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Hedging hit drives S.Africa's Harmony Gold to annual loss

Kitco News

JOHANNESBURG, Sept 15 (Reuters) - South Africa's Harmony Gold Mining Co Ltd on Tuesday posted an annual loss of 828 million rand ($53 million), stung by a weaker exchange rate against the U.S. dollar, despite a boost in revenue from soaring gold prices.

Last week the company flagged derivative losses of about 1.7 billion rand and translation losses of nearly 919 million rand on dollar-denominated debt. It posted a headline loss per share of 164 cents for the year ended June 30 versus a profit of 204 cents per share a year earlier.

Headline earnings per share strip out certain one-off items and are the main profit measure in South Africa.

Asked whether Harmony plans to change its hedging strategy after the large derivative loss, Finance Director Boipelo Lekubo said: "We believe that to hedge responsibly remains a good strategy to lock in healthy margins."

"Over the five years that we've had the programme we've benefited net gains of 2.2 billion rand," she added.

Surging gold prices boosted revenue to 29.2 billion rand from 26.9 billion a year earlier. The miner also reported better-than-expected production in the fourth quarter as operations recovered from South Africa's COVID-19 lockdown and all foreign nationals returned to work.

Harmony said it aims to produce between 1.25 million and 1.3 million ounces in the next financial year, and will update its production guidance once Mponeng and Mine Waste Solutions, which it has acquired from AngloGold Ashanti, are integrated into its operations.

CEO Peter Steenkamp said the high gold price could drive new acquisition opportunities, but the priority was to bed in Mponeng before looking at other projects.

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