold miners globally had been struggling with higher inflation, especially in the last six months, which is adding to their overall cost of production, called all-in sustaining cost (AISC).

During times of inflation gold prices move up as the yellow metal helps investors hedge the fall in value of currency. But persistently high prices, led by higher oil prices, increase other costs such as power, mining and transportation.

Harmony Chief Executive Officer Peter Steenkamp said operational problems at the company’s Hidden Vally Mine in Papua New Guinea, which suffered conveyor belt damage and a five-day strike, impacted results.

“All of those things are now resolved, from a Hidden Valley perspective. The conveyor will run on the second of March and we will be back on normal footing,” Steenkamp said during a call.

During the period under review, Harmony, South Africa’s largest gold miner by volume, agreed a wage deal with unions, which would see its general workforce getting a 1 000 increase for the next three years.

The company restated its financial results for the first half of the 2021 financial year, showing a once-off gain on the October 2020 bargain purchase of Mponeng mine from AngloGold Ashanti, resulting in a wider gap between the 2021 interims and the 2022 half-year profit results.

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