JOHANNESBURG (miningweekly.com) – The net profit of gold mining company Harmony Gold plunged 69% to R1.4-billion from R4.6-billion in the six months to December 31, and an interim dividend has been declared out of income reserves.

Revenue increased by 2% to R22-billion from R21.6-billion and  the operating free cash flow margin halved to 11%, the Johannesburg- and New York-listed company stated in a Stock Exchange News Service announcement.

Production profit fell 26% to R5-billion, while debt to earnings before interest, taxes, depreciation and amortisation remains at 0.1x.

Earnings a share deceased 70% to 227c a share. The interim dividend of 40c a share compared with 110c in the corresponding  interim period last year.

On the company’s poor interim results, Harmony Gold CEO Peter Steenkamp said in response to Mining Weekly that the biggest impact compared with the corresponding six months was the rand gold price, which in the corresponding six months had been very close to a million rand a kilogram gold price and that fell dramatically.

Steenkamp added that from an operational perspective, the Hidden Valley mine in Papua New Guinea had a challenging quarter.

Firstly, a high-grade area at Hidden Valley had to be mined taking slope stability into account.

“I think the team has done fantastically well to make sure that it could actually mine those areas out there and safely,” said Steenkamp.

At the same mine, temporary and more permanent repairs had to be carried out on a cone crusher that had been giving problems.

Finally, at Hidden Valley, a five-day illegal strike took place after personnel objected to being taken off higher-paying Covid-19 reef rosters.

Just when those issues were resolved and Hidden Valley began operating optimally again at the right grade, a conveyor system breakdown took place, which is poised to impact this quarter’s results.

As a consequence, Harmony has revised down guidance to the range of 1.4-million ounces to 1.56-million ounces for the year.

SOUTH AFRICAN OPERATIONS

Commenting on the South African operations, Steenkamp said: “In the circumstances, we actually, I think, did fairly well in a certain way, because we had a lot of issues.”

These issues included South Africa’s electricity load-shedding during the latter part of last year, and, on top of that, Harmony had water issues with specifically Sedibeng Water in the Free State, which was unable to supply water, impacting on the ability of mine fridge plants to function.

At Phakisa mine, the fridge plants run on potable water.

“And then, of course, at the end of the day, it was a lot of issues on safety in South Africa, not only for Harmony, but for the whole mining industry,” Steenkamp said in response to Mining Weekly.

Correct reaction to safety resulted in many safety stoppages as incidences arose.

In the face of all those challenges, Steenkamp rates the South African performance highly.

“In general, we did what we could, and I think in that respect we did fantastically,” he remarked.

“All of those things are now resolved. From a Hidden value perspective, the plant is running now, the conveyor will run on March 2 and we will be back on a normal footing,” Steenkamp said.