A Harmony Gold local mine. Harmony Gold’s acquisition of the CSA Copper mine in Australia for R18.4 billion has cemented the company’s diversification strategy and foray into copper.
Image: Supplied
Harmony Gold Mining Company, which completed a major acquisition in Australia last year, predicts its interim headline earnings per share (HEPS) will grow between 11% and 17% following increased gold prices and further moves to integrate copper at scale within the group.
The group, South Africa’s biggest gold producer by volume, said in a trading statement on Monday that HEPS are expected to be between 1,411 and 1,485 South African cents when the full results are expected published on March 11.
"Harmony's underlying fundamentals remain strong, evident in the performance across our portfolio. Disciplined capital allocation allows us to convert higher gold prices into growth, while integrating copper at scale from CSA and Eva Copper to widen margins and de-risk cash flows through the cycle,” said CEO Beyers Nel.
Harmony completed its R18,4 billion acquisition of MAC Copper, the owner of CSA Copper Mine in New South Wales, Australia, in October last year. Harmony acquired 100% of the Eva Copper Project in Queensland in December 2022, and following the collection of a feasibility study, the board approved the go-ahead for production last November.
Nel said they remain focused on “selective, sequenced, and affordable growth, alongside responsible shareholder returns. 'Mining with Purpose' ensures we convert today's opportunity into enduring long-term value for all.”
He said that their revenue would increase as a result of a significant rise in the average gold price received, which increased by 36% to R1,909,849/kg in the first half, compared with the first half of 2024.
There would be a reversal of impairment in respect of property, plant, and equipment relating to the Tshepong North cash-generating unit (CGU) recognised as a result of significantly higher gold price assumptions applied in the valuation.
The increase in earnings was partially offset by an increase in production costs due to above-inflation increases in electricity costs and higher labour costs, in line with the five-year wage agreement.
There was also an increase in royalty tax due to higher rates being applied as a result of higher profits, as well as the increased revenue base to which it is applied.
Additionally, there was an increase in amortisation and depreciation due to additions to property, plant, and equipment following the acquisition of MAC Copper. There were also increases in acquisition costs, derivative losses primarily in the silver spot price, and an increase in finance costs, mainly due to the bridge facility for the MAC acquisition, which includes the amortisation of the commitment fees.
Harmony’s share price slipped 0.6% to R316.07 on Monday afternoon on the JSE, up by over 48% from R213.01 a year before.
Visit:www.businessreport.co.za