South Africa’s Harmony Gold Mining on Monday said free cash flow nearly tripled in the first quarter of its 2020-2021 financial year compared with the previous quarter, boosted by increased production and a surge in the gold price.
Higher precious metals prices, including gold’s climb to record highs above $2,000 an ounce in August this year, have cushioned miners from the impact of Covid-19 and boosted cash.
Harmony said operating free cash rose to R1.8 billion ($118.15 million) during the three months ended September compared to R603 million in the previous quarter, driven by a 5.4% increase in the rand/kg price.
“A solid operational performance, further aided by the gold price, has significantly strengthened our balance sheet, allowing us to achieve an operating free cash flow margin of 20%,” said Peter Steenkamp, Harmony’s chief executive officer.
Gold output rose 38% to 313,725 ounces compared with 226,632 ounces quarter-on-quarter after all underground operations returned to 100% capacity following the easing of lockdown restrictions, the company said.
The miner said its ratio of normalised net debt to earnings before interest, taxes, depreciation and amortisation (EBITDA)decreased to 0.5 times by the end of the quarter compared to 0.8 times in June.
The company’s net debt stood at R3.25 billion at end September after it acquired assets including Mponeng – the world’s deepest gold mine – from AngloGold Ashanti last month.
Harmony said it expected the deal would further boost its cash flows and reserves.