Gold miner Harmony Gold has posted a 46% increase in production profit to just under R14-billion, or $774-million, for the financial year ended June 30.

The company swung from a net loss of R1-billion in the 2022 financial year to a net profit of R4.8-billion in the reporting year, enabling it to declare a final dividend of 75c, or $0.04, apiece, against a prior full-year dividend of 22c, or $0.01, apiece.

Earnings a share increased by more than 500% to R7.80, or $0.44, from a comparative loss a share of R1.72, or $0.08, in the prior year.

In turn, headline earnings per share (HEPS) increased by 60% year-on-year to R8, or $0.45, compared with HEPS of R4.99, or $0.33, in the prior year.

Harmony met its full-year production, grade and cost guidance, having recorded an 8% increase in underground recovered grades to 5.78 g/t from 5.37 g/t in the prior year.

Gold production of 1.46-million ounces in the year under review compares with the 1.48-million ounces produced in the prior year, despite the Bambanani operation having closed at the end of the 2022 financial year.

Production was mainly driven by a solid operating performance at the South African underground mines and an 18% year-on-year increase in production from the Hidden Valley mine, in Papua New Guinea.

Harmony reported a 108% year-on-year increase in group operating free cash flow to just over R6-billion, from R2.9-billion of free cash flow generated in the prior year.

The company’s cash generation was supported by a 15% higher average gold price realised in the reporting year of $1 829/oz.

The group managed to reduce its net debt-to-earnings ratio to 0.2 times, compared with 0.6 times as at December 31, 2022.

“The past financial year was filled with many highlights as Harmony delivered on its strategic objectives of producing safe, profitable ounces through operational excellence and value-accretive acquisitions.

“We saw an improved safety performance, while meeting our production, cost and grade guidance as we continue navigating a challenging operating landscape,” CEO Peter Steenkamp explains.

He adds that it is worth noting that the company’s costs have remained under control despite the current high inflationary environment.

Steenkamp says continued embedded sustainability practices, improved asset quality and operational consistency resulted in a strong and sustainable group performance with solid operational free cash flows in the year under review.

The company plans to allocate growth capital towards high-margin, long-life operating assets in the copper space, including by progressing its two key projects Eva Copper, in Australia, and Wafi-Golpu, in Papua New Guinea.

At the Eva project, Harmony is progressing a feasibility study following its acquisition of the project in December last year, while Harmony is progressing towards permitting of the Wafi-Golpi project.

Copper now comprises about 20% of groupwide mineral resources.

Harmony will also allocate capital to projects aimed at achieving net-zero emissions by 2045, including by investing in more renewable energy and reducing energy consumption through various energy efficiency programmes.

Harmony saved about R394-million in electricity costs in the reporting year, owing to 41 energy optimisation programmes having been implemented to save 295 GWh.

Harmony has saved a cumulative R1.7-billion in electricity costs since 2016, on the back of more than 240 energy efficiency projects.

Phase 1 of Harmony’s renewable energy programme was commissioned in the reporting year, delivering 30 MW of solar generation capacity to its Free State operations, in South Africa, which will reduce the operations’ daytime grid demand by about 20%.

Phase 2 of the renewable energy programme is in progress, which will add a further 137 MW of renewable energy generation to the portfolio. Harmony expects completion of this phase in the 2025 financial year.

The first 100 MW will largely be funded using a R1.5-billion green loan that Harmony secured in June last year. The remaining megawatts will be delivered through a power purchase agreement.

The two phases combined will reduce the group’s peak daytime grid demand by about 30%, saving Harmony an estimated R425-million in electricity costs.

Harmony also plans to invest further in the surface retreatment facility at the Kareerand tailings extension, as part of the Mine Waste Solutions business, as well as the Zaaiplaats project at Moab Khotsong.

Harmony is aiming, through the Zaaiplaats project, to extend the life of mine at the Moab Khotsong mine, in North West.

Steenkamp points out that Harmony’s gold output for the 2023 financial year was bolstered by a 16% improvement in grades and 22% jump in production at the Mponeng mine, which Harmony bought from fellow miner AngloGold Ashanti.

A feasibility study to determine the possibility of deepening the Mponeng mine, also in North West, is under way, which the company expects to publish in February next year.

Once the study is completed, board approvals will follow. The company wants to extend depths from current levels of about 3.8 km.

The other mine that was part of the deal, Moab Khotsong, also recorded improvements in production and underground recovered grades.

Operating free cash flows from these two mines increased by 172% year-on-year to R3.2-billion in the year under review, of which Mponeng contributed R2.1-billion, or 35%, of the total group’s operating free cash flow.

On the surface side, Harmony says tailings retreatment continues to present an excellent opportunity, given the abundance of resources in old gold tailings dams in the Free State, North West and Gauteng.

The company is conducting studies to determine the feasibility of converting 5.7-million ounces in mineral resources to mineral reserves in the Free State.

Harmony has set its production guidance for the new year at between 1.38-million and 1.48-million ounces.

Capital expenditure is expected to increase to R9.5-billion in the new financial year, from R7.5-billion spent in the reporting year owing to investment in major projects, as well as necessary fleet replacement at the Hidden Valley operation for extended mine life.

Harmony remains South Africa's largest gold mining company by volume, as well as the largest producer of gold from the retreatment of old tailings dams.

“Our comprehensive growth pipeline, including the two major copper projects, will transform Harmony into a global gold/copper producer and create long-term value for all shareholders,” says Steenkamp, adding that the company remains focused on responsible stewardship, operational excellence, cash certainty and effective capital allocation.