JOHANNESBURG (miningweekly.com) – Harmony Gold, which was once a bottom-feeding gold mining company, has been hoisted into a new stratosphere of value and volume by the quality ounces it has acquired.

Johannesburg- and New York-listed company’s operational update for the three months to the end of September 30 highlights just how materially the newly acquired assets dominate the operating free cash flow position of the 1.6-million-ounce-a-year gold producer, which also has a significant pipeline of projects.

“We’re a new Harmony,” the company led by CEO Peter Steenkamp stated in a release to Mining Weekly.

The force of the quality ounces in elevating the company is illustrated by only 4% of this quarter’s operating free cash flow being generated by mines that have been synonymous with Harmony for many years.

In contrast, newly acquired and reinvested assets have come to the operating cash flow party by contributing 62% of the operating cash flow in the quarter, with surface source operations chipping in 34%.

In addition, gold production was up 32% on the corresponding three months of last year.

A 27% increase in underground tonnes milled, arising from a 26% increase in underground output, is also reported.

“We’ve transformed our portfolio,” stated Harmony about the quality ounces that it has brought on board and the volume increases being achieved.

Moreover, production of between 1.540-million ounces and 1.630-million ounces is being guided for the financial year to September 30, 2022, at an all-in sustaining cost of between R765 000/kg and R800 000/kg, with underground recovered grade of between 5.40 g/t and 5.57 g/t being planned

Overall production was steady quarter-on-quarter with 12 868 kg (413 714 oz) of gold produced in the first quarter of the new financial year versus 12 786 kg (411 078 oz) in the final quarter of its previous financial year.

Harmony's all-in sustaining costs for the reporting period increased by 9% to R795 086/kg from R729 680/kg and in dollar terms, an increase of 5% to $1 691/oz.

The higher R832 756/kg gold price received was mainly owing to a weaker rand and the higher earnings before interest, taxes, depreciation and amortisation (Ebitda) of R1 786-million and higher Ebitda margin of 16% was predominantly the result of the higher gold price received.

Net debt is down to R454-million ($30-million).

DECARBONISATION

Harmony's strategy includes a decarbonisation plan aimed at a greener and more equitable future for all.

The company is in the process of finalising short-term emissions targets and a net-zero strategy.

It is implementing the first phase of a renewable energy programme, involving the erection of a 30 MW solar energy plant in the Free State.

The Wafi-Golpu project remains a key deliverable as Harmony develops as an emerging copper/gold mining specialist with exposure to green metals.