Harmony Gold to write down $130 million on mothballed mine expansion

Ice cooling system at Harmony’s Phakisa gold mine. (Image from archives) 

Harmony Gold (NYSE:HMY) (JSE:HAR), South Africa’s third-largest producer of the precious metal, said Friday it will write down US$ $130.5 million (1.4 billion rand) on part of an expansion project into previously unmined areas at its Phakisa mine.

A feasibility study “showed that a large amount of capital was required to develop the decline project,” the miner said about a new area from which to extract ore.

Phakisa is located in South Africa’s Free State province.

Harmony will instead access a portion of the targeted area from a mine adjacent to Phakisa, it added.

The company has been cutting down capital expenditure in line with industry trends and says it plans “significantly lower” investment in its Papua New Guinea Wafi-Golpu mine, which has become its flagship project.

Phakisa, in Free State province, accounts for nearly 8% of Harmony’s production.