Harmony logs record quarterly revenue, halves debt

South Africa's Harmony Gold (JSE:HAR) (NYSE:HMY), the world's fifth largest producer of the precious metal, has kicked off its 2017 financial year on a good note, reporting increased production, stronger cash flows and the payment of a shareholder dividend.

The company, which is also South Africa’s third-largest gold miner, said revenue jumped by 16% to $374 million when compared to the previous quarter, though operating costs also increased — 12% quarter on quarter in Rand terms (19% increase in US dollar terms). This, mainly due to higher labour and electricity costs in winter.

The world's fifth largest gold miner has kicked off its 2017 financial year on a good note, reporting increased production, stronger cash flows and the payment of a shareholder dividend.

The miner halved its net debt to R528m (49% decrease from US$74 million to US$38 million), after paying a dividend of R218 million (US$16 million), and it raised the prospect it could be debt-free by the beginning of the 2017 calendar year.

Harmony highlighted the recent acquisition of the Hidden Valley mine in Papua New Guinea from partner Australia’s Newcrest Mining (ASX:NCM), which — it said —supported the company’s strategy to grow and improve output quality.

Chief executive Peter Steenkamp also noted the firm submitted a special mining lease application in support of the Golpu project, also located in in Papua New Guinea.

After losing money for three years to 2015, Harmony focused this past year on finding assets able to offset falling production at its South African mines. As a result, the company plans is to build a $2.6 billion mine on Golpu, which should help it reduce costs as well as boost production and reserves.

The South African gold miner has set a goal to increase production to 1.5 million ounces over the next three years and said it was on track to achieve its annual production guidance of 1.05 million ounces.