* Q4 headline eps 30 cents vs 33.5 cents forecast
* High costs related to power, equipment take toll
* Company sticks to 2 mln oz output target by 2015
(Adds CEO interview, analyst comment, details)
By Ed Stoddard
JOHANNESBURG, Aug 15 Harmony Gold , the
world's fifth-largest gold producer, reported a 67 percent drop
in quarterly profit, falling short of market expectations as
power rates, new equipment and the costs of a troubled mine
shaft hit its bottom line.
While production rose around 3 percent in the April-June
fourth quarter, output for the financial year was 9 percent
lower, totalling 1.3 million ounces, as safety stoppages
disrupted operations and some shafts underperformed.
Harmony said on Monday it would give its 2012 production
target at an investor event next week. Chief Executive Graham
Briggs told Reuters the miner remained committed to reaching 2
million ounces in gold production by 2015.
"These assets can produce 2 million ounces. We'll continue
to focus on the targets," he said in an interview.
"Having said that, if one of the assets starts wobbling or
something, we'll take it out. We're not going to be obsessive
about our two million ounces but we are going to be obsessive
about having a profitable and sustainable company," he said.
Analysts said output is likely to rise, as new shafts begin
operating and as a broken conveyor belt at Harmony's Hidden
Valley mine in Papua New Guinea is due to be functioning by
"Production on their growth projects should be coming up ...
When that conveyor belt comes back on line at Hidden Valley we
should see some action," said David Davis, a gold mining analyst
with SBG Securities in Johannesburg.
Harmony's headline earnings per share, the main profit gauge
in South Africa, fell to 30 cents in the three months to
end-June from 91 cents in the previous quarter, short of an
average estimate of 33.5 cents in a Reuters poll of seven
A fall in profit was expected after the company said last
month it expected an upswing in costs due to higher power fees
and equipment-related expenses, and the inclusion of costs
related to Target 3, a troubled shaft it acquired.
Quarter on quarter, operating costs were 12 percent higher
due to the increase in electricity prices and the impact of
Target 3, the company said.
Equipment costs pinched earnings in part because of a spate
of public holidays when costly maintenance work is often done.
CEO Briggs told Reuters that costs should decline in the
current quarter though power rates would still weigh. South
African miners pay higher power fees during the June to August
On the price of gold, which has been scaling new highs as
investors seek safe havens amid the U.S. and European debt
crises, Briggs told Reuters: "I don't know that it's going to
scream back any higher this year."
"I have a prediction next year for $1,850. It looks like I'm
undershooting," he said. Spot gold at 1139 GMT was
trading around 0.4 percent lower around $1,738 an ounce. It
rallied to a record high of $1,813.79 last Thursday.
The average gold price was up about 9 percent to $1,509 an
ounce during the June quarter from the previous one and
Harmony's bigger domestic rivals AngloGold Ashanti and
Gold Fields both reported sharply higher earnings for
Analysts remain bullish about Harmony's Papua New Guinea
project Wafi-Golpu and its Hidden Valley mine in that country.
The group said that it had signed a new four-year, $300
million revolving facility with Nedbank and FirstRand
Bank earmarked for its development costs there.
The surge in bullion has helped push Harmony's share price
up about 20 percent so far this year, making it the best
performer among the companies measured by Johannesburg's index
of gold miners
Its shares were down more than 2 percent on Monday,
reflecting investors disappointment and a general retreat by
gold producers on a lower spot price.
(Editing by David Dolan and Erica Billingham)