August 14, 2014 / 7:00 AM / in 3 years

UPDATE 2-Harmony Gold says seeks new assets in Africa, Papua New Guinea

* Harmony plans to seek acquisition opportunities

* S.African mining groups want to diversify out of home base (Recasts, adds details)

By Ed Stoddard

JOHANNESBURG, Aug 14 (Reuters) - South African bullion producer Harmony Gold said on Thursday it was looking for acquisition opportunities elsewhere in Africa and in Papua New Guinea, even as it scales back investment on existing projects.

“There are quite a few assets that are on the block,” Harmony chief executive Graham Briggs told a conference call after the release of the group’s fourth quarter and year results.

He said Harmony would not be looking into new regions such as South America but would focus its attention in Africa and also Papua New Guinea, where it currently has operations.

Harmony’s operations in South Africa, which account for over 90 percent of its production, are mostly older and deep-level mines and it is becoming increasingly expensive to extract ore at such depths.

Mining companies in South Africa are also trying to diversify out of their domestic base because of labour unrest, uncertainty over policy, and rising costs associated with deep-level operations.

While Harmony has signaled its very clear intention to hunt new assets, it is also scaling back capital expenditure on existing projects, an industry-wide trend in the face of depressed prices.

Harmony fell to a steep fourth-quarter loss because of a 1.4 billion rand ($132 million) write-down on an expansion project at its Phakisa operation, which was shelved because it would have required too much capital.

“The net loss for the June 2014 quarter was 1.22 billion rand, compared to a net profit of 31 million rand in the March 2014 quarter, mainly due to the impairment of 1.41 billion rand recorded,” the company said.

Its loss for the year narrowed to 293 cents per share from 543 cents, in part because of cost reductions but also because it recorded even bigger write-downs last year.

Harmony also reiterated it planned “significantly lower” investment in its Papua New Guinea Wafi-Golpu mine, which has become its flag-ship project.

Plans unveiled in 2012 called for spending of almost $6 billion to develop the mine which would have been shared with Harmony’s joint-venture partner Newcrest Mining.

Harmony had been expected to update investors this month about its current expenditure plans for the project but Briggs said on Thursday it would likely finalise its new capital blueprint in September .

1 US dollar = 10.5869 South African rand Editing by William Hardy

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