Harmony Returns to Profit as Production Rises and Costs Decline

Harmony Gold Mining Co., Africa’s third-largest producer of the metal, said it reported a profit in the fiscal first quarter after output rose and costs fell.

Earnings excluding one-time items were 20 million rand ($1.9 million) in the three months ended Sept. 30, compared with a 802 million-rand loss the previous quarter, the Randfontein-based company said today in a statement. All-in sustaining costs dropped 19 percent to $1,264 an ounce in the period. Production increased 12 percent to 309,773 ounces from the prior quarter, and declined 3.8 percent from a year earlier.

Harmony, along with rivals Gold Fields Ltd. and AngloGold Ashanti Ltd., is battling twin pressures of a lower bullion price and declining output volumes in South Africa, the world’s sixth-biggest producer of the precious metal. The metal’s 22 percent drop this year caused Harmony to suspend its dividend and make a loss in the previous quarter. It also forced the company to write down its 50 percent stake in the Hidden Valley mine in Papua New Guinea by $268 million.

“Harmony has built new mines, enabling it to access new and higher-grade mining areas and reducing the time it takes crews to get to the face,” the company said in the statement. “Growing our margins are all about reducing our costs, improving productivity and increasing our gold production.”

The company agreed to exchange two mining-right portions at its Joel operation for two at Sibanye Gold Ltd.’s Beatrix mine, it said today in a separate statement. Sibanye will also sell a further two portions at Beatrix to Harmony for a royalty of 3 percent of net revenue, it said.