Harmony Gold sees 9 percent revenue increase due to increased gold price

Despite Covid-19, Harmony has reported high production in the last quarter of its 2020 reporting year.

A 25 percent improvement in the rand gold price to R735,569 per kilogram in the 2020 financial year resulted in a 9 percent increase in Harmony Gold Mining Company’s revenue to R29.25 billion. The company has also reported a 106 percent increase in operating free cash flows.

According to a statement, through an increase in operating cash flows and the capital raise in June to fund its latest acquisition of AngloGold Ashanti’s South African operations, Harmony has created a robust balance sheet that enables it to fund further growth. 

CEO Peter Steenkamp says: 

“Harmony continues to make good progress in executing its strategy of producing safe, profitable ounces and increasing margins. Our drive for safe ounces was never more applicable than in the last quarter of the financial year as we faced the challenge of managing and mitigating the risks presented by the Covid-19 pandemic. Despite the impact of the South African lockdown and phased restart of mining in the country, we are pleased to report higher than anticipated production and substantial delivery against our strategy in the last quarter of the year.”

Year on year, Harmony’s total annual gold production was 15 percent lower, mainly due to the impact of the lockdown and the phased recovery in South Africa. The average underground recovered grade was almost 3 percent lower with the decrease attributed to the impact of remedial actions to address geological challenges and seismicity at Kusasalethu. 

The company announced the conclusion of its acquisition of Mponeng and Mine Waste Solutions from AngloGold Ashanti, and expects it to close on 30 September 2020. 

Aside from improving its portfolio mix between surface and underground operations, the transaction has the potential to improve Harmony’s overall recovered grade and increase cash flow margins. 

Harmony also announced it will join the FTSE/JSE Africa Top 40 Index with effect from 18 September 2020. “Inclusion in the index, which consists of the 40 most investable companies ranked by investable market capitalisation, points to investor interest in, and support for, both Harmony’s strategy to produce safe profitable ounces and increase margins through operational excellence and value-accretive acquisitions, and in our product, gold,” the statement read. 

Peter concluded that Harmony is well-positioned to benefit from anticipated continuing strength of the gold price. “The newly acquired assets will help grow production and, as conditions improve, Harmony has other Tier 1 projects such as Wafi-Golpu and a pipeline of organic projects in South Africa to incorporate into its portfolio.”