S.Africa's Harmony Gold quarterly loss widens, reports increased headline loss per share - CNBC Africa

S.Africa's Harmony Gold quarterly loss widens, reports increased headline loss per share

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“Total basic loss per share increased in the June 2013 quarter from 29 to 809 South Africa cents per share. Total headline loss per share increased from 47 SA cents to 186 SA cents per share,” Graham Briggs, the Chief Executive Officer of Harmony Gold, said in a statement.

Total headline earnings per share decreased from 565 to 47 cents per share.

Harmony reported a net loss for the June 2013 quarter of 3.4 billion rand compared to a 124 million rand net loss for the March 2013 quarter. The company says this was mainly due to impairment of assets of 2.6 billion rand and the reversal of a deferred tax asset of 547 million rand for the Hidden Valley operation.

“Following the sharp decrease in the gold price, an impairment of assets of 2.7 billion rand was recorded during the June 2013 quarter, consisting of an impairment of 2.6 billion rand for the Hidden Valley operation and 58 million rand for the SA operations. The impairment results from a lower than expected life-of-mine profit, due to the reduction in the US dollar gold and silver prices assumptions and Hidden Valley’s poor production performance,” said Briggs

Operating profit for the June 2013 quarter was 22 per cent lower, due to a 9 per cent decrease in the gold price received, as well as an 8 per cent increase in cash operating cost.

Cash operating costs increased by 225 million rand when compared to the March 2013 quarter, due to the build-up in production at Kusasalethu, annual electricity increases, as well as winter electricity tariffs.

Gold production for the year ending June 2013 was 35,374kgs, 2 per cent lower than the same period last year, mainly due to the labour disruptions at Kusasalethu during the December 2012, March 2013 and June 2013 quarters.

In line with Harmony’s strategic initiative to improve the quality of ounces mined, year on year underground grade increased by 7 per cent. Recovered grade was the main driver towards the increase in gold production across the various operations and improvements were recorded at most operations.

Briggs said that the labour relations climate remained volatile in the industry prior to the start of the 2013 round of wage negotiations in the gold sector. Harmony experienced two work stoppages during the quarter led by the National Union of Mine Workers (NUM) at Doornkop and Tshepong.

“The issues raised during these industrial actions were mainly operational and have since been resolved, or are in the process of being addressed through the existing mine-based structures,” said Briggs.

On the gold sector wage negotiations that started on 11 July 2013 at the Chamber of Mines, Briggs said: “We believe that good sense will prevail and that strikes will be averted. The labour disruptions at Kusasalethu alone cost Harmony approximately 1.2 billion rand. It is not in the interest of the company, the employees or the industry to further be subjected to such losses.”