JOHANNESBURG (miningweekly.com) – The growth aspiration of Harmony Gold to produce at a rate of 1.5-million ounces of gold a year is within a hair’s breadth of becoming a foregone conclusion as production at Hidden Valley in Papua New Guinea and Moab Khotsong in South Africa click in optimally during the current financial year.

In producing 1.228-milliion ounces of gold at an all-in sustaining cost of R508 970/kg ($1 231/oz) in the 12 months to June 30, the JSE- and New York-listed company said only one month of Hidden Valley production and four months of Moab production was included.

Through re-investment in Hidden Valley and the full integration of Moab, going forward, yearly production will be increased by 450 000 oz to 500 000 oz at an average life of mine all-in sustaining unit cost of $950/oz, making the hitting of the 1.5-million-ounce target a certainty.

The company, headed by CEO Peter Steenkamp, once again hit the high spots on the hedging front with the company’s highly successful hedging strategy generating bonanza cash flows of R3.6-billion ($276-million) since implementation in its 2016 financial year and R1.8-billion ($141-million) in the 12 months to June 30.

The full integration of Moab into Harmony was completed in three months.

Harmony, which a week ago seized another soft-rand opportunity to hedge further, will continue to hedge as opportunities to do so arise.

“We hope this honeymoon will last for ever,“ Harmony CFO and hedging mastermind Frank Abbott commented in response to Mining Weekly Online during a media call.

Headline earnings per share for the financial year were 171c a share ($0.13c a share).

The key features in the half-year have been an embedding of its safety culture through various training and awareness campaigns.

For the third consecutive year production guidance has been achieved and for the sixth consecutive year underground recovered grade has been increased, this year by 8%.

The Moab transaction has resulted in Harmony’s underground South African resources being increased by 31% and its underground South African reserves being increased by 11.6%.

Key focus areas in the current 2019 financial year will be safety, repaying debt, delivering on operational plans and progressing the permitting of the Wafi-Golpu copper/gold project in Papua New Guinea, for which the company does not foresee any funding difficulties.

“This will be one of the lowest cost operations in the world. The cash flows are tremendous. It’ll be like Mogalakwena is for Anglo American Platinum,” Steenkamp said.

The company is taking steps to fill a gold production gap in its financial years 2023 and 2024, when it will begin seeing a production reduction.

Three of the company’s Free State mines have near horizons. The small but good Unicel mine in the Free State is the operation closest to closure, which could take place in a year to 18 months, followed by Masimong, with three years to go, and Bambanani with four to five years to go. On the West Rand, Kusasalethu has four years of higher grade left.

There are many opportunities to grow production, the first being the mining of the Great Noligwa shaft pillar acquired in the Moab transaction, where there are five-million ounces in high-grade pillars above infrastructure, as well as many Moab tailings retreatment opportunities. Zaaiplaats will also be an opportunity the company will study for the longer term.

“There are enough opportunities within our current portfolio to fill the gap,” Steenkamp assured journalists.

The company intends investing in a greenfield exploration drilling project at Target North in the Free State, where drilling was last done in 2007.

“It can’t be mined from Target 1 and Target North would be a brand new mine on its own,” Steenkamp told Mining Weekly Online.

Target North is part of the West Wits area, about which much is already known.

“At the moment we’re quite optimistic that there is a possibility of a fairly good grade orebody at Target North,” he added.