Time for Harmony Gold to loosen the purse strings?
HARMONY Gold’s former CEO Peter Steenkamp will go down in the company’s history as one of its most important change agents. It was under his watch the company bought the AngloGold Ashanti mines Moab Khotsong and Mponeng that were largely responsible for its current fortunes, especially the high grade Mponeng.Bought for $300m each in 2018 and 2020, those mines have long paid back amid a driving gold price. Steenkamp also bought full control of Hidden Valley, a Papua New Guinea mine, for which he was derided. Harmony paid R1 and took on its liabilities from its former joint venture partner, Newmont. Beating the doubters, the mine was one of the group’s best performers in the firm’s 2024 financial year so far.All of this was in a gold bull market that Harmony’s current CEO Beyers Nel enjoys today.The supportive gold market also helped Harmony whittle down debt, and build a cash pile estimated by Standard Bank Group Securities analyst Adrian Hammond at about $1bn by year-end –– will probably be enough to pay for the capital development of Eva Copper, a mine in Australia (another Steenkamp acquisition).The group has big capital on the immediate horizon but with long-life mines in its portfolio and a new diversifying copper mine covered by cash, isn’t this time for Nel to use what influence he can to extract a more daring dividend policy from his board?As far as the eye can see (admittedly limited when it comes to gold) US president Donald Trump’s trade wars are inflationary while his geopolitical bullying deeply unsteadying. Uncertain, inflationary markets are likely to continue to support gold. Set against this, Harmony’s pay out policy of 20% of net free cash is not generous. In fact, Harmony trades on a yield of just over 2%, which is poor when set against its rivals. Nel and his board might also consider, given the performance of the firm’s share price, that it can use paper to finance possible acquisitions that might opportunistically be presented to it. Nel said in an interview the company was keeping out a keen eye for value accretive deals given that gold production dips 2028, until it begins production from its Wafi Golpu project in Papua New Guinea. Harmony’s 12% shareholder, , but if you can’t be bold in the current gold market, then when?The post Time for Harmony Gold to loosen the purse strings? appeared first on Miningmx.Weiter zum vollständigen Artikel bei Mining.com
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