Harmony Gold said that the mine extension project is expected to extend the Mponeng mine life from the current seven years to 20 years, allowing it to remain a top-performing asset until at least 2044, and will be self-funded through internal cash flows
Harmony Gold approves Mponeng mine extension project. (Credit: Zac Edmonds on Unsplash)
Harmony Gold announced a ZAR7.9bn ($409m) investment to extend the life of the Mponeng gold mine in the West Wits region, east of Johannesburg, South Africa.
The South African gold mining company announced the decision as part of its half-year financial results, with a record interim dividend underpinned by 226% higher headline earnings.
Harmony Gold acquired the Mponeng mine from AngloGold Ashanti in 2020 and conducted a feasibility study to determine the possibility of extending the life of the mine.
After two years of work, the mining company has arrived at an optimised mine design for the extension of the mine life safely and profitably.
The expansion project is expected to extend the Mponeng mine life from the current seven years to 20 years, allowing it to remain a top-performing asset until at least 2044.
Harmony said that the mine extension project will be self-funded through internal cash flows.
Harmony CEO Peter Steenkamp, during financial results presentation, said: “Mponeng is an incredible mine with an existing world-class infrastructure.
“While strong commodity prices have provided Harmony with good tailwinds, improved safety, good mining discipline and operational flexibility with a stable and a predictable cost structure, remain fundamental to creating the long-term value expected by our stakeholders.
“We’re proud that, in our hands, Mponeng will reach its true potential and deliver a significant positive social impact. This embodies how Harmony creates long-term value for its shareholders and stakeholders.”
Mponeng provides two excellent orebodies, the Carbon Leader and the Ventersdorp Contact reefs, both with exceptional grades of more than 9g/t.
The project will convert more than three million ounces of gold onto mineral reserves, delivering an average steady-state production of 260,000oz, or 8t, of gold per annum.
Once the extension project is complete, Harmony is anticipated to contribute about R2.5bn per annum in cash, at a real gold price of R1.1m per kg.
In the half-year ended 31 December 2023, Harmony’s reported record operating free cash flow increased by 265% to ZAR7.1m, driven underground recovered grades to 6.29g/t from 5.68g/t.
The company’s full-year production guidance remains unchanged at between 1,380,000oz to 1,480,000oz of gold, and grade guidance remains unchanged at 5.60g/t to 5.75g/t.
Harmony CEO Peter Steenkamp said: “Through resilience, dedication and focus, we are improving our safety performance, driving operational excellence, increasing the quality of our ounces and delivering as promised.
“While strong commodity prices have provided Harmony with good tailwinds, improved safety, good mining discipline and operational flexibility with a stable and a predictable cost structure, remain fundamental to creating the long-term value expected by our stakeholders.
“We will continue to use our skills and strong understanding of our orebodies to extract further value – wherever we operate. We mine with purpose – transforming our gold into long-term value for all our stakeholders.”