JOHANNEBURG (miningweekly.com) – The management of the world's fifth-largest gold producer, Harmony Gold, remained "gold bullish", CEO Graham Briggs said on Friday, noting that he believed there would be further upward movements in the gold price.

At a half-year results presentation in Johannesburg, Briggs asserted that the gold price, which was already at suitable levels for Harmony, would still have a good run and that he could see the gold price rising.

Late last month, Goldfields CEO Nick Holland also said that gold had substantial upside and that $1 000/oz was eminently achievable.

The price of gold has risen sharply since the beginning of the year, buoyed by safe-haven buying amid the global financial crisis. Gold was trading at around $913/oz on Friday afternoon.

Briggs said that the company, whose market value had reached an all-time high of nearly R51-billion at the end of January, had to continue focusing on getting the right results and was working hard to ensure that it delivered a good return to shareholders.

However, the miner's share price and market value would be influenced by the gold price.

Briggs said that if the gold price was good, he believed investors would buy the company's shares. He noted that the company was simple and easy to understand with no hedging, thus giving it full exposure to the gold price.

The miner would, going forward, continue to focus on its operational performance, increasing production, conserving cash and maintaining a reasonable margin, but Briggs was confident that the company was moving in the right direction.

He noted that management was satisfied with the progress it was making on its so-called recovery phase, which would see Harmony increase production and eliminate its debt by June.

In the quarter ended December 31, 2008, the miner had already reduced its net debt by R1,1-billion.

Interim financial director Frank Abbott said that he also expected the company to be debt free by June. Its net debt currently stood at just over R1,2-billion.

Once the company was debt-free, it would consider paying a dividend to shareholders, said Briggs.

He added that the company would also not make any decisions on mergers and acquisitions before its debt was settled.

Briggs commented that there was still plenty of growth potential for the company, but said that it wanted to go into any potential deals "absolutely clean".

Harmony would also have to assess any potential opportunities or projects for their value and risk before making any decisions.

However, he noted that the company had started doing some due diligences in this area, but added that there would be no knee-jerk reactions.

FINANCIALLY HEALTHY

Meanwhile, Briggs commented that the company was in a good state and was "financially healthy".

Harmony's net profit was up 227% in the quarter to R1,3-billion, compared with R402-million for the quarter ended September 30, 2008. This was also an increase on the R46-million reported for the year before.

Headline earnings a share had increased to 101c a share, compared with 8c a share for the quarter ended September.

Revenues were up 17% to R3,15-billion, compared with R2,7-billion in the previous quarter.

The miner's production had, however, declined by 8% to 11 267 kg of gold, compared with 12 287 kg of gold in the quarter ended September.

Briggs stated that it was always difficult to report on the company's production in the December quarter, as it included the closure of its operations for a few days for the Christmas break.

He expected production to increase in the third quarter to end March 2009, but said that production was always impacted on in January when the operations start up slowly after the holiday break.

Harmony still intended on reaching its target of producing 2,2-million ounces of gold by 2012.

SAFETY

Briggs was also satisfied with the progress made in terms of safety at its operations.

He noted that there had been a definite turnaround at the Elandsrand mine, which had formerly been of great concern.

Briggs noted that the appointment of a dedicated COO for the mine, Alwyn Pretorius, has led to some success being achieved in terms of safety at the operations.

He added that a lot of work still had to be done on improving safety at all its operations, but said that progress had been made.

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