Phakisa mine
JOHANNESBURG (miningweekly.com) – After a recent feasibility study showed that “a large amount” of capital would be required to develop the decline project at Harmony Gold’s Phakisa mine, on the Basal reef, the group on Friday announced its intention to write down the project to the value of R1.4-billion.
The group said that, in compiling its business plans for the 2015 financial year, particular focus had been placed on improving operating margins, instituting robust and realistic operating planning, increasing free cash flow through higher grades and cost control and allocating capital expenditure that ensured returns.
These plans formed the basis for assessing whether any impairment against the carrying value of an asset was required.
“To ensure that Phakisa meets the planning factors set out above, it has been decided not to continue with the development of the decline,” stated CEO Graham Briggs.
“Our planning process is specifically aimed at ensuring that Harmony is a safe, profitable and cash-generative company.”
He added that a portion of the Phakisa project area would be more efficiently mined from the nearby Tshepong mine and this had been included in the business plan of Tshepong.
“We will reconsider the Phakisa decline in future, as the project as a whole is worth investing in,” Briggs outlined.
The impairment would be recorded in Harmony’s financial results for the year ended June 30, which would reduce the net profit of the company, but would not have an impact on reported cash balances and free cash flow.