Harmony reaps financial rewards of buying the world's deepest gold mine

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Harmony Gold has started reaping the rewards of the integration of the Mponeng mine into its assets.
Harmony Gold has started reaping the rewards of the integration of the Mponeng mine into its assets.
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  • Harmony says the integration of Mponeng mine into its portfolio and a stronger rand-per-kilogram gold price boosted earnings and resulted in strong cash generation.
  • Harmony took control of Mponeng in October 2020, after it concluded a $300 million deal with AngloGold Ashanti.
  • The company reported a 360% jump in adjusted earnings year-on-year to R9.4 billion, and operating free cash flow shot up 78% to R5.3 billion.


Harmony Gold has started reaping the rewards of the integration of the Mponeng mine into its assets, as the operation contributed to the improved production in the nine months to end of March.

On Tuesday, Harmony - which took control of Mponeng in October 2020 after a $300 million transaction with AngloGold Ashanti - said gold production from the mine helped shore up production from the South African operations by 15.9% year-on-year to 31 470kg.

Harmony said the integration of Mponeng and related assets into its portfolio and a stronger rand-per-kilogram gold price boosted earnings and "resulted in strong cash generation and further strengthening of the company's balance sheet".

Adjusted earnings were up 360% year-on-year to R9.4 billion, while operating free cash flow shot up 78% to R5.3 billion.

During the reporting period, the rand weakened by 6% against the dollar from R14.91 to R15.82 year-on-year, a factor which added another positive factor on earnings.

"The sequential increase year-on-year in production and free cash flow was largely due to the successful integration of Mponeng and related assets into our portfolio, as well as a higher rand-per-kilogram gold price received."

However, quarter-on-quarter, production declined 12.2% from 13 425kg to 11 786kg, in what was attributed to an "uncharacteristically slow start-up in January 2021 after the December 2020 break."

Mponeng is the word's deepest gold mine. The $300 million deal with AngloGold Ashanti - which included the famed mine and the company's Mine Waste Solutions tailings recycling business - marked the sale of AngloGold's last remaining assets in the country. Mponeng's depth stretches 4km below the surface.

With gold, copper mining and exploration operations, Harmony said its stronger balance sheet puts it in a good position for the for the next phase of its growth strategy, including its pipeline of cash-enhancing projects that will boost cash flow margins and sustain production for the long term.

Net debt increased by R373 million to R953 million at 31 March 2021 and the company said it made repayments amounting to R833 million during the March 2021 quarter.

The gold price was up 23.3% year-on-year, at R868 964 per kilogram, and contributed to the higher rand gold price received.

Harmony will only hedge if it is not able to lock-in the required margin. The improved performance of its hedge book is also on the back of a weaker rand gold price with approximately 15% of its gold production currently hedged.

Harmony share price was down nearly 3% during lunchtime trade at R69.81, after opening at R72.16.

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