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Harmony Gold returns to profit in fiscal H1'17, declares interim dividend

Harmony Gold Mining Co. Ltd. on Feb. 2 declared an interim dividend of 50 South African cents per share, after the company returned to a net profit attributable to owners of 1.54 billion South African rand in the first half of its fiscal 2017, up from a loss of 445 million rand a year earlier.

The miner's EPS was 3.33 rand, compared to a loss of 1.02 rand per share the year before.

Headline EPS for the half-year was 1.42 rand, in line with stated guidance and a year-over-year improvement from a headline loss per share of 1.03 rand.

The company noted that increased rand and U.S. dollar gold prices received over the previous year improved profitability and enabled favorable hedging arrangements. Harmony Gold also recognized a gain of 848 million rand on the acquisition of a 100% interest in the Hidden Valley gold mine in Papua New Guinea.

Revenue, including the gold hedge, increased 3% year over year from 8.71 billion rand to 9.87 billion rand as the cost of sales improved from 8.01 billion rand to 9.07 billion rand.

For the six months that ended Dec. 31, 2016, the company produced 553,862 ounces of gold, 8% higher than the 513,576 ounces produced in the previous six months.

On the back of a stronger rand, all-in sustaining costs increased to US$1,136 per ounce in the period under review, compared to US$996 per ounce in the previous six-month period. CEO Peter Steenkamp attributed the 14% increase in all-in sustaining costs in U.S. dollar terms to labor cost increases under a new three-year wage deal and to winter tariffs.

Gold sales increased to 544,086 ounces, compared to 511,198 ounces in the previous half-year, while the price received improved 7% from US$1,223 per ounce to US$1,303 per ounce.

"Although the March quarter is traditionally a difficult production quarter due to the slow start-up after the festive season, we believe that our annual guidance of approximately 1.1 million ounces of gold at a cash cost of about US$1,100 per ounce is achievable," Steenkamp said.