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Harmony Gold posts higher half-year earnings, decides not to pay dividend as it invests in 'growth opportunities'

Kitco News

(Kitco News) - Harmony Gold (NYSE: HMY), a senior global gold producer, announced today that for the six-month period ended 31 December 2022 (H1FY23), it recorded an 18% increase in headline earning per share to 293 SA cents per share (17 US cents per share) from 248 SA cents per share (17 US cents per share) in H1FY22.

The company said that basic earnings per share increased by 31% to 298 SA cents (17 US cents) compared to 227 SA cents (16 US cents) per share in the previous reporting period.

Harmony Gold explained that the increase in basic earnings was primarily due to an increased gross profit as a result of higher underground recovered grades and an increase in the average gold price received which offset the increase in production costs.

Group gold production in H1FY23 decreased by 5% to 740,655oz from 778,879oz in H1FY22 mainly due to the closure of Bambanani at the end of FY22. Adjusting for this, group production decreased by 2% or 11,346oz year on year.

Group all-in sustaining costs (AISC) increased by 11% to US$1,600/oz in H1FY23 from US$1,660/oz in H1FY22. This increase was mainly due to the higher AISC at Target 1, Kusasalethu and Hidden Valley, the company said.

Importantly, Harmony Gold also announced that the company has decided not to pay an interim dividend as it invests in growth opportunities.

“As Harmony invests in margin expansion, life-of-mine extension and various other growth opportunities, it is prudent to maintain a strong balance sheet and good liquidity. A decision has therefore been taken to not pay an interim dividend for this reporting period,” the company noted in a press release.

"Our strategy of allocating growth capital towards high-margin, long-life assets has started to deliver the desired results. Excellent recovered underground grades along with the strong rand-per-kilogram gold price have provided Harmony with good tailwinds. Execution excellence and sustainable mining practices will ensure that we achieve our annual production and cost guidance for the 2023 financial year," stated CEO Peter Steenkamp.

Looking ahead, Steenkamp said, “Our shift into copper comes at a critical time for the global just energy transition. Higher quality gold reserves, near-term copper, alongside a growing international footprint will continue to de-risk Harmony. Our portfolio of gold and copper is positioned to provide shareholders with countercyclical diversification alongside improved margins.”

Harmony Gold noted that its production guidance for the financial year 2023 remains unchanged at 1,400,000 to 1,500,000 ounces of gold and gold equivalents.

Harmony Gold has operations and assets in South Africa and Papua New Guinea (PNG). The company's assets include one open pit mine and several exploration tenements in PNG, as well as 10 underground mines and 1 open pit operation and several surface sources in South Africa. In addition, Harmony owns 50% of the significant Wafi-Golpu copper-gold project – a tier 1 asset in a joint venture in PNG.

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