Harmony warns of limited gold production during lockdown

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Harmony Gold [JSE: HAR] has said production of gold in South Africa will be limited to between 650 kg and 700 kg during the lockdown period.

In comparison, its half-year results published in February, show that gold production amounted to 21 411kg, or an average of 3 568.5 kg per month.

The gold mining company on Tuesday issued an update on measures taken in response to the Covid-19 outbreak. The share price, which opened at R39.60 was down nearly 10% at R38.40 shortly after markets opened. The gold price was also trading lower on Tuesday, down 0.37% by 09:30.

Last week President Cyril Ramaphosa announced a 21-day lockdown in order to slow the spread of infection. This means that only essential businesses could continue to operate, while care and maintenance of mining operations is allowed to avoid damage to continuous operations, Fin24 previously reported.

Harmony Gold CEO Peter Steenkamp said that the lockdown would affect the its annual production guidance of 1.4 million ounces and full-year earnings for 2020. The company reiterated the impact the lockdown would have on its operations in a statement issued on Tuesday. "It is anticipated that Harmony will only produce between 650kg to 700kg of gold in South Africa during the 21-day lockdown period," the company said.

Harmony will also be suspending its exploration and capital projects in order to preserve cash.

While all nine underground mines in South Africa have ceased operations, there is still care and maintenance taking place – this is the provision of water, power and security as well the operation of health hubs at each mine.

Mining at hidden Valley, in Papua New Guinea will continue, subject to directives issued by the government in response to Covid-19.

"The health and safety of all of our employees - and in particular those who continue to work on the care and maintenance of our mines, as well as at Hidden Valley – remain our highest priorities. We continue to ensure compliance with all prescribed and recommended preventive measures – in both South Africa and Papua New Guinea," said Steenkamp.

Harmony Gold was among the companies which contributed R1 billion in partnership with the Motsepe family, to assist government in combatting the Covid-19 pandemic.

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