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Harmony and Gold Fields on track to meet 2021 production guidance - Independent Online (IOL)

Friday, 12 November 2021

GOLD miners Gold Fields and Harmony yesterday said their production guidances were on track, while headway was being made to vaccinate their employees.

However, Chris Griffith, the chief executive of Gold Fields, said yesterday that where it was legally permissible, in the countries it operated in, the firm was considering mandatory vaccination among employees.

Gold Fields Australia had introduced its policy on the back of the Western Australian state government's mandatory vaccination policy for all Fly-in, Fly-out workers and had extended this to Perth office employees as well.

But mandatory vaccination was not permissible under the law in Peru and Chile, while a shortage of vaccinations made this unfeasible in Ghana at present.

So far, Gold Fields said close to 80 percent of its employees had received their first vaccination while close to 61 percent of its workforce was fully vaccinated.

Meanwhile, Harmony said close to 80 percent of its employees had received their first vaccination while close to 61 percent of its workforce was fully vaccinated, with a target to vaccinate 80 percent.

Both companies posted solid third quarter results.

Griffiths, presenting the gold mining firm's results for the three months ended September 30, said Gold Fields had attributable gold equivalent production of 606 000 ounces, up 9 percent year-on-year (yoy).

South Deep in particular had a good quarter, with production up 30 percent with managed production of 88 000 ounces at an all-in cost of R567 550 a kilogram.

However, all-in cost increased by 18 percent yoy to $1 263 (R19 400) an ounce largely due to the capital expenditure at Salares Norte increasing from $23m to $108m, while all-in sustaining costs (AISC) increased 5 percent yoy to $1 016 an ounce.

Salares Norte is a high-grade, open pit, gold-silver project in Chile discovered by Gold Fields in 2011.

Griffiths said Salares Norte, which is still under construction, remained on track to deliver its first gold by the end of quarter one 2023, despite severe winter weather as well as ongoing Covid-19 constraints.

Gold Fields said it remained in a strong financial position. During the third quarter, there was a further decrease in the net debt balance to $1 037m at September 30 from $1 097m at June 30, despite an interim dividend payment of $132m.

The net debt balance decreased to $620m from $663m at the end of June.

Gold Fields was on track to meet 2021 guidance with attributable gold equivalent production expected to be between 2.3 million ounces (Moz) and 2.35Moz. As previously guided, AISC was expected to be between $1 020 and $1060 an ounce with all-in costs expected to be between $1 310 to $1 350 an ounce.

Meanwhile, Harmony Gold, in its operational results for the first quarter of the 2022 financial year 2022, said were underpinned by a diversified and de-risked portfolio.

Newly acquired assets and assets that it had reinvested in represented 62 percent of operating free cash flow, while its surface source operations accounted for 34 percent of operating free cash flow this quarter.

Assets, which had been in Harmony's portfolio for many years, accounted for only 4 percent of the operating free cash flow this quarter.

Harmony said its re-engineered portfolio had shown a 27 percent increase in underground tons milled for the September 2021 quarter when compared to the September 2020 quarter and a 26 percent increase in gold production from its underground mines. Total gold production was 32 percent higher this quarter when compared to quarter one 2021.

Overall production was steady quarter-on-quarter with 12 868 kg of gold produced in quarter one 2022 compared to 12 786kg produced in quarter four 2021.

Harmony's balance sheet remained strong, with net debt to earnings before interest, taxes, depreciation, and amortisation, at 0.05 times at the end of the quarter as it further reduced its net debt by R139m to R454m

A 4 percent higher gold price received of R832 756/kg compared to R803 207/kg in the fourth quarter 2021, and a 1 percent increase in gold production of 12 868kg, resulted in a 3 percent growth in gold revenue to R10 959m in the previous quarter.

Operating free cash flow for the period was down 33 percent to R921m compared to R1.23bn previous three-month period ended June 30, 2021.

Harmony's AISC for the reporting period had increased by 9 percent to R795 086/kg from R729 680/kg, primarily due to the reduction in underground recovered grade, specifically impacted by the safety incidents at Mponeng and Tshepong, lower plant recoveries in the Free State province, which had now been resolved, and the lower grade at Hidden Valley.

However, Harmony said there were improvements in grade at Target 1 and Kalgold, while Joel was seeing a significant improvement in volumes post the completion of the decline project. This would ensure that it would meet its annual cost guidance for full year of R765 000/kg to R800 000/kg.

Production guidance for full year remains unchanged and was estimated to be between 1.540Moz and 1.630Moz at an all-in sustaining cost of between R765 000/kg to R800 000/kg.

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