Our opinion on the current state of HARMONY(HAR)Harmony (HAR) was historically considered South Africa’s most marginal gold mining operation until it successfully integrated Mponeng gold mine into its portfolio. The development of Mponeng and its processing plant is expected to cost around US$2.8 billion, and Harmony has yet to secure its share of the required capital, which amounts to approximately R20 billion.
In 2021, the company acquired Mponeng for R4.2 billion. As the world’s deepest mine, Mponeng presents all the challenges associated with ultra-deep-level mining. Despite these difficulties, it has become a key asset in Harmony’s portfolio. The company is also investing in renewable energy, having built a 30MW solar park in the Free State, with further plans to expand green power capacity by an additional 80MW.
On 6th October 2022, Harmony announced the acquisition of 100% of the Eva copper project in Australia for R4.1 billion. This move signals a strategic shift, potentially reducing the company’s reliance on precious metals over time. Eva is expected to commence production in three years, adding an estimated 260,000 ounces of gold and 1.7 billion pounds of copper to Harmony’s reserves.
On 3rd April 2024, Harmony announced that it had signed a five-year wage agreement with all of its unions, providing labor stability.
In its results for the year to 30th June 2024, Harmony reported an underground grade of 6.11 grams per ton, a 6% increase in gold production, and an 11% rise in the US dollar gold price received. Headline earnings per share (HEPS) surged to 1,852 cents, up from 800 cents in the previous period. The company stated, "By investing in our higher-grade gold mines, expanding our surface retreatment business, and growing our international gold and copper assets, we will continue to transform and de-risk Harmony as we go from strength to strength."
In an operational update for the three months to 30th September 2024, Harmony reported gold production down by 1%, although Mponeng’s production increased by 28%. The recovered grade improved to 6.32 grams per ton, while costs rose by 14%. The gold price received increased 21% to $2,356 per ounce. Harmony also reported a "strong, flexible balance sheet with net cash position increasing to R6.3 billion (US$362 million) and liquidity of R15.7 billion (US$909 million) in cash and undrawn facilities."
For the six months to 31st December 2024, Harmony estimated gold production of between 790,000 and 805,000 ounces, with higher recovered grades. The company stated, "All of our underground operations (except Target 1, which is still in a turnaround process after being recapitalized) generated meaningful positive operating free cash flows."
Technically, while the share remains volatile, it is in a strong upward trend. It is highly sensitive to movements in the gold price and the rand/US dollar exchange rate. Harmony was added to the Winning Shares List (WSL) on 16th November 2023 at 9,920 cents. It is now trading at 22,067 cents, reflecting strong investor confidence and the company’s positive operational momentum.
