Judging by the discussions with Sibanye's Neal Froneman, Harmony's Graham Briggs and Village's new CEO Ferdi.Dippenaar, there is not a united front from employers as they assess trade union competition which has led to demands for high wage increases. Froneman seems to be itching up for a fight and says he won't be bullied into agreeing unsustainable wage increases. In the interview below, Harmony's Briggs is talking a different language. And in his discussion with us, Ferdi Dippenaar admitted that as a company with single, short-life gold mine, Village Main Reef may well decide to settle above the industry standard. The other big issue in the Harmony results is its valuation of the Papua New Guinea assets Hidden Valley and Wafi-Golpu. Briggs also addressed those in our interview on CNBC Power Lunch yesterday..ALEC HOGG: Harmony Gold released its most recent quarter results today. Graham Briggs, the Chief Executive joins us on a day when it reverses the recent trend. The price down about 3% as we talk (after big gains in the previous two sessions). I guess some concern about the massive write-downs on the 19th of July. You did notify people that you were reducing the value of your Papua New Guinea asset. What is it down to now?.GRAHAM BRIGGS: What is the gold price down to?.ALEC HOGG: No. Your PNG assets – Hidden Valley..GRAHAM BRIGGS: Well obviously, when you do these write-downs you look at the life of the mine. You look at the gold price, the cost of production and so on and you write down the asset value to equal that. I can't tell you offhand what the value of Hidden Valley is, but the value in the PNG assets is substantial. It's a large number..ALEC HOGG: Is it over 10bn?.GRAHAM BRIGGS: Ja. I should hope that its value is more than R10bn..ALEC HOGG: Because that's what the market is saying; if you take Sibanye's share price for instance, and yours, take the market cap: it's putting a value of about R10bn onto Hidden Valley. You're comfortable that it's still worth at least that?.GRAHAM BRIGGS: Yes. Absolutely. The gold asset is a fantastic asset. It's going to be a great mine one day and certainly it's worth a lot of money..ALEC HOGG: When you strip that (write-down) out of the results and it does become a little more complicated when you have write-downs and you've got a tax asset revision of R550M as well. On the ground here in South Africa it seems like you also did take a bit of strain..GRAHAM BRIGGS: Ja. We took a bit of strain in a few areas, Alec. The Kusasalethu, that decision and the labour unrests we had there which hurt us a lot – about R1.2bn. We also had a few operations that didn't perform. The worst of that was Tshepong which had a poor year, there are a few others. Hidden Valley was one of them that didn't perform very well, but, we had quite a lot of operations that did perform. So we're actually pleased with where we are and the strategy and direction we've taken. We've set ourselves up in a way which is looking good for the future. We've had some fantastic grade improvements and we plan to have further grade improvements into the next year..ALEC HOGG: Graham, you just completed a strategic review as you put into the commentary to your results. What assumptions did you make on labour or potential labour unrest?.GRAHAM BRIGGS: Alec, you know we can't cater for a long strike looking at our financials. We rely on people to be able to produce gold, to be able to pay the bills and to be able to pay the salaries. If we don't have people we can't work. We don't get revenue. I don't know that you can ever have enough money in the bank to cater for the possibility of a week or a month's strike or whatever the case may be. So we don't cater for that sort of disaster. We do cater for making sure that our pumps work and that we have contingency plans for equipment failure and various emergency processes and so on. But to have a strike is something that we certainly hope doesn't happen..ALEC HOGG: Well, Neal Froneman told us yesterday he is prepared to stick it out for three months. He's catered for it. He's got R2bn in cash reserves. I guess from your perspective you take a different approach..GRAHAM BRIGGS: Well, we've got R2bn in cash but the last thing we want to do is spend that cash on just keeping the operations going while everyone is not working. That's not the intent of the R2bn. The R2bn is to try and get to keep and maintain our balance at zero net debt. That's where we want to be all the time so that money has not been side-lined and allocated to a potential strike..ALEC HOGG: Different strokes for different folks. That was Graham Briggs, Chief Executive of Harmony Gold.
