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Harmony Gold cuts output forecast

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Harmony Gold operates the Kusasalethu gold mine, one of the world’s deepest. (Image courtesy of Harmony Gold)

South African miner Harmony Gold on Wednesday cut its forecast for annual gold production by 4% and made a similar increase to its cost guidance due to operational challenges at its Papua New Guinea mine.

The company estimated its South African operations would meet their output and cost of production guidance, however.

In the first half ending Dec. 31, South Africa’s biggest gold miner had geo-technical issues preventing full scale mining at its Hidden Valley mine in Papua New Guinea.

The problems were compounded by covid-19 related restrictions and damage to a conveyor belt earlier this month that will “have a significant impact on full-year production at Hidden Valley,” the company said in a statement.

As a result, Harmony said it now expected total output of 1.48-1.56 million ounces this fiscal year, down around 4% from previous guidance of 1.54-1.63 million ounces.

It also revised up its forecast for all-in sustaining cost – a metric to measure overall costs of gold production – by about 4% to 805,000-835,000 rand per kg for the year ending June 30.

The company added repairs to the 6 kilometre long conveyor belt would be completed by mid-March.

Harmony became the biggest South African gold miner last year when it bought AngloGold Ashanti’s last remaining assets in the country for a total of about $300 million.

The purchase came at a time when the gold price had just touched a peak, helping the company reap huge profits, cut debt and reward shareholders with healthy dividends.

Harmony will announce its half-year results on Feb. 28.

(By Nelson Banya; Editing by Promit Mukherjee and Mark Potter)

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