SOUTH AFRICA – Harmony Gold Mining Company has unveiled a R9 billion (US$623 million) plan to extend several projects to drive long-term profitability as operations generated more cash on record bullion prices during the year to the end of Jun, according to IOL.
Chief Executive Peter Steenkamp said that Harmony had approved the development of the R4.5 billion (US$311.4 million) Zaaiplaats project over the next 10 years, the R3.2billion (US$221.5 million) extension of Mine Waste Solutions over four years, and about R1billion (US$69.2 million) for Hidden Valley in Papua New Guinea.
“We have identified substantial opportunities in our existing portfolio through exploration and brownfield projects, which will extend the life of some of our larger and higher-grade assets, adding lower-risk, higher-margin ounces to Harmony’s portfolio,” said Steenkamp.
He said each project brought multiple benefits and exceeded all the group’s minimum criteria for allocating capital.
Steenkamp said the Zaaiplaats project, near the Moab Khotsong mine, was expected to produce more than 200,000 ounces a year and add 24 years’ life-of-mine at a yield of about 9 grams a ton and an estimated, real all-in sustaining cost of R512,300 (US$ 35,455) a kilogram.
The group expected to spend R536 million (US$37.1 million) towards developing the project in 2021, with the first production forecast in 2028.
“The major capital expenditure will be funded by Moab Khotsong. There are significant benefits to pursuing this project, such as leveraging existing infrastructure, increasing ounces and sustaining jobs. Harmony has proved its ability to extract value and add life-of-mine time and again throughout its 71-year history,” he said.
He said the Kareerand Tailings at Mine Waste Solutions was reaching its tailings deposition capacity and would require major capital to extend the existing deposition site to enable the full development of the group’s tailings resource in the region.
“We have identified substantial opportunities in our existing portfolio through exploration and brownfield projects, which will extend the life of some of our larger and higher-grade assets, adding lower-risk, higher-margin ounces to Harmony’s portfolio”
“This project will be funded out of group cash and will deliver excellent cash flow margins once this project is completed and the Franco-Nevada streaming agreement comes to an end. This project is expected to produce approximately 100,000 ounces of gold per annum and add 16 years’ life-of-mine at an estimated all-in sustaining cost of R572,000 (US$ 39,587) a kg over the life of mine,” he said.
Harmony said highlights included the slashing of debt by R819 million (US$56.7 million) to R542 million (US$37.5 million).
Operations generated R9.7 billion (US$671.3 million) in cash, up from R5 billion (US$346 million) a year earlier, because of the higher gold price.
“The cash generated by operations was more than enough to pay for capital expenditure, a dividend and significantly reduce the group’s debt,” Steenkamp said.
Revenue was 43 percent higher to R41.73 billion (US$2.9 billion), mainly because of the operational expansion from the acquisition of Mponeng, coupled with the higher gold price received.
Total gold production for the year was 26 percent higher at 1.53 million ounces compared to 1. 217 million in 2020. The higher gold production was in line with the group’s guidance and mainly because of the inclusion of Mponeng and related assets in its portfolio.
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