Harmony Gold Ready for Acquisition After Paying Down Debt

JOHANNESBURG (Capital Markets in Africa) – Harmony Gold Mining Co., South Africa’s third-largest miner of the metal, said it’s ready to make an acquisition after increasing production and paying off its debt in the six months to December 31.

“We’ve identified some targets, we’re working on those targets,” Chief Executive Officer Peter Steenkamp said on a call with reporters Thursday. The purchase will likely be in Africa or Papua New Guinea, he said.

Harmony made a profit of 1.5 billion rand ($112 million) in the fiscal first half, compared with a loss of 445 million rand the previous year, buoyed by higher output as well as currency and production hedges, the company said in a statement. That allowed it to pay the first interim dividend in four years and reduce borrowings. 

“We’re more or less debt-free,” Steenkamp said.

As an operator of mainly end-of-life mines in South Africa, Harmony is looking for acquisitions to boost declining reserves. It’s aiming to buy a mine with more than 2 million ounces of gold reserves, annual production of 100,000 to 200,000 ounces and all-in sustaining costs of less than $950 an ounce, Phillip Tobias, chief operating officer for strategy, said on the call.

Harmony is on course to meet its full-year production forecast of about 1.05 million ounces, it said.

The stock has climbed 7.8 percent this year compared with a 10 percent advance in the FTSE/JSE Africa Gold Mining Index. Gold rose 0.3 percent at $1,213.82 an ounce, bringing its increase this year to 5.8 percent.