Harmony Gold sets expectations for Morobe project

 HARMONY Gold sees the Wafi Golpu copper-gold project, in Morobe, as a new game changer to enable a more risk-diverse portfolio for the company.

The South African firm was developing the project in partnership with Australian Newcrest in a 50-50 arrangement. 

The project costs around US$2.3 billion (K5.9 billion) to develop, less than half of the original forecast it made during 2012.

Feasibility of the Golpu deposit is expected to be completed by the end of this year with first production targeted for 2020. With an estimated mine life of 27 years, annual production for stage one is expected to peak in 2025 at 320,000 ounces of gold and 150,000 tonnes of copper.

“The US$2.3-billion Golpu project showed a spectacular ore body with a large copper component that was affordable and mineable and its development would be a big focus this year,” Harmony chief executive officer Graham Briggs said during a conference call on Monday.

Harmony had applied for an environmental permit from the Department of Environment and Conservation to start advanced exploration and feasibility support activities, including the development of access roads, decline development to the ore body and associated works.

Harmony’s gold production in its second fiscal quarter fell 10 per cent from the first quarter due to stoppages at two of its operations, it said.

Output fell 271,963 ounces in the three months to the end of December from 303,341 ounces in the previous quarter.

The company attributed the fall to restructuring at the Kusasalethu mine, its biggest operation, where the firm was forced to halt output to try to remove scores of illegal miners last October.

“Kusasalethu has not returned to profitability after various setbacks,” Briggs said. 

“The under performance of the mine was further exacerbated by four fires and associated illegal mining activities during the past quarter.”

Harmony’s second-quarter loss consequently widened to 496 million rand (US$44 million/K115.63m) from 266 million rand in the previous quarter.

 Its all-in sustaining costs climbed 1.4 per cent to US$1262 (K3316) per ounce of gold.

Harmony reported a 16% decline in revenue to R3.7-billion owing to a 14 per cent decrease in gold sold to 275 851 oz and a 2 per cent decrease in the rand gold price received to R432 963/kg.

“Gold production during the March 2015 quarter is expected to be higher once Kusasalethu [mine’s] restructuring is finalised and Hidden Valley returns to full production, positioning our operations to benefit from higher gold prices,” Briggs said.