Harmony Gold is strategically positioning itself for significant gains as it successfully commissions the first phase of an expansion project at the Kareerand tailings storage facility in Orkney, in the North West province.
Coupled with the final delivery under a streaming agreement with Franco-Nevada and Mine Waste Solutions (MWS), Harmony is well-placed to lower its operational costs while simultaneously capitalising on the current favourable gold prices.
The South African gold producer had an agreement with Franco-Nevada where it was entitled to uptake about 25% mining output from MWS.
It announced yesterday that “the final delivery (was) made into the streaming agreement between Franco-Nevada and Mine Waste Solutions”.
“The conclusion of the Franco-Nevada streaming contract will allow MWS to fully deliver on the value of its production and contribute meaningfully to the broader Harmony group,” said Peter Steenkamp, CEO for Harmony Gold.
“The profitability of this operation more than justifies the capital invested at Mine Waste Solutions.”
Steenkamp added that expansion of the company’s surface re-treatment business was in line with its strategy to invest in low-cost, high-margin quality ounces.
With phase 1 of the expansion project at Kareerand completed and commissioned on time, Harmony expects its MWS operation’s average gold price received to increase and to be in line with current market prices.
“MWS’ free cash flow would increase by more than R1 billion on an annualised basis, assuming the current spot rand per kilogram gold price,” said Harmony Gold.
The resultant increased storage capacity at the operation has enabled re-mining of of old tailings in the region to continue while extending MWS’s life of mine by 15 years to 2040.
Harmony Gold’s broader expansion plans for MWS also include the addition of a fourth processing stream, increasing plant throughput capacity from 25 million to 28m tons annually.
This will take gold production from MWS to a forecast average of about 110 000 ounces per year.
“We have guided for a further R1.2bn in major capital expenditure to be deployed at MWS in the 2025 financial year. A total of R2.3bn was allocated to the tailings storage facility extension project in the 2024 and 2025 financial years, with the bulk being used to complete phase 1.”
Harmony Gold lifted headline earnings per share for the year to end June 2024 by 132%, driven by higher gold and elevated production boosted by higher grades and cost containment, with Steenkamp saying there is strong support for bullion prices to remain elevated.
Steenkamp has told Business Report in an interview that there have been positive shifts in South Africa’s operating environment in the few weeks since consummation of the Government of National Unity bringing together various political parties.
“Yes, I think there's been quite a change compared to prior to the elections in terms of a kind of pact between government and industry, being it the mining industry or other kind of sectors,” he said.
BUSINESS REPORT