JOHANNESBURG (miningweekly.com) – Gold miner Harmony Gold recorded a 3% year-on-year rise in gold production to 36 453 kg, or 1.17-million ounces, for the 2014 financial year.

However, its operating profit dropped to R3.8-billion, down 5% year-on-year, owing to a 5% drop in the rand gold price and a 4% rise in cash operating costs.

Speaking at the results presentation, Harmony CEO Graham Briggs highlighted that the company’s capital expenditure (capex) had decreased by 30% year-on-year to R2.5-billion “as planned”.

This was owing to a decrease in capex at the greenfield Hidden Valley project in Papua New Guinea.

Cash operating costs, however, increased by 6%, or R180-million, in the quarter ended June 30, owing to a rise in consumables and higher winter electricity tariffs for the company’s South African operations.

Meanwhile, in terms of all-in sustaining costs (AISC) – a new cost reporting metric developed by the World Gold Council that covers day-to-day operations, and an ‘all-in cost’, which includes all capex, including growth projects – Harmony Gold achieved a stable 4% year-on-year reduction to R413 433/kg.

“We are satisfied with the year despite fairly abundant operational challenges experienced at our larger operations, which was compounded by the low gold price,” said Briggs.

SAFETY FOCUS
Briggs also highlighted Harmony’s increased focus on safety, having experienced “far too many fatalities during this year”, including fatalities at its Masimong and Tshepong mines, near Welkom, the Doornkop mine west of Johannesburg, the North West-based Kusasalethu mine and the Free State-based Joel mine.

COO Alwyn Pretorius added that, although the miner had made significant progress in terms of safety in the past three years, much still had to be done.

“Since undertaking an external safety audit this year, we have put a safety improvement plan in place that focuses on the implementation of industry best practises at all of our operations.”

He further noted that, while the safety audit had revealed that the company had sufficient standards and risk management processes in place, its strategy was not proactive enough.

As a result, the gold miner has built leading indicators, as opposed to lagging indicators, into its safety management system.

This was being done in collaboration with the Department of Mineral Resources.

Meanwhile, Harmony also revised its five-year strategy based on three key strengths, namely improving its margins, growing the value per share of its Papua New Guinea assets, and identifying openpit mines and bulk mining project acquisition opportunities outside South Africa.