Despite a 36% increase in interim profit, Harmony Gold’s shares slipped yesterday after it failed to deliver a dividend as it hoards a war chest for copper acquisitions as it transforms into a global gold-copper producer.
In its results for the six months ended December 2022, the gold miner reported a 36% increase in net profit to R1.9 billion from R1.4bn in the comparative period in 2022.
By 3.45pm the shares were 2.45% lower at R54.44.
Headline earnings per share increased by R2.93 per share, while earnings per share rose by 31% to R2.98 per share. Revenue of R23.3bn increased by 6%, while operating profit grew 7% to R5.4bn.
The group did not declare an interim dividend due to the allocation of capital towards near-term copper and growth projects.
“As Harmony invests in margin expansion, life-of-mine extension, and various other growth opportunities, it is prudent to maintain a strong balance sheet and good liquidity. A decision has therefore been taken to not pay an interim dividend for this reporting period,” the group said.
Harmony said the total gold production decreased by 5% to 23 037kg (740 655ounces) from 24 226kg (778 879oz), mainly due to the closure of Bambanani at the end of the 2022 financial year.
Harmony CEO Peter Steenkamp said despite the challenges that the miner had to deal with, he was happy with the results.
Steenkamp said Harmony’s strategy of allocating growth capital towards high-margin, long-life assets had already started to deliver the desired results.
“Our copper journey has begun in earnest with the conclusion of the Eva Copper acquisition in the tier 1 mining jurisdiction of Australia. This near-term copper project complements our tier 1 Wafi-Golpu copper-gold project in Papua New Guinea. These assets bolster the Harmony investment,” he said.
Steenkamp said although the miner has a strategy to grow and diversify Harmony, its core business was still predominantly South African gold.
“I am, therefore, pleased that our South African assets have performed well on all key performance indicators despite the many challenges facing the industry.
“Excellent recovered grades at our South African underground operations in the second quarter of this financial year (Q2FY23) ensured we remain on track to meet our full-year production, cost, and grade guidance,” he said.
According to Steenkamp, the energy shortage has forced the group to implement plans to mitigate the effects of load curtailment.
“Our underground mines have excess capacity allowing for the optimisation of various functions, including the compressed air network, ventilation, and time-of-use such as weekend hoisting,” he said.
Steenkamp said: “We have load curtailment, not load shedding. We have the ability to decide where we are going to cut loads of certain areas. We manage the power ourselves, and at many of our mines, we have the luxury of maybe hoisting when we don’t have load curtailment.”
Steenkamp said Harmony’s South African underground operations’ production was largely flat at 17 179kg (552 316oz) in the first half of the 2023 financial year.
All the South African underground operations, including Bambanani, returned R1.8 billion in operating free cash flow, up 33% from R1.4bn.
“This is a commendable achievement especially given the challenging South African operating conditions,” he said.
Steenkamp said Harmony had obtained approval to begin construction of the Kareerand tailings storage facility (TSF) at Mine Waste Solutions in December 2022 and construction was now underway.
Looking ahead, Steenkamp said: “Harmony is transforming into a global gold-copper producer. However, our strategy of delivering safe, profitable ounces and improving margins through operational excellence and value-accretive acquisitions remains unchanged.
“The strong commodity prices have provided Harmony with good tailwinds as we manage the various exogenous challenges. Execution excellence and sustainable mining practices remain key to creating long-term value for all our stakeholders,” he said.
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