Rand gold price batters Harmony
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I-Net Bridge
THE world`s number six gold miner, Harmony Gold, yesterday fell to a fresh three-year low on the continued decline in the rand gold price.
Harmony`s share price has also been under pressure due to its hostile takeover bid for world No4 gold miner Gold Fields, with the second phase of Harmony`s offer set to end on February 4 .
Harmony CEO Bernard Swanepoel announced that Harmony had secured 11,8% of Gold Fields in the first phase of its offer, which was launched in October.
`There is pretty serious value dilution happening in Harmony,` said a Johannesburg-based mining analyst yesterday.
`We are not going to see glowing results for the December quarter, with the rand as strong as this.`
In early trade, Harmony`s share price on the JSE Securities Exchange SA fell to R50,25 , its lowest level since November 22 2001. The rand gold price was quoted yesterday morning at R77,99 its lowest level since July 26 last year.
In the September quarter, Harmony`s cash cost amounted to R77800/kg. For the December quarter, Harmony was aiming to cut its cash costs to R77500/kg, followed by a further cut to R75000/kg by the June 2005 quarter.
Harmony is expected to produce a headline loss a share for the December quarter, when it issues its quarterly results on January 24.
This would be Harmony`s sixth consecutive quarterly loss.
In last year`s September quarter, the gold miner reported a headline loss a share of 110c from 131c in the June quarter.
During the December quarter, the rand gold price averaged R84392/kg, up 2,6% from R82287 in the September quarter.
During the September 2004 quarter, about 17% of Harmony`s production was loss making.
Harmony closed 0,19% lower at R51,75 yesterday. The fall in the share price is expected to further complicate the hostile takeover, as Harmony is offering shares alone in its offer to Gold Fields shareholders.
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