JOHANNESBURG (miningweekly.com) – The net profit of Harmony Gold plunged in the six months to December 31, dropping from R897-million for the corresponding period of last year to R75-million.

However, production soared by 34% and operations generated R1.1-billion in free cash flow on the inclusion of the acquired Moab Khotsong gold mine in South Africa and the return to full production of the Hidden Valley gold mine in Papua New Guinea (PNG).

Harmony is on track to achieve yearly production of 1.45-million ounces of gold in the 12 months to June 30 and production profit in the six months to December 31 was 25% up at R3 385-million, compared with R2 712-million in the previous corresponding period.

Th company has nine underground mines, one openpit mine and several surface operations in South Africa

On the safety front, in the three months to December 31, Harmony recorded the best quarterly lost time injury frequency rate ever achieved by its South African operations, at 4.84.

It also reported a 7% increase in underground recovered grade to 5.65 g/t.

Net debt was cut by R333-million to R4.6-billion and the memorandum of understanding agreement for the Wafi-Golpu project in PNG was an important step towards the awarding of a special mining lease.

“We remain committed to our strategy of producing safe, profitable ounces and increasing our margins to ensure our operations benefit from the positive sentiment in the gold market,” Harmony CEO Peter Steenkamp said.

All-in sustaining unit cost guidance for the 12 months to June 30 has been lifted to a range of between R520 000/kg and R530 000/kg.

Sadly, the South African operations had four fatalities when Kusasalethu team leader Michael Plaatjies, Tshepong scraper winch operator Tsepo Libate, Kusasalethu artisan Tsietsi Manoto and Moab Khotsong locomotive operator Mvuyisi Mayekiso lost their lives.

Safety days were held at each South African operation during October.

Gold production for the group for the six months ending December 31 soared to 23 359 kg or 751 008 oz, compared with 17 418 kg (560 003 oz) in the corresponding period of 2017.

Revenue increased by 40% to R3.9-billion and forward gold sale contracts involved 3 577 kg (115 000 oz) being sold at an average price of R654 245/kg.

Production costs increased by 45% to R3.2-billion in the six months owing mainly to the addition of Moab Khotsong and Hidden Valley’s return to production.

Depreciation was higher owing to Hidden Valley's return to full production which contributed R896-million of the increase.