Harmony Gold said Thursday that it expected to report stronger interim earnings for the half year to December 2024, buoyed by a rise in gold prices which boosted revenues in the company.
Most South African gold miners have received a boost from the appreciation in the bullion price over the past few months. However, the gold miners have been witnessing rising costs while their productivity has generally been falling.
For Harmony Gold, basic earnings for the half year to December 2024 are likely to be higher by between 24% and 42%, the company said in a trading update. It explained that earnings per share for the interim period would be between 1 182 and 1 355 South African cents per share, firmer by upto 956 South African cents per share compared to the previous contrasting period.
This was “due to an increase in revenue as a result of the delivery of safe, predictable and consistent production and a higher average gold price” received.
During the interim period, Harmony Gold received average gold prices that were firmer by 23% at R1 405 020 per kilogram of bullion. In US dollar terms, the average prices that Harmony Gold received for its bullion strengthened by 28% to $2 437 (R45 016) per ounce compared to the same period a year ago.
“The outstanding H1FY25 results are on the back of continuous investment in safety, operational excellence and higher quality ounces. We have a stable, predictable, rand-based cost structure and have been delivering operational consistency across the entire group,” said Beyers Nel, Harmony Gold CEO.
He added that the company’s “disciplined approach to capital allocation has enabled us to leverage the current high gold price environment to generate exceptionally robust operating free cash” flows.
The expected increase in basic earnings for the period will be offset by “an increase in production costs due to planned above-inflation increases in labour and electricity” costs. A rise in taxation for the current period as a result of higher taxable income and higher royalty taxes brought about by a an increase in revenue and profitability will also partly weigh down the earnings performance.
Still, this leaves headline earnings per share higher by 24% at between 1 188 and 1 361 South African cents. In US dollar terms, the HEPS in Harmony Gold are expected to be between 67 and 77 US cents per share, which is an increase of between 31% and 50% on the headline earnings of 51 US cents per share reported for the previous comparable period.
In October last year, Harmony Gold said its broader expansion plans for MWS include the addition of a fourth processing stream, increasing plant throughput capacity from 25 to 28 million tons annually.
This will take gold production from MWS to a forecast average of about 110 000 ounces per year.
“We have guided for a further R1.2 billion in major capital expenditure to be deployed at MWS in FY25. A total of R2.3 bn was allocated to the tailings storage facility extension project in FY24 and FY25, with the bulk being used to complete phase 1,” the company said at the time.
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