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Harmony Suspends Dividend as Quarterly Loss Near Quadruples

Harmony Gold Mining Co. suspended its dividend after its quarterly loss almost quadrupled, joining AngloGold Ashanti Ltd. and Sibanye Gold Ltd. in scrapping the payout as bullion tumbled. The shares fell the most in a week.

Africa’s third-largest producer of the metal made a headline loss, which excludes one-time items, of 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.

Gold’s 21 percent drop this year forced Harmony to write down its 50 percent stake in the Hidden Valley mine in Papua New Guinea by $268 million, contributing to the loss. Labor disruptions that started in December at Kusasalethu, the largest operation that is 75 kilometers (45 miles) west of Johannesburg, cost the company 1.2 billion rand and curbed output. The mine was still building up output in the second quarter.

“The decision now is not to pay a dividend based on our last six months,” Chief Executive Officer Graham Briggs said on a call with reporters. “We’ve had a few headwinds in the last six months, the big one there was Kusasalethu, basically paying all the costs and getting very little gold.”

The company produced 276,109 ounces of gold in the period, 12 percent more than in the previous quarter, which was affected by strikes at Kusasalethu. Production for the year through June was 1.14 million ounces, down 2 percent from a year earlier.

AngloGold posted a loss of $135 million for the quarter through June on Aug. 7 and suspended its dividend. Sibanye yesterday said it planned to give a payout to investors once wage talks with unions are complete.

The three companies are battling labor unions in South Africa over pay. Through the Chamber of Mines, the industry lobby group, they raised their pay-increase offer to 5.5 percent from 5 percent yesterday and said they were also planning a profit-share initiative.

“Anything above CPI is going to be incredibly difficult to promote with costs going up and the gold price where it is,” Briggs said, referring to the consumer price index. South Africa’s annual inflation rate was 5.5 percent in June, according to data compiled by Bloomberg.

The offer “is a terrible joke,” Lesiba Seshoka, spokesman for the National Union of Mineworkers, which represents 64 percent of employees at the seven gold companies in the wage talks through the chamber, said by phone.

The shares declined 5.6 percent, the most on an intraday basis since Aug. 6, to 36.51 rand by 9:10 a.m. in Johannesburg, extending the drop this year to 51 percent. The retreat made Harmony the worst performer today on the six-member FTSE/JSE Africa Gold Mining Index.

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