Harmony Drops for Fourth Day on Mine Closing: Johannesburg MoverStephen Gunnion
Harmony Gold Mining Co. fell for a fourth day in Johannesburg trading, dropping to the lowest in a month, after Africa’s third-largest producer of the metal said it may fire workers and close its biggest mine.
The stock declined 3.1 percent to 66.82 rand by the close in Johannesburg, taking losses since Jan. 2 to 12 percent. More than 1.2 million shares changed hands, 86 percent of the three-month daily average, according to data compiled by Bloomberg.
The company started talks with unions that may result in the closure of the Kusasalethu mine in Carletonville, west of Johannesburg, it said in a statement yesterday. About 6,000 workers including contractors at the mine could lose their jobs, the Johannesburg-based company said. Kusasalethu, which has been temporarily closed since Dec. 20, reached 22 percent of its output target for the quarter through December. The company cut its full-year production guidance to 1.2 million ounces from 1.3 million ounces.
“The fall is justified; it’s a big chunk of their earnings they could lose if they do close that mine,” Jacques Potgieter, head of trading at Tradition Financial Services, said in a phone interview from Johannesburg today. “Unless it comes back on stream again, there no reason for investors to buy. Investors steer clear of uncertainty.”
The company hopes to resume production at Kusasalethu by July, Chief Executive Officer Graham Briggs said at a presentation in Johannesburg yesterday. About 200 workers will perform maintenance on the mine during a 60-day review process which may lead to the closure of Kusasalethu.
The gold miner’s 30-day historical volatility, a measure of stock swings, rose to 33.73 from 28.84 on Jan. 3. The FTSE/JSE Africa All Share Index’s 30-day volatility gauge was at 9.03 from 9.13 on Jan. 3. A higher reading means an asset’s price can have bigger moves.