Harmony Gold reports profit drop, mining deaths spike

The sun sets behind a shaft
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South Africa’s Harmony Gold reported a 43% fall in annual earnings on Tuesday, hurt by impairments and a loss relating to debt denominated in U.S. dollars, and had a worrying setback in its safety record.

The gold industry in South Africa, which has produced a third of the bullion mined in history and is home to the world’s deepest mines, has been squeezed for years by depressed prices and soaring labour, power and operational costs.

The challenges faced by the industry, which is mostly labour-intensive and non-mechanised, were underscored by a spike in the number of Harmony workers killed during the financial year, to 13 from five in the previous year.

Mine safety is high on the radar screen of investors, the government and unions.

Headline earnings per share – the main profit measure in South Africa that strips out certain one-off items – came in at 171 cents, in line with what it had previously flagged to the market, from 298 cents a year earlier.

The net loss was almost R4.5 billion ($307.5 million) compared with a slim profit last year of R362 million.

The company maintains hedges and its rand gold hedges realised gains of almost R1.2 billion.

Harmony produced 1.22 million ounces of gold for the year and said its target for the 2019 financial year was 1.45 million ounces.

One of its focus areas for the next financial year will be obtaining permits for its Wafi-Golpu project in Papua New Guinea.