HAR - Harmony Gold Mining Company Limited - Press Release Release Date: 15/02/2008 09:02:01 Code(s): HAR
HAR - Harmony Gold Mining Company Limited - Press Release
HARMONY GOLD MINING COMPANY LIMITED
Registration number 1950/038232/06
Incorporated in the Republic of South Africa
Share Code: HAR
Press Release - Financial Results for the second quarter ended 31 December 2007
Johannesburg. Friday, 15 February 2008. Harmony Gold Mining Company Limited
(Harmony) announced its financial results for the second quarter ended 31
Harmony`s total production for its underground continuing operations decreased
by 1.3% to 4 445 000 tonnes resulting in an 8.3% decrease in kilograms produced
to 12 403 kg and a 3.9% drop in grade to 4.87g/t. Cash operating costs remained
almost unchanged at R133 234/kg.
Gold price received at R169 502/kg was 8.5% higher than the September quarter
but the Rand/US dollar exchange rate was 4.7% stronger at 677 cents. Harmony`s
operating profit from continuing operations improved 43% to R449.8 million.
Capital expenditure increased during the quarter under review to R808 million,
this is mainly due to the ramp up in expenditure at Hidden Valley in Papua New
The company`s operational results for the second quarter 2008 were negatively
affected by the 44 days of stoppage time at Elandsrand after a shaft incident,
in order to carry out the investigation into the mine incident of 3 October
2007. Elandsrand accounted for 67.1% or 1 177 kg loss of production in the
December quarter. The one-day national strike called by the National Union of
Mineworkers in support of safety also impacted on production. However, both the
Elandsrand accident and the one day strike has resulted in increased safety
focus and we are hopeful that this will result in positive safety behaviour and
a renewed safety effort from all Harmony employees.
The benefits of Harmony`s intensive cost control measures that commenced early
in October 2007 will only materialise in the next half of the financial year.
Measures implemented included the termination of 2 827 external contractors and
the voluntary retrenchments and natural attrition of 2 123 and transfer to more
efficient shafts of 4 859 employees. The transfers were mainly service staff
from Randfontein central offices and from non-productive to productive areas.
St Helena Nos. 4 and 8 shafts were placed on care and maintenance and its 650
employees have been redeployed at other Harmony operations. The transfer of the
centralised staff at Randfontein to the operations is part of the company`s
decentralisation process to compel operations to take ownership of their costs.
Our total complement now stands at 43 800 employees and 5 700 contractors
compared with 47 431 employees and 7 019 contractors at 30 June 2007.
Harmony`s Chief Executive Officer Graham Briggs says, "Harmony has in the past
few years been focusing on organic growth and these projects are now mines under
construction, most building up in production from now to 2010. All of these
mines will have longer life with generally higher grades. These production units
are larger and we will be expecting more consistent results, both in tonnes and
grade. These long life mines, together with those already in production, will be
the core of Harmony in the future. They make up the bulk of Harmony`s reserves
and will have lower cash costs."
"Harmony`s management is devising new strategies on optimizing operations to
produce at 90% of electricity supply to ensure that we deliver returns on our
shareholders` investments", concludes Briggs.
During the quarter, the internal due diligences on the effectiveness of the
continuous mining (Conops) method were completed. The review revealed that
Conops was not an effective mining method at Masimong and it has subsequently
been terminated and the majority of the workforce transferred to Phakisa. Conops
will be reviewed continually and it is our intention to phase out Conops at
those operations that do not deliver on our objectives.
The costs savings drive have had effects of positively decreasing the working
cost from R1 798 million to R1 652 million and hence despite producing less gold
(mainly due to the Elandsrand accident) the cash cost remained virtually
Changes have been made to this quarter`s reporting format. The previous
structure of quality, growth, leverage and international assets has been
replaced with South African underground, surface and international assets. In
addition to the company structure changes, and in accordance with the new
accounting regulations, four of Harmony`s operations, Orkney shafts 1 - 7, St
Helena, Cooke shafts and plant in Randfontein, and Mt Magnet and South Kal in
Australia, are now being reported as discontinued operations in the income
In the light of Eskom`s electricity supply disruptions and with mines operating
only at 90% of Harmony`s previous power supply, the company`s production for the
March 2008 quarter will decrease.
Issued by Harmony Gold Mining Company Limited
For more details contact:
Chief Executive Officer
on +27(0)11 411 2012
+27 (0)83 265 0274
General Manager, Investor Relations
on +27 11 411 2314 or
+27 (0)82 654 9241
Randfontein Gold Mine
P O Box 1
South Africa 1796
T +27 (11) 411 2000
For the comprehensive set of results please visit www.harmony.co.za
Merrill Lynch South Africa (Pty) Limited
15 February 2008
Date: 15/02/2008 09:02:01 Supplied by www.sharenet.co.za
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