PNG shines bright for Harmony

HARMONY Gold is confident that its biggest mining project outside of South Africa, which is in Papua New Guinea, is on track to deliver and the miner is looking to expand the project further.
It said pre-feasibility studies at the Brownfield project in Wafi-Golpu are progressing according to schedule, and that at the of the last quarter, seven drill rigs were operational, with six engaged on extension of the Golpu orebody to the north and infill of deeper sections.
“We have communicated to the market that the expectation is June this year in terms of completing the pre-feasibility studies,” Harmony chief financial officer Hannes Meyer told I-Net Bridge/BusinessLIVE.
The world’s fifth-largest gold miner also announced that it was on track to maintain its 3.7 billion south African rand capital expansion plans.
Wafi-Golpu contained an estimated 11.1 million ounces gold, 47 million pounds of molybdenum, along with 4.1 billion pounds of copper reserves.
Harmony said it was in the process to build up its production from its South African assets, which will enable it more cash to expand the Golpu project.
The group reported record earnings for the quarter ending in December.
Operating profits rose by 59% to 2.1 billion South African rand, while headline earnings per share more than trebled to 242 cents over the same period.
Harmony’s earnings were boosted by the combination of a stronger gold price and a weaker rand over the quarter.
The company noted that during the past quarter, the gold price received rose by 11% from R396, 405/kg in the September 2011 quarter to R438, 183/kg in the December 2011 quarter. Operating costs fell by 6% to R249, 356/kg over the period.
While Harmony realised increased output levels from Tshepong, Phakisa and Unisel, safety stoppages due to two fatalities resulted in a 23% drop in tonnes milled at Kusasalethu and proved to be a drawback for the company.
“We had some safety stoppages at Kusasalethu and unfortunately had some fatalities and that had an impact on production, so I think we were closed for about two weeks during the quarter,” Meyer said.
“At the current price, our margins therefore, remain strong. We remain bullish on the gold price and it is our view that the gold price in dollar terms will continue to strengthen, as the fundamentals that drove the gold price up are still in place and the global financial markets have not yet stabilised.”
Gold was expected by Harmony to reach an average price of US$1,850/oz for calendar year 2012 and may even move as high as US$2,000/oz later this year.