JOHANNESBURG (miningweekly.com) – Gold producer Harmony Gold CEO Graham Briggs was confident the company’s embattled Kusasalethu mine, near Carletonville, would be operating at full production by the end of the June quarter.

“In six weeks, we could be starting to produce some ore from Kusasalethu and probably closer to the end of the [June] quarter, we will reach full production,” he noted during a conference call on Monday.

He pointed out, however, that starting up the mine would be difficult, as safety measures would have to be put in place and it would be time consuming to get the 6 000 workers, which included contractors, back to work, with many having to undergo medical examinations.

Kusasalethu had been plagued by violent unprotected labour disruptions that started in late 2012 and Harmony announced in early January that it would possibly place the mine on care and maintenance.

Briggs said a dual process had been started at Kusasalethu on January 7, which included the issuing of a Section 189 notice to workers to respond to the company’s announcement that it could possibly place the mine on care and maintenance, which could result in the loss of about 6 000 jobs.

The company had also held bilateral discussions with various parties, including unions. Two meetings had been held to date.

“We have made some good progress at the Commission for Conciliation, Mediation and Arbitration, which is facilitating the process to avoid retrenchments,” he said.

Briggs added that Harmony was awaiting comment on a draft agreement that had been compiled and issued on February 1, following the general agreement of all parties involved at the January 7 meeting.

“The agreement will be a benchmark of how we engage with each other,” Briggs noted, adding that he expected further progress on the matter to be made at a third meeting this week.

He indicated that the company had also received a positive response to the draft agreement from the Department of Minerals Resources during a meeting on Sunday.

Meanwhile, Harmony reported that disruptions at Kusasalethu resulted in the company’s overall gold production during the December quarter falling by 9% to 291 734 oz. This, in turn, resulted in the rand per kilogram unit cost for the reporting period increasing by 6% from R294 404/kg in the September 2012 quarter to R310 858/kg.

However, the rand per kilogram cost of all operations, excluding Kusasalethu, decreased by 4% to R285 498/kg, compared with the previous quarter.

Despite the nonoperation of Kusasalethu, Briggs stated that the company enjoyed an “overall strong financial quarter”, with production from all other operations rising by 3%.

The company reported a 16% increase in operating profit to R1.6-billion, a 28% rise in headline earnings a share to 158c and declared an interim dividend of 50c a share.

Harmony attributed the increase in operating profit to higher grades, an increase in the gold price
and a decrease in cash operating costs, which decreased by R127-million, mainly as a result of lower electricity costs.

Despite the distorting impact of Kusasalethu, the underground recovered grade increased for the third consecutive quarter, from 4.52 g/t to 4.77 g/t.

“We have been on this [upward] trajectory for a while, we should be at grades closer to about 5.8 g/t by 2016. If you look at the rest of the gold industry, not just in South Africa, there is a downward trend in grades and we are bucking this trend,” Briggs enthused.