Harmony’s Loss Quadruples on Hidden Valley Mine Writedown

Harmony Gold Mining Co. (HAR) said its quarterly loss almost quadrupled as Africa’s third-largest producer of the metal wrote down the value of a mine in Papua New Guinea and after strikes at its biggest operation.

The so-called headline loss, which excludes one-time items, widened to 804 million rand ($80 million) in the three months through June, from a loss of 202 million rand in the previous quarter, the Randfontein, South Africa-based company said in a statement today. It didn’t declare a final dividend.

Labor disruptions at Kusasalethu, Harmony’s largest operation that is 75 kilometers (45 miles) west of Johannesburg, since last year cost the company 1.2 billion rand and curbed gold output, Harmony said last month. The company, along with rivals AngloGold Ashanti Ltd. (ANG) and Sibanye Gold Ltd. (SGL), is battling labor unions in South Africa, who have rejected producers’ offer of a 5 percent wage raise.

“In the current gold price environment it is no longer growth at all costs,” Chief Executive Officer Graham Briggs said in the statement. “Investors are seeking returns and do not favor large capital projects. This is the new reality that we are dealing with.”

The company produced 276,109 ounces of gold in the period, 12 percent higher than in the previous quarter.

Harmony wrote down the value of its 50 percent stake in the Hidden Valley mine in Papua New Guinea by $268 million because of declining prices for silver and gold, as well as the mine’s poor production performance.

To contact the reporter on this story: Kevin Crowley in Johannesburg at kcrowley1@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net

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