JOHANNESBURG (Reuters) – South Africa’s Harmony Gold seeks to wipe out its debt by the end the year, its chief executive said on Thursday, as the firm swung into quarterly profit thanks to a weaker rand and higher production.
Shares in Harmony Gold, which are up almost 350 percent since November, soared as much as 15 percent and traded up 7 percent at 35.30 rand by 1150 GMT.
Harmony Gold has cut jobs and costs to cope with plunging bullion prices, allowing it to pay down some of its debt.
“The target date that we have set for ourselves at current prices is that by the end of this calendar year we would like to repay our debt,” Chief Executive Peter Steenkamp, who was appointed in November, told Reuters in an interview.
At the end of the second quarter which ended in December, net debt stood at 2.52 billion rand ($159 million) after the company paid down 1.1 billion rand.
Harmony returned to profit in the quarter as headline earnings per share – which strips off certain one-off items – reached 17 cents from a loss of 1.20 rand in the previous quarter.
South African mining companies benefit from mostly cheaper costs because they are paid in the rand, which softened 14 percent since Oct. 1, and earn higher income from sales of their commodities in dollars.
Steenkamp said he did not foresee any more job cuts in the company as the firm is now more profitable.
Increased profitability also allowed the company to fund its Golpu mine in Papua New Guinea, which it jointly-owns with Newcrest Mining Ltd, where it completed a feasability study.
Steenkamp said the company would like to develop the mine first before considering a sale of the asset.
Spot gold, which fell 5 percent over the three months to December, clung to a three-month high on Thursday on bets that global economic headwinds could make it tough for the U.S. Federal Reserve to raise interest rates in the near term.
Production in the period rose for a third consecutive quarter by 2 percent to 287,074 ounces and it kept its 2016 target of 1.1 million ounces unchanged.
($1 = 15.8231 rand)
(Editing by James Macharia)
© Thomson Reuters 2016 All rights reserved