JOHANNESBURG (miningweekly.com) – JSE-listed Harmony Gold on Friday announced an expected asset write-down of between $260-million and $280-million (about R2.6-billion and R2.8-billion), citing lower dollar gold and silver prices and the poor performance of its Hidden Valley mine, in Papua New Guinea (PNG).

Harmony said the amount included an impairment of between R50-million and R80-million of its South African assets.

The company, which partners Australia’s biggest gold miner Newcrest in the PNG venture, said that the impairments would reduce its reported net profit, but would not have an impact on reported cash balances and free cash flow.

Newcrest announced an asset impairment of between A$5-billion and A$6-billion in June, which is said to be the biggest one-time charge in gold-mining history.

Harmony is the second South African gold miner to book an impairment, with AngloGold Ashanti announcing a charge of between $2.2-billion and $2.6-billion on Monday.

Harmony CEO Graham Briggs said in a statement that his company continued to manage that which was in its control – production and costs.

“We have reduced our capital expenditure, as well as our services, exploration, procurement and corporate costs, and have approved our operational plans based on a gold price of R400 000/kg,” he said, adding that the company was making good progress with its cost-cutting programme, Project 400.

Briggs reported that the group’s overall gold production for the June quarter would likely be between 10% and 12% higher than the previous quarter, on the back of higher tonnages and improved grades, which increased by between 5% to 7%.

The higher production helped to bring down cash operating costs by between 3% to 5% on a quarter-on-quarter basis.

However, gold production for the 2013 financial year, which ended on June 30, would be between 2% and 4% lower than the previous financial year, on the back of labour disruptions at Kusasalethu, which had cost Harmony R1.2-billion in lost revenue.

The mine remained closed after the Christmas break amid fears of violence and intimidation among workers, but was reopened on February 15 after the company struck a deal with various trade unions representing miners.

“During the June quarter, all employees at Kusasalethu returned to work safely and production build-up commenced in line with the start-up production plan,” the company said in a guidance statement for the quarter ended June 30.

Harmony’s results for the quarter and year ended June 30, as well as its business plans for the 2014 financial year, would be released on August 14.

The South Africa-based miner traded at R35.11 a share on the JSE on Friday, up 3.78% on the previous day’s closing price.