Africa-Press – South-Africa. Harmony Gold shares dropped after the largest producer of South African gold warned of rising costs, even as record bullion prices pushed up profit.
The Johannesburg-based company expects its costs to jump by 9% to 16% in the fiscal year that started 1 July, after climbing 17% in the previous 12 months. Following the news, the company’s shares plunged just over 10% on 28 August.
The projected increase reflects “inflationary realities and updated mine plans,” Harmony said.
While gold miners have enjoyed an earnings bonanza from soaring prices over the past two years, costs have also escalated with higher energy, labour and material inputs.
Top gold miner Newmont is studying plans to drive down costs that could lead to deep job cuts.
Harmony’s capital expenditure for this year is expected to climb to almost R13 billion, from nearly R11 billion in 2025.
That’s being driven by projects to extend the lives of the firm’s flagship operations in South Africa and replace essential machinery at a mine in Papua New Guinea.
The company’s shares fell as much as 7% in Johannesburg trading, paring this year’s gain to 58%.
Gold production declined 5% to 1.48 million ounces last year at the firm that specialises in generating value from ageing, deep underground mines in South Africa.
One of them – Mponeng, which was acquired from AngloGold Ashanti Ltd. in 2020 – has become the company’s star performer.
Profit jumped by two-thirds to R14.4 billion in the 12 months through June. The average price the company received increased by 27% to $2,620 an ounce over the period, it said on Thursday.
Like larger peers Barrick Mining and Newmont, Harmony is growing its exposure to copper via a pair of projects in Australia — anticipating a surge in demand for the metal fueled by the green-energy transition.
The company expects to complete the $1 billion purchase of MAC Copper, which owns an operating mine, in October and is also nearing a final decision on whether to develop the Eva Copper project.
Copper will account for about 40% of Harmony’s total production by 2035, the firm estimates.
The graph below shows Harmony’s share price decline following the release of its results on 28 August.
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