Mining Weekly

JOHANNESBURG (miningweekly.com) ­– Gold mining company Harmony said on Monday that it was committed to the safe resumption of its nine underground operations that had been placed on care and maintenance in response to the Covid-19 pandemic.

Care and maintenance at the underground mines during the lockdown included the continued provision of water, power, security and the operation of health hubs.

The Johannesburg- and New York-listed company, headed by CEO Peter Steenkamp, has a medical hub at each of its mines, staffed by medical professionals.

There is at least one qualified doctor at each hub, supported by qualified nurses.

Full compliance with the requirements of the amended lockdown regulations, as announced by the South African government on April 16, has been pledged.

Operations at the company’s underground mines will be at a reduced capacity of not more than 50% during the remainder of the current national lockdown period to April 30.

Thereafter, increasing capacity will be phased in, as determined by Mineral Resources and Energy Minister Gwede Mantashe.

In a news release to Mining Weekly, the company said it anticipated that it would take up to five working days to restart the underground operations.

Prior to the lockdown announcement, a risk assessment-based Covid-19 prevention strategy had been implemented at all its operations.

The objective of the risk assessment is to identify, evaluate and rank the hazards associated with any exposures to Covid-19 and potential infections, which allows for the reduction or elimination of the probability of an employee contracting Covid-19 and to limit the severity should an employee be infected.

Harmony’s Covid-19 standard operating procedure (SOP) is aimed at ensuring a safe return to work for each of its employees and meeting the conditions contained in the amended lockdown regulations published in the Government Gazette of April 16 for the safe resumption of operations.

It has been informed by guidelines provided by the Department of Mineral Resources and Energy, the National Council for Infectious Diseases, the World Health Organisation, discussions with its trade unions and Minerals Council South Africa.

The company stated that all requisite staffing, facilities and equipment, as well as communication and education mechanisms, were in place to ensure:

• rigorous screening as employees return to work and when at work;
• testing and treating of employees showing Covid-19 symptoms;
• quarantining of employees who test positive for the virus at the 200-room Brand 5 hostel in Welkom, in the Free State, and a 150-room facility in the Klerksdorp area, in North West province;
• submission of data collected during screening and testing to the relevant authority;
• transport of South African employees from their homes in the remote labour sending areas back to the mines;
• recall of workers from neighbouring Southern African Development Community countries at the end of lockdown in those countries;
• care and counselling of employees deemed to be vulnerable;
• preventive personal hygiene measures; and
• physical distancing and relevant controls in high density areas, with large congregations of people being disallowed.

Audits have been undertaken to check on SOP compliance and agreement has been reached to allow labour unions to conduct similar safety audits in conjunction with management teams.

The state of disaster remains in place for three months and compliance with the Disaster Management Act 57 of 2002 will be ongoing for three months until mid-June, irrespective of the date on which the operations re-open or the lockdown is uplifted.

STRONGER CASH FLOW

A 55% increase in operating free cash flow margin is expected for the quarter ended March 31, compared with the quarter ended December 31, owing to an estimated 11% increase in the gold price received.

The average recovered grade at underground operations in South Africa was 7% higher quarter-on-quarter and total gold production quarter-on-quarter, was 8% lower owing to the impact of the Covid-19 lockdown and the usual slower startup after the Christmas break.

A more comprehensive operational update on the nine months to March 31 will be provided during the first week of May.

BALANCE SHEET PROTECTION MEASURES

Several measures to protect Harmony’s balance sheet have been taken in the face of the global pandemic, including:

• cash preservation and a suspension of exploration and major capital projects;
• rolling forward into the first three quarters of the new financial year most hedge transactions maturing from  the middle of April to the end of May 2020 to better match the gold production;
• declaring a force majeure on select supplier agreements;
• drawing down on rand and dollar facilities to ensure sufficient liquidity as underground operations restart; and
• not committing to any new debt facilities.