Precious metals miner Harmony Gold’s production increased by 30% to 378 510 oz of gold in its first fiscal quarter ended September 30, compared with the 290 644 oz produced in the first quarter of the prior financial year.

The boost in the group’s production and cash flow generation, CEO Peter Steenkamp commented on Tuesday, is owing to its Hidden Valley mine, in Papua New Guinea (PNG), and its Moab Khotsong operation, in South Africa.

“We are confident that we will achieve our annual production and cost guidance as we continue to focus on safety, production and cost management,” he said.

During the quarter, Hidden Valley recorded no lost-time injuries and generated free cash flow in the fiscal quarter since achieving levels of production in June, compared with a net cash outflow in the previous quarter.

The operation recorded an all-in sustaining cost (AISC) of $1 119/oz, while recovered grade and gold production is expected to improve during the remainder of the 2019 financial year as mining into the deeper and higher-grade areas of the orebody progresses.

During the comparative quarter in 2017, Hidden Valley recorded lower gold production owing to the planned three-and-a-half-month plant stoppage and infrastructure upgrade, and the maintenance programme, which began in August 2017 and was completed in November the same year.

SOUTH AFRICAN OPERATIONS

The South African operations, meanwhile, recorded a 19% year-on-year increase in gold production to 333 981 oz, mainly owing to the addition of gold produced by Harmony’s Moab Khotsong mine, which was acquired in March.

However, production decreased by 2% quarter-on-quarter. The underground recovered grade at Moab Khotsong is expected to improve during the remainder of the 2019 financial year as mining in the middle section progresses.

Operating costs during the financial year’s first quarter increased owing to the seasonal higher winter electricity tariffs, in July and August, and higher labour costs, including one-off leave liability adjustments following the settlement of the wage agreement on October 3.

Additionally, Harmony on Monday announced that one of its employees had died on November 3, after succumbing to injuries sustained in a rail bound equipment accident on October 29 at the Moab Khotsong mine.

Meanwhile, the volatility and weakening of the rand against the dollar during the quarter presented an opportunity to top-up Harmony’s hedging programme, the miner said in its statement on Tuesday.

The average rand/dollar exchange rate for the quarter weakened by 11% to R14.05, compared with the average 2018 fourth quarter exchange rate of R12.64.

Harmony’s board, in this regard, approved hedging limits comprising a 25% currency over a 24-month period, as well as 20% gold and 50% silver – also on 24-month periods.

Further, engagement by the Wafi-Golpu joint venture with the PNG government on the application for a special mining lease for the Wafi-Golpu project continued during the quarter.

Harmony also announced “robust exploration drill results from [the] Kalgold openpit operation to underpin resource growth and expansion studies”. The updated mineral resource estimate for its Kalgold operation, in the North West, South Africa, incorporates the exploration drill results up to September 30, which it cited as “encouraging”.

The Kalgold brownfield drill campaign resulted in the drilling of 20 872 m, with intercepts returned over the course of the programme outlining an expanded, robust mineralised system with over 2.1 km of strike, extending to in excess of 300 m below surface.

According to the final Samrec-compliant, independently audited, mineral resource declaration, Kalgold contains 76.5-million tonnes at 0.95 g/t gold for 2.34-million ounces of gold, representing an increase of 1.05-million ounces from the 2017 estimate.