Harmony eyes lift in total gold output to 1.5moz pa and to add wider African gold acquisitions

The world’s fifth largest gold producer has told a Perth mining forum today that it plans to lift its total output to 1.5 million ounces a year within three years as it combines its increasing output from African and PNG mines.

Addressing today the second day of the three day Paydirt 2016 Africa Down Under mining conference in Perth, Harmony Gold’s CEO South East Asia, Mr Johannes Van Heerden, said that while the Company had achieved its latest guidance of 1.1 million ounce annual production, it was focused on lifting that level by another 400,000 ounces a year by 2020.

“Importantly, we want to achieve this on an All In Sustaining Cost (ASIC) target no greater than US$950 an ounce, and that such a cost performance is sustainable,” he said.

Harmony’s robust gold output was achieved amid delivery of a 61% reduction in debt and a net profit for the latest full year of US$64 million. This includes contributions from its nine South African gold mines where it is that country’s third largest gold miner.

Its South African gold reserves of 16.9 million ounces account for 45% of its total gold reserves inventory.

Mr Van Heerden observed that the global gold sector had in recent past lost its focus on margins, cash flows and capital allocation.

“One could call that lack of focus undisciplined,” Mr Van Heerden said.

“In Harmony’s forward growth objective, we want to make sure of adequate margin which allows us to reward our shareholders, to mine safely, to look after local stakeholders and when we stop mining, leave the environment in an appropriate healthy state.

“Harmony has over the past five years, been achieving a gradual increase in our underground gold grade profile.

“Our key objective is to grow our South Africa gold mining margin by mining above five grams per tonne from our underground mines.”

“Harmony is one of the few gold miners increasing its underground gold grade profile consistently over the last few years.

“That is because we have invested through the commodity cycles in South Africa’s gold future and that is now bearing fruit.”

He said Harmony had commenced also looking elsewhere on the African continent for gold acquisition opportunities “as it makes sense to be able to deploy the exploration, mining and project development skills we have built up in South Africa and PNG”.

Mr Van Heerden said Harmony would primarily be looking for gold “but we are comfortable with copper as long as there is gold associated with it”.

“We don’t mind the split as both metals (copper and gold) have a bright future so we are looking for something with reasonable reserve life and production profile – provided it satisfies our margin, safety and adequate return protocols.”