Harmony CEO says gold miner cannot forever hoard cash
HARMONY Gold CEO Beyers Nel acknowledged the company “cannot forever hoard cash”, but a dividend policy adjustment or special payout was not yet in the miner’s sights.“I don’t want to create the impression of improved returns as we have a fixed policy of paying out 20% of net free cash flow. But we also can’t forever hoard cash. It will be a decision taken by the board at a specific time,” said Nel of the likelihood of changes to shareholder returns.On Monday (March 3) Harmony declared a record interim dividend of 227 cents/share, equal to R1.44bn or $78m. This was on the back of a R1.4m per kilogram gold price which took net cash to R7.28bn compared to R2.8bn at the close of its previous financial year.What’s more, the company stands to generate a net operating margin of about R300,000 per kilogram or R7.5bn in additional operating free cash flow as the gold price is R400,000/kg stronger – assuming this is the average price for the remainder of the financial year ended June 30.Set against this potentially improved cash generation, Harmony has to finance Eva Copper, a project it acquired in Australia in late 2023 from Copper Mountain Mining Corp. for $170m in upfront cash. The capital required will be disclosed when Harmony publishes an update of Copper Mountain’s feasibiity study which worked on $597m in pre-production capital.Adrian Hammond, an analyst for Standard Bank Group Equities said at Harmony Gold’s presentation that within six months the miner would have enough cash to finance Eva to which Nel replied: “This is a key catalyst for taking stock for where we are on the balance sheet. But we just want to get through Eva”.Eva Copper represents a departure for Harmony Gold which has, since inception 75 years ago, focused only on gold. Nel said the company was continuing to look for other assets via merger and acquisitions.While there was no imminent deal, he said Harmony was interested in buying near-production or in-production assets. Harmony doesn’t necessarily require another long-lead project, however. After Eva Copper, the group is hoping to start development of another greenfields project – Wafi-Golpu in Papua New Guinea – which has first production pencilled in for 2031 or 2032.But between 2027 and Wafi-Golpu’s commissioning, Harmony is scheduled to drop gold production about 500,000 oz, roughly a third of production. Nel said he was not concerned about the so-called ‘gold gap’, as the quality of production would not decline. Nonetheless, Harmony is considering ways to maintain output at 1.5 million ounces.“We are not necessarily under pressure to do anything to fill any gap,” said Nel. “We are, from an M&A point of view, continuously browsing for value, though there’s nothing on the near-term radar speficically. We are looking to add.”The post Harmony Gold cannot forever hoard cash appeared first on Miningmx.Weiter zum vollständigen Artikel bei Mining.com
Quelle: Mining.com
