Harmony Gold posts loss as Kusasalethu drags production down

(Bloomberg) — Harmony Gold Mining Co., South Africa’s third-largest producer of the metal, said it made a loss in the second quarter as stoppages at Kusasalethu, its biggest mine, caused output to fall.

Harmony Gold's three year share price
Harmony Gold’s three year share price

The headline loss was 496 million rand ($44 million) in the three months to Dec. 31, compared with a 266 million-rand loss the previous quarter, Randfontein, South Africa-based Harmony said today in a statement. Production fell 10 percent to 271,963 ounces while all-in sustaining costs climbed 1.4 percent to $1,262 an ounce.

“Kusasalethu has not returned to profitability after various setbacks,” Chief Executive Officer Graham Briggs said in the statement. “The underperformance of the mine was further exacerbated by four fires and associated illegal mining activities during the past quarter.”

Harmony was forced to shut Kusasalethu, which straddles Gauteng and North West provinces, for two weeks beginning in October last year after the company arrested more than 100 illegal miners and imposed new safety measures. Briggs announced a plan to turn the operation around in December to mine higher- grade ore and return it to profit by the fiscal fourth quarter.

The company has secured a new revolving credit facility of as much as $250 million, which matures in February 2018.

Harmony has climbed 52 percent this year, making it the best performer in the 167-member of the FTSE/JSE Africa All- Share Index this year as gold bucked the trend of falling commodity prices.

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